5600 is the short term low, rise to 5850 on the cards?

Support 5616 5578 5538 5520
Resistance 5650 5657 5665 5666 5837

Good morning.
Market Summary for Tuesday
The markets were affected by global banking issues with worries about Greece and Deutsche Bank to the fore.
As has been the pattern over the last few trading days markets try and get off to a strong start but then weaken during the day as sellers reappear.
There were some support levels around 5750 so this level will act as a focus for traders in the next couple of days, but currently 100 points below that level.
In a reverse of previous days the commodity sector sold off quite dramatically whereas safer shares were the least affected by the downturn.
There was also some bargain hunters for tech shares and tourist related shares outperformed which had been sold off recently.

US & Asia Overnight from Bloomberg
Asian stocks dropped as a week of volatile trading in global equities continued, with Japanese shares extending losses after the biggest one-day plunge since August.

The MSCI Asia Pacific Index slipped 0.9 percent to 117.06 as of 10:16 a.m. in Tokyo, poised for the lowest close since Jan. 21. Japan’s Topix index is heading toward the lowest close since October 2014. A gauge of global equities and the Nasdaq Composite Index edged nearer to a bear market, while the Standard & Poor’s 500 Index traded at the lowest since April 2014 amid declines in energy and technology shares. Crude tumbled almost 6 percent before rebounding on Wednesday.

“Contributing to the drop in oil and certainly having a large impact on the drop in equities is this growing concern about the sustainability of the recovery, the state of economic growth in China and increasingly the state of growth in the U.S.,” Russ Koesterich, global chief investment strategist for New York-based BlackRock Inc., said on Bloomberg TV. “People are getting worried about the global recession, worried about growth, which is affecting not only oil and stocks but other risky assets as well.”

The Topix slipped 1.5 percent in Tokyo as the yen strengthened. The gauge is currently trading below the lowest levels of January’s selloff. Traders are paying more attention to the volatility sweeping global markets than the Bank of Japan’s monetary easing, with the yen climbing against almost all of the more than 150 currencies tracked by Bloomberg since the central bank embraced negative interest rates on Jan. 2.

As global stocks near a bear market, volatility is on the rise, with the Chicago Board Options Exchange Volatility Index briefly touching a five-month high. The measure of market turbulence known as the VIX jumped 20 percent in the prior three days. A similar gauge for the Nikkei 225 Stock Average is at the highest level since August, jumping 30 percent on Tuesday.

Investors will be watching Federal Reserve Chair Janet Yellen as she testifies before the U.S. Congress on Wednesday. After the Bank of Japan’s surprise move into negative interest rates largely failed to assuage market concerns, Yellen will need to calibrate her commentary carefully to avoid further fueling volatility.

Australia’s S&P/ASX 200 Index fell 1.3 percent, retreating for a fourth day to the lowest level since July 2013. New Zealand’s benchmark dropped 0.4 percent. Singapore’s Straits Times Index declined 2.7 percent while the FTSE Bursa Malaysia KLCI Index was little changed, resuming trading following an extended weekend Lunar New Year holiday. Markets in South Korea, Hong Kong, China, Taiwan and Vietnam remain shut.

U.S. Futures
E-mini futures on the S&P 500 Index slipped 0.1 percent on Wednesday. The U.S. equity benchmark index fell 0.1 percent on Tuesday, after erasing a 1 percent loss and climbing as much as 0.8 percent. The Nasdaq Composite Index fell 0.4 percent after lurching between gains and losses.

Oil snapped a four-day losing streak, rebounding from the lowest close in almost three weeks before U.S. crude inventory data. Futures gained as much as 1.8 percent in New York after slumping 13 percent in the previous four sessions. U.S. industry data was said to report crude supplies climbed 2.4 million barrels last week. Government figures Wednesday are forecast to show a 2.85 million-barrel increase, according to a Bloomberg survey. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Well yesterday morning started off going to plan, but the bulls couldn’t quite reach the 5745 short order (failed at 5741… arghhh) and well, the next thing you know its testing 5600. The bulls defended this area pretty well as the next really major level below is 5400 (though there is some support at 5550 first). Bear that in mind. Anyway, for today, its looking like an initial rise up to the top of the 10 and 30min channels as well as the daily pivot area at 5652 to 5666, so it will be interesting to see if there are any bears waiting here as it could be a good shorting spot. If the bulls manage to break through 5666 then we could be on for a bit of a bounce for a few days and pull away from the 5600 area. If the short from this area gets stopped then it would be worth flicking to long to ride any possible bounce towards 5700+. As mentioned, if the bears do bring it down from 5666 then I am looking at a potential drop to 5580ish, maybe a bit lower. The volatility continues at the moment and its certainly a bit tricky, so stay nimble and keep the stops tight!

