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Thread: UK Markets Week 14 Oct 2013

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    UK Markets Week 14 Oct 2013

    The Lloyds Bank Commercial Banking Regional PMI report reads: "While the headline index measuring overall business activity across the English regions fell slightly from 61.0 in August to 60.7 in September, it was once again well above the 50.0 'no-change' mark. The index has now shown rising business activity for 11 consecutive months. (...) In Wales, the equivalent index for overall business activity rose to 59.2 in September (up from 57.7 in August). (...) London recorded the strongest output growth in England last month (62.9), followed by the North West (62.3) and East Midlands (61.0). While the North East remained the weakest performing area in terms of business activity expansion (56.2), the region has still recorded growth for the past five months."

    Ireland: The Ulster Bank Construction PMI posted 55.7 in September, up from 49.7 in August and the first time above the 50.0 no-change market since May 2007. The report points out: "New orders expanded at a sharp and accelerated pace, leading to growth of purchasing activity and a stabilisation of employment. (...) Panellists reported that higher new orders and signs of improvements in economic conditions had contributed to growth of activity."

    Michael Page International issued a 3Q Interim Management Statement: "Gross profit was 127.0M in our traditionally weaker third quarter, up 0.4% YoY in reported currency (-0.2% at constant exchange rates). In all our regions and key disciplines, in the third quarter we saw increasing year-on-year quarterly growth rates in constant currency. (...) we expect Q4 to be another challenging quarter, with difficult conditions likely to continue in some markets, but with gradual improvements in others. (...) at this point we expect full year operating profit to be around 68M." Meanwhile, the Co said Kelvin Stagg, the Co's finance controller and company secretary, will act as acting CFO as Andrew Bracey has resigned.

    Essentra said in its Interim Management Statement: "During the third quarter of 2013, the Co's overall performance was in line with the Board's expectations. Revenue was ahead +23% versus Q3 2012 at constant FX and +24% at actual rates: like-for-like growth was +9%. (...) the Co is on track to deliver further balanced, profitable growth in 2013 and to continue to make progress towards its Vision 2015 objectives of at least mid single-digit like-for-like revenue growth and double-digit adjusted EPS growth at constant exchange."

    Carillion Plc said its consortium with Beijing Construction Engineering Group and the Greater Manchester Pension Fund has been selected by Manchester Airports Group to deliver the 800M Airport City development at Manchester Airport. The Co added: "Carillion expects to invest up to 12M of equity in the development, as well as delivering up to 580M of construction work."

    Balfour Beatty announced the winning of the 77M I-140 Wilmington Bypass project, which includes a 7,185-foot-long bridge over the Cape Fear River in North Carolina.

    Glencore Xstrata is in talks with Vale on combining their nickel operations in Canada's Sudbury basin, reported Reuters citing sources familiar with the situation.

    HSBC's China unit said it has gained regulatory approval to set up a sub-branch within Shanghai's free-trade zone.

    Intertek Group announced the acquisition of ETEC LABS, "a leader in advanced transportation testing, including alternative energy vehicle analysis, research and demonstration projects", without disclosing transaction terms.

    Automobiles & Parts: GKN (+1.14% to 362.3p) closed at a 3-month relative high against the FTSE 100.

    Financial Services: Schroders (+2.32% to 2644p), Henderson Group (+1.65% to 197.1p) and Close Brothers (+1.43% to 1275p) reached a new 3-month relative high against the FTSE 100.

    Industrial Goods & Services: Howden Joinery Group (+4.51% to 308.5p) and Hays (+2.96% to 121.6p) reached a new 3-month relative high against the FTSE 100.

    Real Estate: Segro Plc (+1.92% to 318p) reached a new 3-month relative high against the FTSE 100.

