Forex Technical Analysis PCI 2014-04-01

Good afternoon, dear traders and investors. Today we will talk about the classic investment portfolio, based on GeWorko method. The portfolio components selected from the Top10 S&P500 golden list. The rating is assigned in accordance with the market capitalization on December 31th, 2013. More information about the index can be found on our website S&P500. For risk diversification, we chose one asset from each sector of the U.S. economy presented in Top10 S&P500: information technology, industrial production, energy, financial services and consumer goods. We assume weak relation between these sectors between each other. The weight of each asset is calculated by the Sharpe's method based on the Capital Asset Pricing Model, CAPM. The optimization result is the maximum of the return/risk ratio for the portfolio.
Optimization of weights was presented for the period 26.06.2013-14.03.2014. This period corresponds to the last uptrend existence term for the S&P 500. It is assumed that the dynamic direction of the index globally determines the portfolio price direction. Here we consider the daily chart of the portfolio created in NetTradeX. At the moment, the market situation provides convenient points for bullish trading, as it is seen in the figure.



Price drifts inside the sideways corridor near the daily rising trendline. Neutral movement significantly reduces the value of trend indicators such as ParabolicSAR. So the decisive importance for us is the behavior of oscillators warning of quitting the sideways channel. TheRSI(14) confirms bullish direction, and we expect the preliminary violation of the level 51 before the price gains an upward momentum. It is recommended to place a pending order above the resistance level at 1.0184. This level is confirmed by the latest values of the ParabolicSARand the upper Bollinger band. The preliminary target is slightly below the 161.8% Fibonacci system, but long-term traders can hold the position unless the price crosses the rising trendline channel downwards. This instrument assumes the positional trading due to the complexity of portfolio weight calculation.