30 Comments

  1. Morning all,Dax around yesterdays high and Ftse 50 points above it,must be the thought of Yellen that refreshes the parts other Central Bankers cant reach.

    1. Morning WSF.just wanted to mention that pennant formation on the Dax you pointed out yday,The market did do what you suggested.Thanks for pointing it out,it’s a new chart pattern for me,interestingly though as I’m watching these markets a lot,I think I pick up a feel for them……my feel was the same as your pennant formation…..a couple of weeks back I was watching Ftse and it spiked at 95…. Then dipped…then hit 97 before selling off strongly….I had the dealing tab open to short it on that occasion but I didn’t take the trade…..interestingly though tmfp then commented about RSI divergence at that very same moment……I’m thinking now to try and match up my feel for the market to either an RSI signal or a chart pattern before taking a trade …..I think watching sometimes …although non productive….can be beneficial….If you see any more chart patterns forming please could you mention them.up to now the ones I have learnt from you chaps and Nicks site are….double top / bottom….head and shouders (thanks WSF and GG for that one) this pennant formation….. And the Flag pattern…although I’m not too sure about that one yet. Anyway thanks and mentioning these patterns might help someone else who reads this Good Luck.

      1. The bigger the time frame the safer patterns are,harder for machines or people to game bigger time frames.Peter Brandt says he only trades really big time frame patterns now,with positions he holds through daily volatility.On Twitter yesterday he said,”$SPX 2009 to 2015 rally equal in pts to 1932 to 2000 rally. So, how can bulls claim the market owes them any more? ” Makes you think.

        1. Those dates include a large part of the Great Depression of 29/ 39…… Then we had World War Two……till 45…… Then a sustained period of rebuilding……..The Dow is 2200 points off last Mays high….in an election year……I don’t know….maybe it’s got a bit more life in it yet………

  2. Morning all, interesting comment from tmfp last night, something like “sellers selling because they can not because they have to…yet”. I’d agree that there is more selling to come but if I was looking to unload I’d let it run to get more. With that in mind I’m still happy with my (still out of the money!) long and think (hope!) that Nick’s 5850 is achievable. JY will move the market but as per normal it’ll settle back to where it was before. Have fun today, as anstel says, riding the roller coaster.

    1. Only 68 pts and your in the money,it’s not always timing the market……….sometimes it’s time in the market IMO……I think it was you chippy that said…..I can’t believe people sold the Ftse at 5600 when it was 5800-5900 last time. Hang on chippy I think you will be fine personally…..Good Luck…and hang on !

      1. “Time in the market” – Now you’ve depressed me! Made me think when I started in the LSE there was no such thing as FTSE 100, we had the FT 30, that was updated, from memeory, once an hour! Feeling old!

        1. 🙂 “Rub on Vick’s where you used to splash Brut” just keep swinging chippy.
          Hard to see what would sustain and build on this run up given recent trends,Oil is 28.23 so doesnt look like news is due there.Think you are probably right about the pullback,maybe set a short against one of the Longs with the Hedge button,no extra margin and add 50 odd to Trading Resources,if it turns down and confirms,just an idea,sure you’ve already thought of it,sure it’ll come good regardless too.

          1. 🙂 Just downloaded that Fred Wedlock song,forgotten how good it is.My neighbour will think it’s a personal attack too and be begging for a return to Status Quo by the time Yellen starts,”It takes you all night to do what you used to do all night” lol.

          2. One little thought I’d like to mention chaps….IMO the Dax is the most sensitive index…this morning it has risen approx 230 points….Just makes me wonder what they suspect or know? WSF said the oil is very low…..an oil bounce and some sweet nothings from janet…….I don’t know but something’s got the Dax interested,and there’s no flies on the Germans.