    Stock/Benchmark ratio(s) 50D MA cross over: Investec Plc (+2.84% to 420.2p), Ladbrokes (+3.08% to 190.7p), London Stock Exchange (+1.61% to 1577p), Shire (+2.69% to 2445p), United Business Media (+2.07% to 716.5p)

    Stock/Benchmark ratio(s) 50D MA cross under: BAE Systems (-3.2% to 436.3p), Croda International (-4.8% to 2477p).

    Stock(s) 50D MA cross over: Amec (+2.26% to 1085p), Babcock Intl Group Plc (+1.29% to 1177p), BBA Aviation (+1.75% to 308.7p), Burberry Group (+1.26% to 1605p), Capita Group (+0.85% to 1005p), Hikma Pharmaceuticals (+0.76% to 1063p), Intermediate Capital Group (+1.69% to 456.9p), Inchcape (+1.64% to 618p), Intertek Group (+1.08% to 3270p), Ladbrokes (+3.08% to 190.7p), Next (+1.61% to 5040p), QinetiQ (+1.22% to 190.4p), Shire (+2.69% to 2445p), Standard Life (+2.63% to 355.5p), St James's Place Capital (+1.22% to 620p), United Business Media (+2.07% to 716.5p)

    Stock(s) 50D MA cross under: BAE Systems (-3.2% to 436.3p), Meggitt (-0.92% to 541p).
    "Risk comes from not knowing what you are doing" --Warren Buffett--

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    City Index - UK Morning Brief 15 Oct 2013

    Burberry Group posted a 1H Trading Update: "Total revenue (1,031M) increased by 14% underlying, with retail growth of 17%, wholesale down 7% and licensing up 2% (both adjusted for Beauty). Adjusted PBT for the six months to 30 September 2013 is now expected to be around the level of the prior year, better than previous guidance of down year-on-year. The recent appreciation of sterling, if it persists, will impact the translation of second half revenue and profit." Meanwhile, the Co announced: "Angela Ahrendts will step down as Chief Executive Officer by mid-2014 to take up a new position with Apple. Christopher Bailey is to be appointed to the position of Chief Creative and Chief Executive Officer."

    Rio Tinto reported 3Q production: iron ore production up 2% YoY to 68M tons, mined copper +23% to 162K tons, semi-soft & thermal coal +14% to 7,070K and aluminium +3% to 2,253K tons. The Co's CEO commented: "We achieved strong production results in the third quarter, with copper volumes up as Oyu Tolgoi ramps up to full capacity and Kennecott continues to recover ahead of expectations. Productivity improvements in our Australian operations led to record quarterly thermal coal production. In iron ore, we achieved record production and shipments in Western Australia following the official opening of our landmark Pilbara 290 port and rail expansion, four months ahead of its original schedule and $400M under budget. We maintained good progress against our strategic priorities to improve the performance of our businesses, strengthen the balance sheet and deliver our approved growth projects."

    AstraZeneca announced that its global biologics research & development arm MedImmune has acquired Spirogen, "a privately-held biotech company focused on antibody-drug conjugate technology for use in oncology", for an initial consideration of $200M and deferred consideration of up to $240M. The Co added: "MedImmune has also entered into a collaboration agreement with ADC Therapeutics to jointly develop two of ADC Therapeutics' antibody-drug conjugate programmes in preclinical development. MedImmune will also make an equity investment ($20M) in ADC Therapeutics, which has an existing licensing agreement with Spirogen."

    Hargreaves Lansdown issued an Interim Management Statement: "Assets under Administration reached 39.3B as at 30 September 2013, an increase of 2.9B over the quarter. Key drivers have been strong net new business of 1.26B (an increase of 129% compared with the first quarter of last year), improved investor confidence, the success of strategic initiatives and improved stock markets."

    Bellway reported FY results: "The Group delivered a 31.8% increase in operating profit to 151.1M at an operating margin of 13.6% (2012: 11.4%). (...) resulting in profit before taxation of 140.9M, an increase of 33.8% compared with the prior year. (...) he Board is proposing to increase the final dividend by 50% to 21.0p per ordinary share. (...) the total dividend for the year to 30.0p (2012: 20.0p)."

