Bear Market Rallies likely, 5540 support today. 5650 resistance

Support 5567 5551 5540 5500 5436 5403
Resistance 5585 5605 5620 5661 5663  5696

Good morning.
Market Summary for Thursday
Another day of falls which were again aggravated by worries over the banking system and world economic growth.
The speeches by the FED’s Yellen yesterday and today appeared hesitant and lacking clarity which also did little to give investors confidence.
The sector to suffer most was clearly financials, with gold the standout sector to the upside as investors ran for cover into safe assets.
After an initial big fall near the open the FT100 tried to claw back during the day only to hit more selling into the close – which is never a particularly good sign. News alerts last night confirmed that global markets have now officially entered a bear market.

US & Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index heading for its biggest weekly decline in a month, after global equities sank into a bear market and Japanese shares extended losses as the yen strengthened.

The MSCI Asia Pacific Index dropped 1.7 percent to 114.50 as of 9:11 a.m. in Tokyo. The gauge is headed for a 4.9 percent decline this week. The Topix index slipped 4.1 percent as the market resumed trading following Thursday’s holiday. Combined losses in U.S. and European equities dragged the MSCI All-Country World Index down 20 percent from a record reached in May, the common definition of a bear market.

Central bank activity remained in focus as negative interest rates have eclipsed investor worries over China’s fading economy and the near two-year collapse in oil prices. Sweden lowered interest rates that are already below zero, about two weeks after Japan shocked markets by imposing negative rates in a bid to quell the turmoil. Investors ignored a second day of testimony from Janet Yellen, whose indication that the Federal Reserve won’t rush to raise benchmark interest rates in the face of global ructions failed to stem the selloff in risk assets.

“Markets are losing faith in the central banks and their ability to stabilize the situation,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said by phone. “Central banks will have to think of unconventional policies they can implement. The global economy is extremely weak.”

The Topix is trading at the lowest level since October 2014, poised for its biggest weekly decline since October 2008 as the yen traded near a 15-month high. Bank of Japan Governor Haruhiko Kuroda will speak in parliament later today. South Korea’s Kospi index fell 0.5 percent. New Zealand’s S&P/NZX 50 Index lost 1.2 percent. Australia’s S&P/ASX 200 Index slid 0.8 percent.

Futures on the Hang Seng Index slipped 1.4 percent in their most recent trading, while those for the Hang Seng China Enterprises Index lost 1.6 percent. Hong Kong stocks fell Thursday in their worst start to a lunar new year since 1994 as the global equity rout deepened. Markets in mainland China, Taiwan and Vietnam remain closed for the holidays.

E-mini futures on the Standard & Poor’s 500 Index climbed 0.3 percent on Friday after the underlying U.S. equity benchmark index finished 1.2 percent on Thursday.

West Texas Intermediate oil jumped as much as 4.7 percent Friday in New York. The contract slumped 4.5 percent on Thursday as crude stockpiles at the delivery point for New York futures expanded to a record. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have had a decent bounce so far off the 5500 level tested yesterday and the 30min chart looks bullish to start things off today. The problem is that we have been here before this week and by 07:15 its gone all bearish and drops 100! There is certainly a lot of panic and fear out there at the moment, most of it justified, and with markets now officially entering a bear market (20% off their highs) the average Joe is going to start getting a bit concerned. However, just taking the contrarian view for a moment there is pretty good support showing at 5540ish for today so worth a long here on any dip down to that level. There is the top of the falling 30min channel at 5600 so the bulls will be keen to break this level going into the weekend. Below 5540 then we have the 5500 level again, and then 5436 for the bottom of the 10 day Bianca, followed by 5400 where we have the Raffs. So, any weakness from the bulls today and we are looking at steep declines again. That said, I think the bulls are waiting in the wings for the news flow to start being a bit more positive. We have a load of data out today on retail and GDP figures so I wouldn’t be surprised if we get a decent rally shortly. News flow usually is 2 weeks negative, 2 weeks positive at the moment. With the markets the way they are at the moment its makes pinning your colours to the mast extremely hard, as the picture is changing quite rapidly but I think a long around the 5540/5550 area today could work out well if we dip down to that.

