Review of FTSE-100 shares
Eoin Treacy's view This
has been a tumultuous few weeks. The US Dollar has been under pressure, the
Eurozone debt crisis does not appear to have had the resolution many assumed
last week, government bonds have rallied
and Wall Street pulled back sharply over the last few days.
I thought
it might be instructive to click through the constituents of the FTSE-100 to
see how shares have been reacting to the news flow. To do this I went to the
International Equity Library and selected FTSE-100. I then simply clicked on
the first share, 3i Group, and went through the list by hitting the Next button.
Alternatively I could have clicked on the green '+' sign next to each of the
constituents which would have added them to my Favourites. This would have allowed
me to use the View All Charts function which tiles 7 charts one above another;
making viewing them a seamless exercise.
The FTSE-100
Index has been largely rangebound between 5600 and 6100 since December.
It is currently mid-range and testing the 200-day MA which continues to exhibit
an upward bias. A sustained move in either direction will be required to crystallise
investor sentiment but the short-term trend within the range remains upwards;
with a succession of higher lows since June. A fall below 5750, held for more
than a day or two would be required to question this view.
The UK
proved nimble at the onset of the financial crisis by getting its devaluation
in early. The Pound fell from $2 in July 2008 to a low of $1.35 in early 2009.
It has since moved into a process of base formation development which probably
has more to do with the subsequent weakness of the US
Dollar and Euro than any particular
resilience in the Pound.
The Financial
sector remains troubled with even some of the stronger constituents such as
HSBC and Standard Chartered under pressure. HSBC
has returned to test the lower side of the two-year range and the broader five-year
progression of lower major rally highs also remains intact. A sustained move
above 625p is the minimum requirement to indicate demand is reasserting itself
in this area. Standard Chartered lost
momentum from late last year and has been ranging below the 200-day MA since
February. A sustained move back above the trend mean, with a rally above 1700p
is required to question medium-term top formation development.
Burberry
(luxury fashion) , Shire (pharmaceuticals)
and Weir Group (oil, mining & utility
services) have all performed extraordinarily well but are becoming increasingly
overextended relative to their respective 200-day MAs and the likelihood of
a reversion towards the mean continues in increase.
Fresnillo
is one of the world's larger silver miners. It has rallied impressively since
June and is now testing the December peak near 1800p. While some consolidation
in this area is a possibility, a sustained move below 1450p would be required
to question medium-term upside potential.
Royal
Dutch Shell (primarily natural gas) yields 4.69% and continues to consolidate
mostly above 2100p. A sustained move below that level would be required to question
medium-term upside potential. BG Group
found support in the region of the 200-day MA from June and has bounced impressively.
A sustained move below 1300p would be required to begin to question medium-term
upside potential.
IMI
(oil services) remains in a rivetingly consistent medium-term uptrend defined
by an unbroken progression of higher reaction lows. A sustained move below the
200-day MA, currently near 967p would be required to question medium-term upside
potential.
GlaxoSmithKline
(pharmaceuticals) yields 3.71% and is an S&P Europe-350 dividend aristocrat.
Given its strong record of dividend increases and solid business model, the
share might be considered defensive. It broke out of a more than three year
base earlier this month and a sustained move below 1250p would be required to
check medium-term potential for additional upside.
Unilever
(consumer goods) yields 3.76%. It failed to sustain the break above 2000p last
month and has pulled back into the 18-month range. A countermanding upward dynamic
is now required to indicate a return to demand dominance and to offset scope
for a further test of underlying trading.
Diageo
(beverages) is also a dividend aristocrat and yields 3.14%. The share remains
in a consistent medium-term uptrend defined by a progression of higher major
reaction lows. These would need to be taken out, with a sustained move below
1150p to question the consistency of the advance. SABMiller,
also in beverages, lost momentum somewhat over the last year but has held its
progression of higher reaction lows. A sustained move below 2100p would be required
to question medium-term uptrend consistency.
Next
Plc. (retail) yields 3.28% and broke out of a more than yearlong range in
the region of the 2007 peak three weeks ago. A clear downward dynamic and/or
sustained move below 2150p would be required to question medium-term scope for
additional upside.
Experian
(credit scoring) yields 2.2% and has been ranging in a relatively gradually
reversion towards the mean since late last year. This has now been completed
and a sustained move below 750p would be required to question the consistency
of the medium-term uptrend.
The above
shares demonstrate the global orientation of the FTSE-100 and that those leveraged
to the growth of the global consumer's purchasing power are outperforming. A
number are now at a juncture where they should find support if their medium-term
uptrends are to remain consistent.