    Chemicals: Johnson Matthey (+5.88% to 2987p) reached a new 3-month relative high against the FTSE 100.

    Food & Beverage: Associated British Foods (+2.72% to 1963p) closed at a 3-month relative high against the FTSE 100.

    Industrial Goods & Services: Travis Perkins (+5.07% to 1763p) and Howden Joinery Group (+0.68% to 310.6p) closed at a 3-month relative high against the FTSE 100.

    Insurance: Resolution Plc (+3.35% to 336p) closed at a 3-month relative high against the FTSE 100.

    Real Estate: Derwent London (+1.71% to 2504p) and Segro Plc (+0.79% to 320.5p) reached a new 3-month relative high against the FTSE 100.

    Retail: Booker Group (+1.24% to 139p) closed at a 3-month relative high against the FTSE 100.

    Telecommunications: BT Group (+1.55% to 353.5p) reached a new 3-month relative high against the FTSE 100.

    Utilities: Severn Trent (+1.23% to 1808p) closed at a 3-month relative high against the FTSE 100.

    Stock/Benchmark ratio(s) 50D MA cross over: Afren (+6.98% to 145.6p), BG Group (+1.26% to 1205.5p), BP (+0.85% to 443.4p), Bellway (+2.29% to 1386p), DCC (+1.74% to 2568p), Hargreaves Lansdown (+1.61% to 1009p), Informa (+1.35% to 525p), Johnson Matthey (+5.88% to 2987p), Spectris (+1.97% to 2278p)

    Stock/Benchmark ratio(s) 50D MA cross under: Burberry Group (-1.25% to 1585p), Michael Page International (-4.95% to 470p).

    Stock(s) 50D MA cross over: Afren (+6.98% to 145.6p), BG Group (+1.26% to 1205.5p), BP (+0.85% to 443.4p), Bellway (+2.29% to 1386p), Compass Group (+0.82% to 862p), DCC (+1.74% to 2568p), Hargreaves Lansdown (+1.61% to 1009p), Informa (+1.35% to 525p), Investec Plc (+0.64% to 422.9p), Johnson Matthey (+5.88% to 2987p), Legal & General (+1.38% to 198.6p), London Stock Exchange (+0.7% to 1588p), Rotork Plc (+0.86% to 2806p), Smith & Nephew (+1.88% to 786p), Spectris (+1.97% to 2278p)

    Stock(s) 50D MA cross under: Burberry Group (-1.25% to 1585p), Electrocomponents (-1.28% to 269.4p), Michael Page International (-4.95% to 470p).

    "Risk comes from not knowing what you are doing" --Warren Buffett--

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    UK Markets Corporate Events - Ftse 350 / Director Dealings 15 Oct 2013

    Today's Corporate Events (FTSE 350 universe)
    Bellway FY results


    Director Dealings
    Bunzl plc: Managing Director:UK & Ireland, Charles Paul Budge exercised and disposed of 23,923 shares of the Co at 13.13 per share. Total holding following notification: 24,826.
    "Risk comes from not knowing what you are doing" --Warren Buffett--

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    City Index - UK Morning Brief 16 Oct 2013

    IMI Plc issued an Interim Management Statement: "On an organic basis, after adjusting for acquisitions and exchange rate movements, revenues for the three months to the end of September are 3% ahead of last year and 1% lower year to date. On a reported basis, revenues are 4% up for the three months to September and flat year to date. Based on current market conditions, we remain confident that the Group will deliver full year results in line with current market expectations." Separately the Co announced it has agreed to sell its Beverage Dispense and Merchandising divisions to The Marmon Group, a Berkshire Hathaway company, for $1.1B (690M) in cash, saying: "The Board of IMI proposes that, subject to completion of the Disposal, IMI will return cash of 620M to shareholders and contribute 70M to the IMI UK Pension Fund."