73 Comments

  1. Morning all,see Nick slipped a 20 between a 63 and a 96 to see if we are paying attention.I’m amazed he doesnt do that more often,or maybe he does,is there a prize ? I see everyone is now going with the Tweet as the cause for that rally,so I guess we can expect more Tweets since they are cheaper than QE.Have a good day everyone.

      1. Early mornings…my partner leaves at 0530 on Fridays, she half woke me up and I thought wow that was a quick sleep, a couple of minutes later she got back into bed said sorry I looked at the clock 02.30 🙁

        1. lol Where I am they switch the Streetlights off before the Sun comes up,some mornings I go outside to drink Coffee and lose the cup,start the day playing Blind Mans Bluff in a Rockery full of Rosebushes,hard not to see that as a metaphor 🙂

          1. 🙂 We have a street light outside our bedroom window, first thing I did was tape over it, only had blue tape, half expect Dixon to be standing under it bending his knees.

  2. Morning all, I missed looking back to see how wrong I could be in print so, seeing as I have a half day today, here goes.
    The only reason for any rally today is the OPEC rumours. Anyone who takes them at face value needs therapy.
    The US have a long weekend and China comes back from their New year on monday so I’d think the DOW will be risk off this afternoon, very vulnerable to oil rumour.
    The FTSE has gone technically oversold using the blunt definition of <30 daily 10 rsi.
    Don't get too excited you bulls, the last three occasions it did this there were further drops of 211, 169 and 537 points before the final lows of that move.

    But I'm lightly bullish intraday, 5630 resistance rejected the first attempt, the DAX looks uninspired but may be cheap if it doesn't break 8780 for an hour, and I wouldn't be surprised at another go at it this morning towards Nick's 5650.
    I'm with Nick, will be sniffing round for a long mid 5500's, even 5600 for a risky punt.
    GL.

    1. Running out of steam, broken uptrend and momentum out for 27 off the 603 long and neutral, bearish if 8610, deffo 00, and 8840 break.

          1. Making hard work of it
            I came out of spec long at 28 New highs for us means something like 940+ on DAX getting a bit overextended then short term
            Would look to sell a pop to 40 if it gets there too quick

          2. Wasn’t convincing was it?
            Lower high fail on FTSE makes 5610 holding more important this time. Not expecting fireworks, good day to have it off. OOer.

          3. I know you dont like this and it’s still early,but Dow wed close was 914 above that is 16k and below 850, as non cash mkt level,and 800,they are up a 100 from the close at the moment,maybe we are a couple of hundred away from a sell point there ? I dont know but Retail sales at 13.30 as an excuse to rally and FOMC Dudley at 15.00 as an excuse to fall or maybe another Tweet from someone ?

          4. Lots of ifs and buts there WSF, it’s going to be a strange DOW given the circs above ^^^, I’m glad I’ve had a good week so less need to second guess it today.
            There might be a good cheap call/put finesse for volatility but otherwise I’d stay well clear.

          5. Yeah,I just have 60 min Dow open with some old trend lines on it,and there is a knackered Frying Pan shape, blah blah 🙂 800,850 will show what it’s doing and it just failed around 800.850 Dax makes more sense to watch at the moment anyway.Cheers.

  3. Morning all, good call last night by argyle. Just sold my Barclays from yesterday at 1.54 for 5 points, helps pay for the ftse trauma. That said, still got the expensive ones. Don’t know what happens from here but I think if it gets to low 5500s again I’d be a buyer and if it runs to 5700 I’d be a seller, so a bit no mans land! Good luck.

      1. That VIX long worked out good, took +400 on it yesterday, will look at buying it back in low 20’s if we get a silly OMG OPEC rally towards 6000.

