24 January, 2014
Good afternoon, dear investors. Today we traditionally publish analytical material composed by using the PCI GeWorko technology. In the previous report, we were able to successfully take profits on the basis of forecast for the PCI Google/Apple. The second way to reduce investment risk (besides spread trading closely related to assets) is the investment portfolio composition. This classic instrument of institutional investors is a special case of a personal composite instrument and it can be created by a few clicks in the NetTradeX platform.
Today we consider the "Three leaders 1.0" portfolio, composed by the Sharpe method. You can find the additional portfolio calculation document here. The portfolio is based on the stocks included in the S&P 500 Top10, companies with the highest capitalization. The result is an instrument with a maximum ratio of return/risk: Exon Mobile (19 %), General Electric (33%) and Procter & Gamble (48%). The share of total invested capital is percentage. Despite the fact that the analysis was based on weekly candles, this instrument is useful for day traders as the dynamics of the large-scale trend is known. Let us consider the technical analysis signals. The figure below shows the price chart of portfolio and one USD lot correlation. The Y2 trend could not penetrate the resistance at 1.0109 and it is still correcting. This is confirmed by the ParabolicSAR, and the RSI(14) oscillator, which has been showing the divergence since November 14 th. Moreover, the price broke through the lower boundary of the Bollinger Bands channel. We can assume that the situation is under bearish control. And it is so at the moment.
Nevertheless, the upward trend existed for two years touched the support line 6 times (see the first figure). We believe that its continuation is most probable, so we recommend the riskier day investors to count on a fast end of correction and buy at the third bottom of the channel (it is marked with a dotted line) in case the RSI (14) oscillator breaks through the resistance line. This is most likely due to the fact that the signal of the oscillator approached the resistance line and it will be reversed soon. In addition, the hint of the first correction ending is received from the bearish "Hammer" - it is labeled in yellow on the second chart. We recommend the most careful and patient traders to wait for the breakthrough of the resistance level at 1.0109 and wait for the target at 138.20% Fibonacci level at 1.0321. This will ensure less profit with minimal risk.
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