    Hochschild Mining reported: "In Q3 2013 the Co produced 5.4M attributable silver equivalent ounces (vs 5.1M a year earlier), comprised of 3.6M ounces of silver and 30K ounces of gold. Overall, in the first nine months of 2013, the Co delivered attributable production of 15.1M silver equivalent ounces (vs 15.4M a year earlier), including 9.8M ounces of silver and 88K ounces of gold, and remains on track to meet its full year production target of 20.0M attributable silver equivalent ounces.

    BBA Aviation announced that Non-Executive Chairman Michael Harper will retire in May 2014 and be succeeded by Nigel Rudd, currently the non-executive chairman of Heathrow Airport Holdings Ltd.

    Great Portland Estates said its proposed development at Rathbone Place, W1 has been approved by the City of Westminster.

    Basic Resources auto & parts and technology shares gained most in London on Tuesday.

    Automobiles & Parts: GKN (+2.02% to 367.9p) closed at a 3-month relative high against the FTSE 100.

    Financial Services: Aberdeen Asset Mgmt (+3.38% to 410.3p), Henderson Group (+2.38% to 202.5p), International Personal Finance (+2.33% to 659.5p) and Close Brothers (+1.33% to 1300p) closed at a 3-month relative high against the FTSE 100.

    Industrial Goods & Services: DS Smith (+2.15% to 295p) closed at a 3-month relative high against the FTSE 100.

    Media: Rightmove (+4.77% to 2524p) reached a new 3-month relative high against the FTSE 100.

    Oil & Gas: Genel Energy (+1.52% to 1002p) reached a new 3-month relative high against the FTSE 100.

    Personal & Household Goods: Burberry Group (-7.63% to 1464p) closed at a 3-month relative low against the FTSE 100.

    Real Estate: Derwent London (+1.24% to 2535p) reached a new 3-month relative high against the FTSE 100.

    Retail: Booker Group (+1.22% to 140.7p) reached a new 3-month relative high against the FTSE 100.

    Technology: ARM Holdings (+3.19% to 1018p) reached a new 3-month relative high against the FTSE 100.

    Stock/Benchmark ratio(s) 50D MA cross over: Anglo American (+2.99% to 1569p), Cairn Energy (+2.24% to 274p), Sainsbury (+1.36% to 395.3p)

    Stock/Benchmark ratio(s) 50D MA cross under: Capita Group (-3.62% to 970.5p), Informa (-0.95% to 520p), Ladbrokes (-3.18% to 185.5p), Spectris (-1.98% to 2233p).

    Stock(s) 50D MA cross over: Anglo American (+2.99% to 1569p), Cairn Energy (+2.24% to 274p), Electrocomponents (+1.19% to 272.6p), Intertek Group (+1.16% to 3304p), Sainsbury (+1.36% to 395.3p), William Hill (+0.9% to 423.7p)

    Stock(s) 50D MA cross under: Capita Group (-3.62% to 970.5p), Informa (-0.95% to 520p), Ladbrokes (-3.18% to 185.5p), Spectris (-1.98% to 2233p).

    "Risk comes from not knowing what you are doing" --Warren Buffett--

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    UK Markets Corporate Events - Ftse 350 / Director Dealings 16 Oct 2013

    Today's Corporate Events (FTSE 350 universe)
    Close Brothers ex-div: 29.5p
    F&C Commercial Property Trust ex-div: 0.5p
    Galliford Try ex-div: 25p
    Intu Properties ex-div: 5p
    NB Global Floating Rate Income Fund ex-div: 0.89p
    Spectris ex-div: 14.75p
    Ted Baker ex-div: 9.5p


    Director Dealings
    No major transaction
    "Risk comes from not knowing what you are doing" --Warren Buffett--

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    City Index - UK Morning Brief 17 Oct 2013

    UK: The Markit/ IPA Bellwether Report revealed that a net balance of +12.3% of companies registered an increase in marketing budgets during 3Q vs +7.3% in 2Q. The reported added: "The rise in total marketing budgets during the third quarter was closely linked to a strong upturn in the confidence of companies regarding their own and their wider industry's financial prospects. (...) confidence regarding own financial prospects had grown to the greatest degree in eight-and-a-half years of data collection, with the net balance of firms becoming more optimistic reaching +49.2% (up from +27.6% in the previous quarter)."

