I will keep this short and sharp, as no number of words can predict what is going to occur next on a trade by trade basis. The VectorVest Composite UK is shown below where the rising wedge that I have spoken of here has completed.
The price of the Composite has risen while the MTI has fallen. This is known by technical analysts as bearish normal divergence, and as the name suggests, it invariably precedes a reversal.
The target from the rising wedge infers only a modest pullback in the trend and it will probably be a buying opportunity in this very strong underlying trend.
I remain very bullish for the first half of 2017, but feel with around an 80% confidence that the first few days of March will see a pullback of the same vein as occurred during November 2016.
On VectorVest, the short term trend is down while the underlying remains upwards.
I was optimistic of support holding on Hill and Smith on Thursday past, but Friday’s trading saw support fail. Such is the life of a support and resistance trader. I will watch the stop on this share carefully on Monday morning.
I have excellent open profits in many shares at the moment, and it seems appropriate to bank a few of these soon. In particular, the small cap shares need careful thought. In any selloff, shares such as Sopheon, Ab Dynamics and Victoria will be difficult to exit without giving back much of the gain. I don’t hold Victoria myself, but I know that many reading hold the share. I called it on Tip TV a few weeks ago.
For me, the technical evidence supports exiting positions that haven’t moved in the upswing and banking some open profits soon. This would become more urgent upon a close below the upsloping trendline on the chart above. Also, if the DEW market timing technique were to print a sell signal, that would add significantly to my motivation to raise cash.
This course of action is in sync with my trading plan, but it may not be appropriate for you. The downside, of course, is that we may well have to buy into these shares at higher levels.
It’s time to be diligent, strong and resolute.
February 25th 2017