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Sample Research: One Week Ago
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UK Index Summary
Safe to venture out?
For the first time since 20 January, FTSE100’s downtrend has decelerated enough to sustain a rebound (see right). But, much uncertainty still characterises the current market. For example, after a two-day advance, the index remains below last Thursday’s intra-day peak. We are gradually re-establishing longs, but will not hesitate to sell as the recovery is still in an embryonic stage. Index Breadth
For the FTSE100, the chart was unchanged at 47% yesterday (see right). But with a support close by, we envisage a rebound soon. Stock Action
Northumbrian Water jumped a stunning 14% on the possibility of a bid, rumoured to be a Candian pension fund. This advance not only swiftly reversed last Friday’s downside break, it also raced past the range resistance at 280p. This level is now expected to turn into support. But we are not chasing the rally here as it has gone too far. Severn Trent has also moved too fast to climb aboard. Moreover, there is resistance at1200p.
Instead, we prefer to buy Pennon Group, which found support at the prior resistance levels at 510p (see right). Its relative ratio is also basing out nicely. Thus we see more upside potential. Accumulate some now, more on a break at 550p. International Power could be another choice. The uptrend is steady and could accelerate in the next few sessions should more money flow into the sector.
Turning to stocks that are vastly oversold but could rebound, we highlight Hochschild Mining (see right) and Premier Oil (see below). In both cases, a strong decline occured since the start of the year, dragging the momentum indicators to oversold. Meanwhile, their relative ratios are at the bottom of the the ranges, raising the scope for a period of market outperformance. For HOC, stop at 250p.
Chart of the day: Bet on a rebound in Barclays?
But the support at 250p has proved surprisingly durable. This level was the support in May-July last year. It may act be an accumulation point again for the bulls. Taking a contrarian note to the medium-term view, a short-term buy may be initiated to bet on a rebound back above 300p. Beyond that, however, the outlook remains murky, so aim to close out on prices rising above the 50-day MA. Stop at 250p.
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Back
Excited by the manufacturing data, the bulls ventured out yesterday. Equities in Europe, UK and US all rallied, brushing aside worries on Obama’s new budget plans, where the administration will incur a staggering $1.6 trillion in deficit this year. (In a way, the author struggles to understand how this massive debt will be repaid...)
One area where we prefer to see more improvements is the Bull Trend indicator for each sector. 
Ano
For Premier Oil, stop at the psychological 1000p. 
There is no doubt that Barclays’ chart pattern looks like a medium-term top. After peaking in October last year near 400p, the stock has gone downhill since. A rebound earlier this year was quickly snuffed out, resulted in a quick dive back to the December lows (see right).