    Diageo issued an Interim Management Statement: "In the three months ended 30 September 2013 Diageo delivered 3.1% organic net sales growth with volume up 0.6%. Reported net sales were flat for the quarter mainly reflecting the termination of the distribution agreement for Jose Cuervo. (...) exchange rate movements for the year ending 30 June 2014 are expected to adversely impact operating profit by 165M and decrease finance charges by 5M."

    British Land announced the sale of its 50% stake in Puerto Venecia Shopping Centre and Retail Park in Zaragoza, Spain, to JV partner Orion European Real Estate III C.V., a fund managed by Orion Capital Managers, for E144.5M.

    BSkyB posted 1Q results: "Group revenue increased by 7% to 1,843M (2013: 1,715 million) with good growth across the board. (...) Adjusted profit before tax was 263M (2013: 291M) (...) Adjusted profit for the period was 205M (2013: 221M), generating basic EPS of 13.0p (2013: 13.4p). (...) ARPU continued to grow well, increasing by 17 to reach 559, representing growth of 3% versus the prior year."

    Fresnillo Plc published a 3Q production report: "Year to date attributable silver production (including Silverstream) of 32.1Moz, up by 5.6% when compared to the same period in 2012. Quarterly attributable silver production of 11.1Moz, (including Silverstream), up by 7.6% year on year. Year to date and quarterly attributable gold production decreased by 6.8% and 9.8% respectively compared with the same periods in 2012. (...) On track to achieve full year guidance of 41Moz of silver. We continue to evaluate the impact on 2013 gold production guidance and will provide a further update following the lifting of the suspension of the explosives permit at Herradura, expected in the next week."

    Travis Perkins provided an Interim Management Statement: "The positive sales momentum experienced in the second quarter of 2013 continued into the third quarter. Total sales growth of 8.6%, 7.1% on a comparable trading days basis, and like-for-like sales growth of 6.3% demonstrate the Group's strong position in each of its markets and its ability to leverage improving sentiment. (...) The Group remains on course to achieve full year EPS of around 100p, despite 5M of lower gains on property disposal which are not expected to be realised in the year."

    Bunzl Plc issued an Interim Management Statement: "Overall trading has been consistent with expectations at the time of the half year results announcement in August. At constant exchange rates, Group revenue for the third quarter has increased 12% compared to the same period last year due to underlying growth of about 2% and the positive impact from acquisitions." Meanwhile the Co announced the acquisition of Mexico City-based Pro Epta, "a leading distributor of catering equipment throughout Mexico, principally to luxury hotels and restaurants", without disclosing financial details.

    Booker Group posted 1H results: "Sales for the 24 week period were 2.2B, an increase of 16.5%. Half year profit before tax (pre exceptional items) was 58.1M (2012: 49.6M (restated)), up 17.1%. Underlying EPS increased to 2.73p (2012: 2.48p)."

    Rank Group issued an Interim Management Statement: "In the 15 weeks to 13 October 2013 the Group experienced a 7% decline in like-for-like revenues caused by the exceptionally hot weather in July adversely affecting customer visits across our venues, a lower casino win margin in London and a disappointing performance in Mecca's venues and digital channel."

    Dechra Pharmaceuticals reported: "Group revenue on continuing operations for the first quarter ended 30 September 2013 was appx. 5% ahead of last year (appx.-1% at constant currency)."

