FTSE100-- Week 22 Moo River Watch (31st May to 6th June 09)

FTSE 100 (cash future)

(based on 30 year advanced data charts)

Yearly

Price chart: While Dow over the pond has maintained its long term upstream moo river, FTSE100 is in a bigger trouble, as it is confronted with a question of a cross road or cross stream which asks whether FTSE100 is actually now in a downstream moo river. the falls end of last year and this year has penetrated the long term upstream moo river, but fortunately the bear market rallies have withdrawn the candle bodies inside the moo river. We will know the answer to this key question to the future of Britain, as it all depends on whether we can finish above 4000 by the end of this year. Right now, we are facing substantial bear defence from 4450 to 4680, millions of bears lay in camp here to launch their onslaughter. It is very difficult to see that bulls can actually carve this bear defence zone. In the longer time frame, we are in a giant bear market rally, lasting possible just short of 2012, to reach somewhere very close to 6000 again, then we will ask whether the world or the western world or Britain has found a new impetus for growth, or are we (particularly the Western world) in a terminal decline. But we have plenty of scope to manoevour yet, no need to be forced into answering this challenging question until 2020, possibly.

All momentum indicators are bearishly poised at the moment.


Quarterly

Price chart: let's stop worrying ourselves sick with the longer term challenges and for now, let's all enjoy this bull run as if this is a new bull market. Things can be all seen in different perspectives if you switch the time frames. In the medium term horizon, we are in a new bull market lasting for years. While it might be a slow burner to start with, it will soon gather pace once we get to the giant and powerful Wave 3. For now, we can almost see a balanced debates between bulls and bears, each having plenty of evidence to support their cases. This is a classical Wave 1 of the new bull market, only the visionary and the brave bulls will be buying into this and the crowd will only join in Wave 3. In order to facilitate this paradigm shift, we must reach 4680ish as a minimum target and close the quarter above 4450. We have got one month to do it, starting tonight in Asia.

RSI: this is where it is evident that Britannia is in fact in a long term decline as the yankies. Once we have finished with this pullback, bears will be the only ones laughing, but for now, can they survive this temporary setback in their bear campaign as we are going to test their patience and capital to the extreme? I now see why George Soros is bear hugging Britannia for his final trophy to be put on his tombstone--Soros, the bear that breaks down Britannia! (I can also see the more glorious one for Buffet--the bull that saves America from the deepest financial crisis in history, if he bows out at the right time, though personally I wish him to keep at active investing and living happily for ever!).

All other momentum indicators are reluctantly supporting the bulls' case for a pause in the giant bear market over decades, but we are yet to kick off this new bull market in style.

Monthly

Price chart: while I am a permabull in this bull run, I see prices to remain at least under 4800 for June, if not under 4740, or even 4680, which is the most likely candidate for me. Above 4680, I may join the bears for a quick scalp of a few hundrew bear points, as the reward is handsome enough, while the risk is minimum (I will explain that later).

RSI: this is where it will tell us where to cash in longs and turn into bears as there are various upperbanks or key resistance levels there. I will keep an eye on these and keep you alerted.

There are a few oddly shaped W on other momentum indicators, on the whole, many are unconvinced about this new bull market (in the medium term) yet or maybe many are staring with fear at the giant bear market over the longer term. But it is a tricky market and we have to make day to day, if not tick to tick decisions for some daytraders. Long term outlooks help to shape your long term stance, but 'we have to trade what we see, not what we want to see' (Sir Grim) or what we will see in years to come.

Fear and greed, it is very much a balancing act for this highly challenging game of daytrading.

Weekly

Price chart: while we are in the upstream moo river, there is really no hurry to go up just yet, it could take us potentially all the way to the end of June to fill in the gaps to the lowerbank and then we must either break higher or lower, otherwise, we are happily stuck in this 4300 and 4500 range. Please check out the 'Weekly forecasts and results' for my speculation for this coming week.

Most momentum indicators are supportive so far and will not tell you whether they are exhausted or not. Trick or treat for bulls and bears. Wise traders will work out two sets of trading plans, one for this range and another for break outs from this range. Let's all get ready for some Moocanic action this week.

Good luck.