FTSE 100 Resistance 6928 6966 | Support 6855 | OPEC cuts | Asia rises

FTSE 100 Support 6865 6855 6841 6786
FTSE 100 Resistance 6918 6928 6944 6966 6969 6984 7029

Good morning. The initial short from 6872 worked well yesterday and turned out to be a good moving banking half at 6844, as it rallied back up from there to retest that level. That afternoon saw another dip down to the 6836 area that I sent on the update email and from there it really took off – helped by the news that OPEC is cutting oil production for the first time since 2008. Whilst I had that as support I wasn’t expecting a 70 point rally to 6910 this morning. Does set up a gap for the start of todays activities though, with 6855 looking like the new support area.

US & Asia Overnight from Bloomberg

Asian stocks rallied with U.K. equity index futures and Malaysia’s ringgit as oil held near a three-week high after OPEC members unexpectedly agreed to cut crude output for the first time since 2008.

Regional energy shares jumped by the most in seven months and led gains on the MSCI Asia Pacific Index, which was set for its best quarter in more than four years. The ringgit was the best performer among Asian currencies as prospects brightened for Malaysia, Asia’s only major net oil exporter, and the yen weakened. U.S. crude traded near $47 a barrel, having surged 5.3 percent on Wednesday as the OPEC deal was announced. Sovereign bonds retreated across most of Asia amid speculation higher energy prices will stoke inflation.

A global oil glut has weighed on crude prices for more than two years, spurring deflation that’s hurt corporate earnings and led to negative bond yields in two of the world’s four biggest economies. The Organization of Petroleum Exporting Countries said its members reached a preliminary agreement to trim production to a range of 32.5 million to 33 million barrels per day following informal talks in Algiers, though the group won’t decide on targets for each country until a November meeting in Vienna.

“The energy sector is going to be a key contributor to the rally we see after the OPEC decision,” said Tony Farnham, a strategist at Patersons Securities Ltd. in Sydney. “All we’ve seen at this stage is the intention to do something, I’d like to see it more concrete and then still they have to abide by it. But, it is the first step.”

Stocks

The MSCI Asia Pacific Index gained 0.7 percent as of 1:58 p.m. Tokyo time, with a gauge of energy shares surging more than 4 percent. The regional benchmark has rallied 10 percent this quarter as Hong Kong’s Hang Seng Index climbed 14 percent, Asia’s best performance.

“OPEC’s decision to curtail production wasn’t expected, and now crude prices will likely head toward a range of $50 to $60 per barrel from $40 to $50 per barrel, which will ease global deflationary concerns,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo.

China Oilfield Services Ltd. jumped 11 percent on Thursday in Hong Kong as PetroChina Co., Asia’s biggest oil and gas producer, rallied by the most in four months. Hsin Chong Group Holdings Ltd. plunged by as much as 57 percent as the stock resumed trading after Anonymous Analytics rated the property and construction company a “strong sell.”

Futures on the U.K.’s FTSE 100 Index rose 1 percent, after the benchmark added 0.6 percent in the last session. S&P 500 Index contracts added 0.1 percent, having risen 0.5 percent on Wednesday as investors weighed the OPEC deal and comments from Federal Reserve officials.

Fed Chair Janet Yellen told lawmakers that the majority of the central bank’s policy-setting group sees an interest-rate increase as likely this year, while Chicago Fed President Charles Evans said an extended period of low borrowing costs will leave less room to navigate future economic shocks. Yellen is scheduled to speak again on Thursday, as are regional Fed chiefs for Atlanta, Minneapolis and Philadelphia.

Currencies

The ringgit strengthened as much as 0.9 percent versus the dollar, leading gains among the currencies of oil-exporting nations. Canada’s dollar was steady following a 0.9 percent advance on Wednesday and the Norwegian krone built on the last session’s 1 percent jump.

Mexico’s peso held near a two-week high before a monetary policy review on Thursday, with most economists predicting interest rates will be raised. Taiwan also has a central bank meeting and its currency strengthened 0.5 percent from Monday’s close as trading resumed following a hurricane. Just over half of the economists in a Bloomberg survey forecast the island’s borrowing costs will be left unchanged, while the remainder were looking for a cut.

The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, rose 0.1 percent from its lowest close in more than two weeks. The yen slid 0.7 percent, the biggest loss among major currencies.

Commodities

Crude oil was little changed at $47.06 a barrel, after jumping on Wednesday by the most since April. The lower end of OPEC’s new production target equates to a nearly 750,000 barrels-a-day drop from what the group said it pumped in August. Saudi Arabia and Iran had signaled before the meeting that an agreement was unlikely in Algiers, while all but two of 23 analysts surveyed by Bloomberg predicted there would be no deal.“The cut is clearly bullish,” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “The number of actual barrels that will be taken off the market is unclear. What’s much more important is that the Saudis appear to be returning to a period of market management.”