    1. Thanks argyle, sorry didn’t see this. I’m a bit nervy of cash index at the mo (funnily enough), but will keep an eye and may have another tickle in Options if something seems to be getting off the mark. Cheers.

  5. Looking at the FTSE 100, 5, 15, 30 & 60 Mins are bullish fornow and aiming at 5690 first resistance, if it can clear 5690 area the next level of resistance is approx 5750/74 –
    On a 240 Min chart there is Bullish Butterfly formed at 5493 – 5513 with first Resistance at 5907 and 6049
    Not sure if 5493 was a short term low yesterday!

    Here is a idea on DAX
    http://lolfx.co.uk/world-indices/

    1. Thanks goldtrader,I have a similar chart,mthly so a bit vaguer but sort of up a bit then down a fair bit would fit there too.Shame we dont have Hugh here this week.

      1. You are welcome.
        I am not even looking at the monthly as its too scary!, with the Monthly trendline broken at 5806 the next level of Support is 4775.50 which marries with with 100% FIB followed by 4403 the next level of Support on FTSE 100.

        1. Yeah ugly,6000 odd Dax and below that a bit worse.Mthly Dax has a 5 wave count up too from ’91,usual Elliot rules with squinting a bit 🙂

      1. huh “Thanks for the chart, that’s a dream sell at $27.50 (should it get there)”
        Buy US OIL above $27.50 with SL around $26.03 for the TP of $29/$29.87

        1. My bad, I was meaning “dream sell” when it hits the tip of the arrow around $29.70/$30.00. That would be its death rally imo.
          When I draw trendlines I don’t automatically go from the highest high or the lowest low. That exhaustion high of >$33 just after 12.00 was anomalous, I’d start from the ~$32.00 shortly after as the real beginning of the downtrend, which would pivot on 30.64 and keep the current rally still below breakout.
          Mixing technicals, fundamentals and sentiment, I’d prefer to miss that possible rally than buy a false breakout and get wiped out when this current crop of rumours turn out to be disinformation and oil and equities really sell off.
          Just my opinion.

  9. Back again, didn’t miss much apart from 10 holding and 50 finally attained.
    That’s a wrap, as they say.
    Have a great weekend

    PS
    Unless anything drastic happens in the way of strategic OPEC rumour mongering in the next hour, we have to go back to the summer of ’12 for a lower monthly FTSE close.

    PPS
    The last four occasions we went through 5660 on the way down, the moves continued on for
    488 points
    940 points
    870 points
    errr 2,200 points

    https://www.youtube.com/watch?v=Z0GFRcFm-aY

    🙂

  10. Crude up 12% on the day…….wow, imagine what would happen if someone said the rumours of a cut in supply were false. Ftse close anyone? Got a small short here 5675 looking for a drift lower till 9pm around 5644.

  11. Almost a 400 pt jump on the Dow in 24 hrs…..! Dax is maintaining some degree of sanity though….FTSE up approx 170 pts… Don’t know what else to say….. Well I suppose we could get a strong sell off next……place your bets?

        1. 🙂
          “… Buy low, sell high…One minute you’re up half a million in soybeans and the next, boom, your kids don’t go to college and they’ve repossessed your Bentley.” – Louis Winthorpe III

          1. i love it……hey look its about to drop 500pts someone must have sneezed……come on kids do your homework I’m just goin to short this now and you’ll be back in college Monday….. :0)

  13. In retrospect the rally today was obvious. The tell-tale sign was when the BBC wheel out some bloke on the 10 o clock news after a day like yesterday who predicts the end of the world as we know it!

    1. Yeah that Frying Pan bottom on the Dow 60 mins 6hrs ago was a good tell too,still cant knock this week or the day,are you Short now we have hit 5700 or are you waiting chippy ?