    Britvic said in its Trading Update: "(4Q) Group revenue up 12.8% (15.9% Actual Exchange Rate) to 366.4M, (...) (FY) Group revenue growth of 4.4% (5.2% AER) to 1,321.9M (...) Operating profit expected to be slightly above the top end of the 125M to 131M previous guidance range."

    Construction & Materials telecom and insurance shares gained most in London on Wednesday.

    Financial Services: Hargreaves Lansdown (+4.81% to 1090p), Henderson Group (+1.53% to 205.6p) and Aberdeen Asset Mgmt (+0.78% to 413.5p) closed at a 3-month relative high against the FTSE 100.

    Food & Beverage: Britvic (+2.39% to 600p) and Associated British Foods (+1.53% to 1995p) closed at a 3-month relative high against the FTSE 100.

    Industrial Goods & Services: DS Smith (+1.53% to 299.5p) reached a new 3-month relative high against the FTSE 100.

    Insurance: Resolution Plc (+1.25% to 341p) reached a new 3-month relative high against the FTSE 100.

    Media: ITV (+1.66% to 190.1p) closed at a 3-month relative high against the FTSE 100.

    Personal & Household Goods: Reckitt Benckiser (-1.26% to 4309p) reached a new 3-month relative low against the FTSE 100.

    Real Estate: Great Portland Estates Plc (+1.2% to 588p), Segro Plc (+1.02% to 325.9p) and Derwent London (+0.79% to 2555p) closed at a 3-month relative high against the FTSE 100.

    Retail: Home Retail (+2.24% to 178p) closed at a 3-month relative high against the FTSE 100.

    Technology: ARM Holdings (+1.18% to 1030p) closed at a 3-month relative high against the FTSE 100.

    Telecommunications: BT Group (+1.3% to 359p) closed at a 3-month relative high against the FTSE 100.

    Utilities: SSE (-1.39% to 1423p) closed at a 3-month relative low against the FTSE 100.

    Stock/Benchmark ratio(s) 50D MA cross over: Inmarsat (+0.77% to 721p)

    Stock/Benchmark ratio(s) 50D MA cross under: Firstgroup (-0.66% to 119.8p), National Grid (-0.66% to 752p).

    Stock(s) 50D MA cross over: Ashtead Group Plc (+1.96% to 650.5p), Daily Mail & General (+2.14% to 789p), Imperial Tobacco (+1.42% to 2220p), Informa (+0.77% to 524p), Standard Chartered (+1.9% to 1499.5p), Ultra Electronics Holdings (+2.24% to 1914p)

    Stock(s) 50D MA cross under: Thomas Cook Group (-0.6% to 150.3p), William Hill (-0.94% to 419.7p).
    "Risk comes from not knowing what you are doing" --Warren Buffett--

  7. #7
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    UK Markets Corporate Events - Ftse 350 / Director Dealings 17 Oct 2013

    Today's Corporate Events (FTSE 350 universe)
    Booker Group 1H results
    BSkyB 1Q results


    Director Dealings
    No major transaction
    "Risk comes from not knowing what you are doing" --Warren Buffett--

  8. #8
    The bull run in the S&P 500 and FTSE 100 tenaciously continues but perhaps a time for caution is just around the corner. Based on recent economic reports investor sentiment has reached an extreme level in optimism. Investors are optimistic that the Fed will continue to support and push stock markets higher but the irony is that the economy is beginning to falter at a time when some stock markets are making all-time highs.

    If you are a short term bull, I can understand why you would continue to buy at current levels, there is potentially some upside left while sentiment remains resolutely bullish (and you can find out what I think here when you become a member). However, if you are a long term investor, evidence is mounting that upside potential is likely limited. The US economy is deteriorating. Most of the latest economic reports have been worse than expected. Last week's nonfarm payrolls, PMI manufacturing index, jobless claims and durable goods orders were all weaker than expected. This week the US pending home sales were also disappointing, suggesting that the US housing recovery has begun to lose momentum. Pending home sales fell by 5.6%, this number was below analysts' estimates for a small rise. And today consumer confidence fell more than expected.