Tin gained 0.7 percent to trade just shy of $20,000 a metric ton, a level last seen in early 2015. The metal used for solder in electronics has jumped 17 percent this quarter, the best performance on the London Metal Exchange, as warehouse stockpiles fell to the lowest since 2008.

Copper, nickel and lead rose by at least 0.8 percent, with the latter climbing to its highest since May last year. The LME index of six industrial metals is heading for a third successive quarterly gain for the first time since 2011 helped by an improving economy in China, the biggest consumer. Gold added 0.3 percent, buoyed by recent declines in the dollar.

Bonds

Benchmark 10-year bonds in New Zealand fell for the first time in seven days, while notes in Australia and Singapore dropped by the most in two weeks. The yield on similar-maturity U.S. Treasuries rose by one basis point to 1.58 percent following a similar increase on Wednesday.

“The rise in Treasury yields after the OPEC news was contained because the decision to really cut production won’t be finalized until November,” said Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo. “The Fed’s rate-increase path isn’t gaining momentum, making it unlikely for yields to extend their climb.”

Japan’s 10-year yield stayed at a one-month low of minus 0.09 percent. Similar-maturity notes in Germany yielded minus 0.145 percent at Wednesday’s close. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have a decent bounce from the 6836 area now, confirming that 2 hour chart is working well that I sent round yesterday afternoon. As such any dip back today towards 6855 is worth a long, to target 6966 and possibly 7000 today and tomorrow. I don’t want to fall in love with the upside but I think we are going to get one more push up over the next few weeks before an even bigger down move than we saw earlier this week. But, as I prefer to focus just on today, I think we will get a dip from the 6928 R1 area to start with (there is a chance though that we pop up to the 6944 area which has twice been the recent high) before we get some profit taking and dip back down. 6855 looks like it will probably hold as support though, so a viable entry I feel. Gold has continued its decline this week, which preceded the FTSE rise, just a bit weird that the FTSE was so weak to start the week and visited 6760 before bouncing (6800 would have been preferable!). Anyway, should 6855 break then the bears will be back in control and aiming for sub 6760, however, for today I think the ball will be in the bulls court.

37 Comments

  1. Bulls in control once again..most media very bullish…why weren’t they saying time to buy @ 5500 at the beginning of the year ….

  2. Few, nice gasp. I set my target to 10502.2 but it only touched 10502.7. However I decided not to mess about and close that short from 63-57 area (with double add up at 35) at 10506 I think they gave me. And here it goes a bit more, to 10498 area.

    1. Yesterday wasn’t great for me. It’s all because I rushed (it’s easier to blame somebody else, eh, I had a meeting and wanted to make a few quid before that). So I went long on the top and lost quite a lot cos I closed by accident and then entered another long from 10448 and left till 12 noon (and gone out). When I was back it was doing well, but again I was greedy as I wanted 10511-534 and missed the perfect exit at 10490. Greed Greed Greed. £400 would have recovered. Instead it dropped and I closed b/e and took other “fast measure” longs on which I only cashed £100. I closed my longs and in the evening … here you go: 10524. Are they having a laugh???

      1. Hi Jack, I never use pivots….always seems a little subjective as in you can put them in to give you what you want to see depending on time frame, positioning etc

        I’m not having a go, rather I would like to learn more and am curious as to how accurate you find them in determining buy/sell or close points.

        1. I used it today: just needed an immediate profit. Didn’t use them for the whole month so I agree with what you are saying. I don’t use them as a rule too. For me Fibs are more important and sup/res lines.

  3. Closed my Dax short for +50. I think it will go a lot more but caution is key and I bagged £500 so happy days

  4. That good news at 13:30 will be setting panic for an early US rate rise. Reckon this could go down hard later.

    I pulled one of My Dows for +23 in case it rises.

    Come on FTSE your turn to dive now

      1. I have added at 6929, and added to Dow at 18328

        Seems like it’s struggling to make further gains.

        Come on DUMP!!!!!

  5. I think by the time the chain reaction spreads overnight we could go well below 6800!

    I’m off to Paris motor show tomorrow, not quite enough to buy a Lambo but going to have a f@&King big drink!!!

  6. Banks are all interlinked with loans investments and god knows what else. It shows destabilisation and will send flash backs of the last banking crisis

  7. Hey all
    A bit exciting out there init!
    Well done on the big wins 🙂
    I managed to turn a profit today too, though it was bloody hard work.
    Is dow really gonna roll over again ?? its having a think about it 🙂

  8. Best day ever for me over 300pts! Sad as it sounds it’s not the money won but the repeatability of process. I’m starting to believe I can do this full time and for that consistency is key.

    Sorry if I have posted too much!

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