    2. Isn’t it just typical chippy,,,,,your long from yday would have been looking much more comfortable…..and what’s actually changed,a few rumours and 10-12 % on oil…i wonder why we bother sometimes,I really do.

      1. That’s why we have technical analysis and trading technique mate.
        At least there is the illusion of logic. There’s no logic in feelings or trying to quantify the effect of ‘news’.

  14. There’s a fairly good down channel from November, about 550 points wide, which we hit at 5500, anstel, so there’s room for a rally over 5800 for sure.
    If we are trading with the benefit of hindsight, then that was good buy yesterday at 5500 and slap on a b/e with a limit at 5850. And just forget about it. (But where do you stop it, with daily tails of over 100 points?)
    BUT, us being human, and the moves being so volatile, none of us were prepared to do that or even call it.
    Trying to make sense of macro is difficult enough, but when you trade micro it’s irrelevant as well.
    In any time scale trade, entry level with good R/R is crucial, spend your time working on that rather than getting too caught up in ifs and buts about the big picture.

    1. Wise words as always tmfp,everything you have ever mentioned is spot on thanks as always……personally now, after seeing it going from looking like it was going to collapse. at 15502 yday to now at 15903. Well …… If you ask me someone’s having a laugh……..This is beyond me tmfp, i know when I’m out of my depth, its like playing against a computer game.there is no sense at all to it.too many authentic rally’s for me…….I wonder if they are authentic declines as well……I’m a bit disillusioned with it to be honest,not placed a trade today…..it’s like you said it could sell off now because of Presidents’ Day……but who knows it could go to 16500 again.mixed feelings here I’m afraid….I’ll have another look next week,I’m not giving up yet but too much BS for me at the moment.All the best,Good Luck,and I admire your skill.

      1. That’s not a bad idea, try treating it like a computer game. Seriously.
        Divorce it from the ‘real’ world with all its red herrings and other distractions, read no news, elicit no opinions, trade purely on numbers.
        BS is only a problem if you allow it to be.

  15. Hey anstel,you can take 10 points off a 50 point move and repeat.
    Finished for the Week, have to get through 6 Woodenhand Brewery bottles of Truro Cask Ale,whatever that is,to clear some space in a cupboard,tough job.Have a good weekend everyone.

  16. what are your feelings into the close tmfp, I’m short ftse at 5675 & 5708 and Dow off the figure 15900
    GG

    1. If you’re not wanting to hold over the weekend I’d bite the bullet on any dip.
      Actually started typing this at 88 and was going to say get out now.
      If there is big downside in the next hour I’d be very surprised, risk off for the long weekend apparently means short covering, but in the big picture 900+ holds no attraction as a long to me.
      GL.

  19. Anstel, don’t know whether you are still there but in answer to you question above, I honestly don’t think I’d be any more comfortable if I was still running that long. Once it smashed through 5600 it had to be cut so I could move on. Because I was still bullish I went on a single stock hunt which has worked out ok so far, could only do that after I’d got rid of the poor position.
    Again, like you said above, it’s a computer game, you run out of credits you can’t play anymore!

  20. Why do I feel that this rise has been to stop a big China fall on Monday. Reminds me of a few weeks ago when the rally started off to 6100

  24. If the DOW pulls us over 850 (or if we get there ourselves first) looks to be a good time to start fade up shorting. In the meantime it still looks to be a buy the dips for a little while. Choose your moments, get in front and hang on. 🙂
    GL

    1. Morning tmfp
      you seem to have broken the ftse. I noticed that the ftse refused to move after your statement, saying ” ..lets see how tmfp is going to fade this..”

      1. lol, yeah the basta*rds have gone on 5 pt spread, I think they may have taken a hit.
        I’m currently abusing a hapless Australian in Customer Services….

        1. “Technical glitch…no information…”
          Back to 2 pts now.
          Above ref to DOW was senility inspired temporary memory loss re Washington day, although the essence is valid.
          Caught a short at 30, hanging on to it for 5770, b/e stop now.

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