FTSE 100 resistance 6833 support 6790 | Yellen Speech | Asia flat

FTSE 100 Support 6802 6796 6790 6786 6770 6750 6711
FTSE 100 Resistance 6832 6834 6844 6850 6864

Good morning. Bit off a funny spike down first thing which didn’t help that early long, however, the 6863 short worked well. The market continued falling for most of the evening ending up around 6820 where it remained overnight. Of course, its all eyes on the US at the moment with the Fed and Jackson Hole meeting, followed by Yellen’s speech tomorrow. U.S. economic data today are forecast to show durable goods orders rebounded in July and services output picked up this month, continuing the run of mixed US data.

US & Asia Overnight from Bloomberg

  • Price swings in Asian stocks are the most muted since 2012
  • Oil near one-week low after U.S. inventories unexpectedly rise

A dollar rally ran out of steam as most financial markets stabilized ahead of a Friday speech by Federal Reserve Chair Janet Yellen that may shed light on the likely scale and timing of U.S. interest-rate increases. Chinese stocks and iron ore dropped.

The Bloomberg Dollar Spot Index snapped a four-day winning streak that was fueled by hawkish comments from Fed officials.

Fluctuations in the MSCI Asia Pacific Index over the past two weeks have been the most muted since 2012 and gauges of expected price swings in Japanese and Hong Kong equities are near their lows for the year. Crude oil held near a one-week low following an unexpected rise in U.S. stockpiles, while iron ore slid by the most this month.

A rally that drove global equities to their highest level in a year fizzled out since the start of last week amid rising expectations the Fed will raise interest rates in 2016. Monetary tightening in the U.S. risks destabilizing financial markets as central banks in the major economies of Asia and Europe lower borrowing costs and step up stimulus to bolster growth, policies that have led to negative 10-year bond yields in Germany and Japan.

“Everybody is waiting for Yellen, and I’m not sure whether Yellen will provide the impetus all traders are looking for,” said Nicholas Teo, a strategist at KGI Fraser Securities in Singapore. “The Fed rhetoric so far has been balanced although the last two weeks we’ve seen quite hawkish comments.”

U.S. economic data on Thursday are forecast to show durable goods orders rebounded in July and services output picked up this month. Gauges of business sentiment in Germany and U.K. retail sales are also scheduled, while Medtronic Plc and Vivendi SA are among European companies announcing earnings. Brazil’s Senate opens an historic impeachment trial that is expected to result in President Dilma Rousseff’s permanent ouster.

Stocks

The MSCI Asia Pacific Index was little changed as of 1:23 p.m. Tokyo time, with technology stocks advancing and energy companies losing ground. The gauge has moved less than 0.2 percent on each of the last four days.

Benchmarks in Hong Kong, Singapore and South Korea were little changed, while Japan’s Topix index declined 0.2 percent amid trading volumes that were 30 percent below average.

“It’s too scary to buy into Japanese shares” given the possibility markets will be whipsawed following Yellen’s speech, said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. Shares will be sensitive to the yen, which could surge to 95 per dollar if Yellen indicates a rate increase is off the table, while it will plunge should she suggest a hike is imminent, he said.The Shanghai Composite Index dropped 1.1 percent, set for its biggest loss of the month, on concern the government will act to cool speculative activity in the nation’s financial markets. PetroChina Co. and Cnooc Ltd. fell more than 1 percent in Hong Kong after reporting earnings, while China Construction Bank Ltd. climbed to a 10-month high ahead of its results.

Futures on the S&P 500 Index were steady after the U.S. benchmark dropped 0.5 percent on Wednesday. U.S. stocks could face a significant correction over the next two months as a slew of technical signals suggest the summer rally will lose momentum, according to UBS Group AG.

Currencies

The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, declined less than 0.1 percent, after climbing 0.8 percent over the last four trading sessions. Fed funds futures indicate a 54 percent chance of a U.S. interest-rate hike this year, up from 36 percent at the start of August. The yen was little changed at 100.48 per dollar and South Korea’s won gained 0.3 percent.

“The market’s just trying to get through the whole event risk” of Yellen’s speech, said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. “But after that, what’s driving the market is back to the search for yield and it’s good for emerging markets in general.”

Goldman Sachs Group Inc. sees the pound, the yen and the kiwi as most vulnerable to a potential surprise from Yellen’s speech at the annual monetary-policy symposium in Jackson Hole, Wyoming.