        2. “I mentioned it yday ,I think I got away with it” 🙂 careful,shades of Fawlty Towers there,we’re pushing the envelope with the anti german stuff again,they’ll put us on a list 🙂

          1. I know you were joking with the fawlty towers joke,but I would just like to add WSF, I have a lot of respect for the Germans,,,they make some of the best quality cars IMO.in fact I think anything made in Germany is usually top notch kit. Mind you I saw one of those McClaren sports cars the other day……that looked well screwed together and thats British so we can still make good stuff ourselves if we put our mind to it.

          2. I worked in Kaiserslautern for a while once,Germany is well worth a visit,although back then that area had dual pricing in a lot of shops and more US military than anywhere else on Earth,apart from some base in Texas.Used to go on their Barracks/Housing Estates to use the Laundromats and Bowling Arcades,they had really bad free Coffee and no idea who was Military and who wasnt,spot checks by M.P’s who asked you to leave if you didnt have US ID,but it was only really an issue in their tax free shops.They had tons of cars and furniture and stuff the US Govt shipped out to them,massive waste of money.

  3. “Stock index Futures point to triple digit Dow gain” on CNBC and the guest says,”People should really know why they are buying something” 🙂

  4. Tell you what WSF ….if you, me ,and chippy hadn’t commented tday it would be really quite on here with tmfp AWOL.

    1. So if ECB money does go into european banks like Deutsche bank and if Yellen says the right stuff with more tomorrow would that be enough for a base or would it still need something more?

      1. If only I knew……only thing on my mind is the Dow was pushing 16500 less than a week ago……it wouldn’t take much I don’t think to get back there…..if you look at some of the European investment trusts……they havn’t dropped as much as I would have thought…..we still have the QE in Europe.i think it will recover.but when…spring time maybe. this low oil price is killing off jobs, Stock Markets. Probably kill of some of the smaller oil producers as well ….it’s in everybody’s interest to reduce supply when you think about it.

          1. I’m not quite sure what to make of it ?……Just watching at the moment……if in doubt do nothing is my present plan. Think it could go up but !!!! TAAT.

  5. I know what you mean anstel, only been on here a week and was genuinely enjoying tmfp s banter……… I love real people and tmfp seems to be one of those, being short £120 pp in these markets would be enough to frazzle anyone’s mind for a while! If you are reading this tmfp, well done…….taking your advice, don’t rush in but look to fade sells into any rallies which has seen the account grow nicely{& steadily} Take Care, GG

  6. Evening all, haven’t missed much then! Wonder whether the Yanks are up for another 8.30 run or more especially how far they’ll smash it before the run. Any thoughts?

  7. Evening chippy,I do think they want a close over 16000,yesterday was 16027 and it’s just gone from 16 to 16085.I reckon tomorrow is a new day and it wont go lower tonight now,probably wrong though.

  8. You never know we might get another surprise rally on the Dow back to 16200…..stranger things have happened and it seems a bit more bullish than last few sessions including the Dax.Good luck Chippy.

    1. Yes Good luck chippy,Dow just turned at 100 which looks like the 50% fib too,so see what happens now,wouldnt rule out 200,suppose it depends on whether the shorts have closed yet or are still hanging on,think the rally needs their momentum.

  9. Back from a very cold dog walk (note, if you want a dog don’t get one that has Dalmatian in it!) and again squat diddly going on. To me I feel safer the slower it goes, hoping it is building a base if you see what I mean. It certainly doesn’t like it down near 5600, looks like it had a go this morning again. Anyway, I’m sitting comfy, only blot on the landscape is the early 5850 trade. Hopefully, nice calm drift up over the next few trading days!
    By the way anstel, I am really pleased that you have learned to sit on your hands when not sure, one of the only pieces of advice I’d ever offer to a gambler!

    1. Thanks Chippy,yes I haven’t placed a trade tday.quite nice actually to have a break from it…..I’m waiting to see if it can build some foundations and like you said a solid base.i really think that the market needed a correction and now it’s offering the chance for investors to get in at a discount to last Mays peak.i think the market will go back up personally,these prices could look like a bargain in a couple of months…hopefully anyway…nobody wants a collapse…..the knock on effect would be bad all round I reckon.

  10. FWIW if it’s going to break 16 somewhere around 15977 would be bullish to hold ,but the trend from Tues wont really break until down closer to 15900.

  11. Morning chaps, just a quickie, I’d be very wary of the long side today, just got that feeling in my water…..
    All the best of luck.

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