Tuesday 29 September 2015

Top Tweets Today: 29/09/2015

Glencore has hit back at its critics saying that it is committed to cutting back its debt from $30 Billion to $20 Billion and remains on course to reach that target and the company's balance sheet is in a sufficient state to service all debts due to its long serving relationship with finance houses.

It also stands behind its belief that the nature of the commodities market at the moment is merely short term turbulence and expresses the view of a recovery in the medium to long term. The market took the share as high as 20% in London on the back of the company's reassurance. This on the back on news that CEO Ivan Glasenberg lost more than $500 million in the turmoil yesterday, something many assumed would shake the commodities man but his stuck to his guns so far.

I decided to concentrate on my charting today and tweeted this particular index, the JSE Resources 20 index which includes the 20 largest resource companies listed on the JSE weighted by market capitalisation. I decided to go long term on the monthly as it would give context to the level  of technical damaged it has experience during the past year.

I recall drawing the chart early last year with a tight range between 45 000 and 60 000 and saw a break below 45 000. That break would suggest a move of 15 000 to 30 000. As you can see we are almost at those levels which has started to make me turn bullish on mining companies. However there is still much needed to prove itself.

Concidently the 30 000 support marks the lows of the financial crisis of 2008/09, if the index were unable to retain above that level things could get nasty but I don't see the possibility of that happening given the existing 33% drop from the 45 000 but even more so the 50% drop from the 60 000 highs made during 2014.

Another chart of interest I found was the Nasdaq which has now officially crossed the "Death Cross" point following its counterparts of the S&P 500, Dow Jones Industrial Average and the Russells 2000. What is a "death cross" you say?

It is a technical analysis term for when the 50 SMA (Simple moving average) crosses underneath the 200 SMA. The significance of the move is that medium and long term investors observe the levels carefully and this would go down as a sell. The signal creates a flurry of selling which in turns leads the index lower.


Looking on longer terms charts you'll notice how the confluence between the price and the SMA's suggest we are moving into a downward market. The Nasdaq made headlines earlier this year by finally returning to the all time high it made back in 2000 before the crash. My concern right now is that the price has stalled at that high and headed on it's way back down. There has also been a sustained bull run leading up to that high which does question how much longer can the trend continue...
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