    Oh dear, the Fed's money printing policy was supposed to boost economic growth and kick-start the economy. Instead it is failing spectacularly. Continued disappointing economic news is disconcerting to the Fed's policies and should be of concern to investors and traders alike.

    This long episode in the stock market history is nearing an end, but it is not easy to predict when the stock market will finally peak and investors will take heed of the warnings. In a market driven by bullish sentiment the stock market can climb a wall of worry for a long time. The end to the bull market will eventually arrive sometime between December and February 2014, but a bear market may not necessarily surface for a while. In fact the chances are that the stock market will go sideways for the next few years.

    In the UK it would appear that the long sideways trend has already begun. The FTSE is still trading below its May high, this does not mean it won't make a new high but if it does it will be short lived as upside is strictly limited. Long term investors should prepare themselves for little-to-no return over the longer term. Short term traders using a non-trend following strategy of buy low, sell high should do well and thrive in this market environment.

    So what could cause the stock market to stall?

    1. The stock market rise is not supported by earnings growth.
    In a market driven by monetary stimulus, the growth in company's earnings may not keep up with stock market returns. Something has to give, either earnings growth will accelerate which I sincerely doubt, given the deteriorating conditions or the stock market will decelerate and stall.

    2. Companies are hiding their weaknesses.
    Since 2009 interest rates have been so low that companies have been borrowing massively to fund expansion and buy back stocks. This in turn has boosted the value of companies quoted on the stock market. But does this represent fair value? If earnings have been artificially boosted it increases the odds that earnings growth won't accelerate but decelerate, hence the stock market will need to correct to re-adjust this imbalance.

    3. Some leading sectors like banks are no longer responding to the rally.
    This could be the first indication that troubles are brewing on the horizon.




    The UK bank index started to underperform the FTSE 100 index a few years before the financial crisis of 2007 began. Banks collapsed with the general market then perked up during the recovery after 2008, however, the sector's relative strength as shown by the red line on the chart remains weak. This red line made a new low in 2011 when the FTSE 100 index was in a bull trend, then in 2012 and up to February 2013 banks outperformed the FTSE 100. Since then the relative strength line is down again, an indication that the stock market is about to enter another major correction.

    An elevated level of optimism reigns. Is this to do with the Fed policy or with seasonal influence? As we approach the end of October, investors are looking forward to the last two months of the year and the traditional Christmas rally. The period starting in November is generally bullish for stocks, and with the Fed in the background, chances are the market will rally in November-December. But going forward into next year, I'm anticipating that the optimistic mood will change and risk will favour the downside.

    Thierry Laduguie

  9. #9
    The bull market is in its fifth year, can we really expect the rally to continue in 2014? Probably not. The average bull market lasts two years, this one has been going on for longer due to the amount of stimulus provided by the Fed. We are in a first degree extreme in bullish sentiment, this condition occurs at major market tops. According to my interpretation of the wave count there should be a final wave up in January-February before the bull market ends.

    A top in February would make sense. Tapering is underway, bond yields are rising as expected and with another debt ceiling deadline in March, the stock market chaos will return in the first quarter next year. I expect bond prices to fall and yields to rise in 2014. The stock market could go sideways for most of the year. It won't be a one-way bet anymore, those who have been accustomed to making money by following the trend will get a shock when the stock market returns to its natural path. Only those with trading skills, discipline and a deep understanding of the market will succeed in 2014. On the weekly chart, here is the pattern:



    The final wave up is a fifth of a fifth [wave 5 of (5)]. The target is 6900 sometime in January-February. Thereafter I expect the bull market to end.

    Today is the last trading day of the year, the UK stock market will close early (12:30). I wish you all a happy, healthy and prosperous New Year, 2014 will be full of surprises. 2014 will be the year when most pundits, investors, traders... will be wrong-footed.
    Kind regards,

    Thierry Laduguie

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