Commodities

West Texas Intermediate crude oil was little changed at $46.75 a barrel. It dropped 2.8 percent in the last session as data showed U.S. inventories unexpectedly rose last week.

Iron ore dropped 3.2 percent in Singapore after Li Xinchuang, a vice chairman at the China Iron & Steel Association, said falling steel production in China should weigh on prices for the raw materials. The price is still up by about 40 percent for the year.

Copper was up 0.4 percent, still near its lowest level in more than two months. Barclays Plc flagged risks of a “sharp slowdown” in demand from China in the second half, after the world’s top user slashed imports to the lowest in 17 months. Inventories tracked by the London Metal Exchange have surged 21 percent over the past three days to the highest since November.

Gold gained less than 0.2 percent, after sliding 2.1 percent over the last four days.

Bonds

U.S. Treasuries due in two years were little changed with their yield at a two-month high of 0.76 percent. The securities are the cheapest they’ve been relative to 30-year notes since the start of 2008 following a run of hawkish comments from Fed officials including Vice Chairman Stanley Fischer and the heads of the New York and San Francisco branches.

“The Fed is likely to hike this year, with December more likely than September,” said Jarrod Kerr, a senior rates strategist at Commonwealth Bank of Australia in Sydney. “There is some room for short-end U.S. yields to push a little higher over 2017.” [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Could be an interesting/tricky one today. The 2 hour chart has gone bearish and has resistance from my indicators at 6834 and 6844 so a short around this area is worth a go I feel. I also think we could be on the way to 6750 shortly, especially if the bottom of the Bianca channels break. They are currently at 6790 for the 10 day and 6802 for the 20 day. I have gone for a long from this area on the trade plan in case they hold, however, be prepared to flip to short if they break. We have certainly weakened a little bit since the 6950 level the other day, and yesterdays rally faltered at the 6865 level as expected. The ball is really in the bears court now to make the declines stick, however the bulls will be hoping that the Fed is fairly positive tomorrow. The whole 6800/6810 area is the key one really – it held well the other day but if it keeps getting tested then it will eventually break. Could be a quick trip to 6750 if so.

So fairly simple plan today really but I am favouring the short over the long as a bias – so maybe a larger stake on the short compared to the long. So, yes, could be a tricky one today!

34 Comments

  1. Morning all. Long at 6795.

    Had a good day yesterday and made enough to cancel old short at 6375. Feels good to have that gone!

    I have also hedged a small short.

    IMO all the fear from J hole is baked in, I still think the market wants 7000

  2. Morning ! Shorted 21 this morning .. nice drop till 80 closed !! long @ 81. looking to close the gap if can in few hours if not will flip to short .. have a good day guys

  3. Morning guys well I’m under pressure with a long at moment………no surrender….well not yet anyway :0) I’ll never get a problem with constipation in this game lol :0) good luck all just going back to the bathroom :0)

    1. I’m a little bit to overgeared…..I need a risk manager…..Si are you available for a new post :0)

      1. Hey Anstel, send that risk manager my way !
        I was long the dax again.. Done well out of the turn though – made a weeks money. Going to play around later and either give some back or make some more 🙂

        1. I’m no where near your sizing inoodle but I’m in up to my neck on this one…..I had a strong view on the market and I backed it will my money……I need to real it in though and listen to my own advice sometimes….I still think it’s going to work I’m long from 40……good luck all :0)

  4. Cheers Anstel, I reckon Yellon and crew are under orders to be dovish to keep the market up for the US Elections. We will see? GL

  5. I see C & H’s and double bottoms everywhere.In the past when its been like this not waiting for confirmation has always been expensive 🙂

    1. Hey Anstel, send that risk manager my way !
      I was long the dax again.. Done well out of the turn though – made a weeks money. Going to play around later and either give some back or make some more 🙂

        1. It’s OK its cup and handle…..got it from investopedia now let’s see what it means :0) thanks anyway….

          1. Sorry Anstel,forgot to hit refresh,have charts and Samuel L Jackson running,eg Ftse 5 and 15 ,but it’s a bit of a funny one when the cup isnt all of the pullback from a trend,supposed to be more about continuation,like a Pennant than about reversal.FWIW Bulkowski thinks it is lower probability than people generally assume,but maybe because if you trade it as a reason to play a breakout then breakouts are actually low probability.Still stands as useful imo though,not just scaqlping,if it fails then its a good contra indicator.
            http://thepatternsite.com/cup.html

  6. oh oh, posted to the wrong thread 🙂

    Good advice though wsf! (though I did have to google for cup & handle :))

    1. close was 35 yesterday on Ftse,low was 25,Nick has 34 as possible resistance,so seems like an area to watch,still early in the day anyway Esther George is on CNBC in an hour with the view from the Kansa city fed lol.

  7. Has anyone in the modern economy ever left a Bike with a shop and not had a phonecall saying they need to pay extra for a new Bottom Bracket ? I’ve seen 70 year old bikes in India that have never had more than new air,oil and Brake pads stuck on them and they have a Monsoon season.Funny how it’ll be ready in 2 hrs as long as I have cash too,still I’ll be back on the road tomorrow morning impressing hot chicks with my athleticism 🙂
    http://afflictor.com/wp-content/uploads/2011/02/Bicycle_two_1886-1886-1024×795.jpg

    1. I’ve got an old MTB a cheap one,it had the old spindle and cups and bearings …the bike was given to me …I replaced the bottom bracket with new spindle and bearings but left the original cups alone….lasted about another 2.5 k miles then it was totally shot again…..I replaced it with a shimano UN55. 68 mm x 118 mm English thread…..the original spindle was 68mm x 119mm but it was slightly offset to the drive side……it’s worked out ok though with a better chain line although the chain is closer to rear tyre when using the granny ring at the front….still enough clearance and I hardley ever use the 22 front sprocket anyway…..if you need a sealed cartridge BB have a look at the Shimano UN 55 range….they come in 68 mm and 73 mm widths and about 6 different spindle widths biggest is 127.5 then 122.5 then 118 and I can’t remember the smaller sizes……they are about £15 – £20 and a fully sealed BB…….might help you in future……you need a splined tool as well to fit it……not expensive……..:0)

      1. Oh and a crankarm extractor to pull the crank arms of the old BB …less than the cost of out of hours Ftse spread :0)

        1. 🙂 Thanks,but you are talking to someone who has just found out he has been underinflating his tyres.Gone from having dangerously underperforming brakes to having scarily good ones now too.I’ve pretty much decided to make tomorrow a longer ride and then go for a new time on my usual circuit on Saturday.Funny how I’ve got serious about that though,caught myself watching someone elses film of their 30min circuit on You Tube yesterday.

          1. Oh sorry WSF I’m always messing about with stuff…..I forget sometimes that not everyone is into playing with spanners and DIY stuff……Riding is the best bit anyway…..been doing some 30 mile night rides with some friends with a bloody big 1000 lumen front light from Aldi…..I have to twist it down like on dip when cars come toward me……it’s really bright…..Really enjoy it and it keeps us reasonably fit ,,,,something we don’t get sat in front of a screen all day………happy ride tomorrow :0)

          2. Oh sorry WSF I’m always messing about with stuff…..I forget sometimes that not everyone is into playing with spanners and DIY stuff……Riding is the best bit anyway…..been doing some 30 mile night rides with some friends with a bloody big 1000 lumen front light from Aldi…..I have to twist it down like on dip when cars come toward me……it’s really bright…..Really enjoy it and it keeps us reasonably fit ,,,,something we don’t get sat in front of a screen all day………happy ride tomorrow :0)

          3. No I should know more about it all,managed to work out what I did wrong with the brakes,but thats about it,thanks for the info.It is addictive,Ive got some lights I plug into the comp to charge.Cycling and some stuff with Springs and Bands is about all I’ve been doing for exercise for a few months.Starting to miss other stuff,but havent got tired of this yet,will change things around a bit in September,want to be around for Europe for the last election bit and the pullback and the surprise Santa rally too 🙂

          4. http://www.pullum-sports.co.uk/resistance-bands/cat_16.html

            I use routines that include static holds for tendon strength and combine the exercises to hit stuff twice eg Bicep Curls then Bent Forward Rowing,I work long sets for me too,15,that and the cycling has been interesting,miss some of the other stuff a bit though,Bagwork especially.
            Anyway done for the day,have a great evening,guess we’ll see what Yellen brings tomorrow.

  8. Just stuck a short on oil? Have no idea why except I was bored! Added a 20pt stop. NOTE TO SELF Stop being a Tw@t !

    1. We have all done daft things, don’t beat yourself up matey….it’s all part of the learning process….good luck with your trade.

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