Support 5900 5892 5870 5841 5825 5795 Resistance 5945 5960 5986 6012 6088

Good morning. Well that got bearish quickly yesterday. There was an initial move up on the Dax, S&P and FTSE (stop hunt), before all 3 fell, and was just a bit early with the Dax short. Wasn’t expecting a 200 point fall on the FTSE, even though I am in short the rallies mode. We ended up testing the bottom of the 20 day Bianca at 5909 just before the end of the US session which saw a little bounce (coincided with Dow hitting 16000). The mining sector took a bashing with Glencore looking rather ropey at the moment — the shares dropped 25% yesterday. Its the usual story of too much debt and the fall in commodity prices has meant that debt isn’t as serviceable as it was. Over leverage – has killed off many a trader, many a company and even countries (looking at you Greece).

US & Asia Overnight from Bloomberg
Asian stocks fell, with the benchmark index heading for the lowest close since November 2012, as a selloff in U.S. and European markets spread to the region and material shares led losses.

The MSCI Asia Pacific Index retreated 1.4 percent to 122.96 as of 9:10 a.m. in Tokyo, on course to slide 16 percent this quarter. The Standard & Poor’s 500 Index slumped 2.6 percent on Monday amid a rout in commodity and biotechnology shares, while a gauge of global equities fell to a two-year low. Glencore Plc slumped 29 percent, dragging the Bloomberg World Mining Index to its lowest level in almost seven years.

Markets have been whipsawed as China’s economy falters despite stimulus efforts. A gauge of industrial profits fell the most in at least four years, a report showed on Monday, ahead of manufacturing data this week that should provide further clues on the health of Asia’s largest economy. The specter of higher interest rates in the U.S. is also weighing on sentiment, with Federal Reserve officials ramping up rhetoric in favor of a 2015 rate increase.

“The slowdown in China is spreading to other Asian economies, Brazil and Australia, and weakness in emerging countries could echo throughout the overall world economy,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo. “We still don’t know when market fears will end about China’s slowdown, and because of this investors are turning to cash and safe assets.”

Regional Gauges
Japan’s Topix index lost 2.4 percent after the yen gained 0.6 percent against the dollar on Monday. Australia’s S&P/ASX 200 Index declined 2.3 percent and New Zealand’s NZX 50 Index fell 0.9 percent. Markets in South Korea are closed for a holiday and those in China, Hong Kong and India are yet to open. Taiwan’s equity market is shut because of a typhoon.

E-mini futures on the S&P 500 rose 0.2 percent after the underlying gauge’s drop on Monday sent the measure to a one-month low. The Nasdaq Biotechnology Index sank 6 percent following its worst week since 2011. Valeant Pharmaceuticals International Inc. fell the most in four years.

Data Monday showed household spending climbed more than forecast in August, indicating consumers will help the U.S. economy muddle through any global slowdown.

New York Fed President William C. Dudley said on Monday that the U.S. economy was “doing pretty well” and that the U.S. central bank will probably raise rates later this year. John Williams, head of the San Francisco Fed, also reiterated his expectation that borrowing costs will be boosted in 2015, adding that the jobless rate will probably fall to below 5 percent this year.

“Volatility is going to stay high,” Dan Suzuki, a strategist at Bank of America Corp., told Bloomberg TV in New York. “There’s a general sense that people don’t want to go all into these markets.” [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I was a bit too optimistic for yesterday expecting the bulls to rise to 6150 before the downside started. I seem to be running 24 hours early with my hunches the past few sessions so I wouldn’t be surprised if we see the 5875/5892 area hold as support for today with a rise towards the daily pivot at 5986. My 2 hour chart has resistance at 6010ish as well and this level could be worth a short to hold for a few days, maybe even to reach 5700. Trends are all still down, volatility is up and I still think we will see 5700 soon – shorting the rallies seems to be the way to be at the moment. The Dow has just snuck below the 16000 level so may well pull back above that today before another leg down to the August lows (15200 area). So for today I am thinking we will be flat to slightly bullish, but should present a good opportunity for shorting, especially at the 6010 area if seen.

77 Comments

  1. Morning.
    DAX is the first of the three to break Aug 24th lows so that’s where the weakness is, they won’t be able to resist a stab at the 8000’s pretty soon imo.
    When they do, 8350 will be the obvious target.

    We just bounced off 5900 and DAX off 9400, while they hold I would think there’d be a bit more oversold upside this morning, especially if we can get through 5930 which is looking a bit of a problem atm.

    Very important not to think ‘Oh well, we’ve had another Black Monday, will be OK for the rest of the week now’.
    That’s like surviving the first tremor of an earthquake and not expecting the aftershock, that’s the one that kills you.

    2. If this is a bounce, got to be shorting time soon?
      This increase in volatility around 5950 might be a top forming, got rid of my 30 break long but reluctant to short it. No rush…

        1. Yes I saw that.
          That’ll cheer Jack up, he likes it when your arrows point in the right direction. 🙂
          (Which is fair enough, arrows pointing in the wrong direction are not much use to anyone.)

      1. Hmmm, really needs to hold 25/30, DAX 9440/50, and bounce with a bit of conviction or the down pressure’s back on.

        1. Ta, seems to be just about holding.
          I’m thinking about a long for a retest of the highs, but got caught long yesterday trying to be too clever and missed out on 60+ pts in shorts, especially as I was Super Bear that was annoying.

  5. Seems DAX pivot put a lid on that rise from low 93xx…, well done those brave ones who took the longs in the mornings, all indexes bull rally…
    As with DAX if it takes a short breather and then attempts pivot again, it will break it easily…how far up then, no idea
    Nick you got that spot on, ” 5875/5892″, support on FTSE held very well, sadly didn’t take a long, as thought it might just go 10 more points down, but didn’t and raced up…
    As DAX managed pivot, wont even short FTSE possible closer to pivot area etc, so waiting on my hands for now, missed the morning big gains! 🙁

  6. 200 point fall is nothing… Definitely not a black Monday. Scary to go long when in a bear market it can loose a third of it’s value. Personally not looking to make any money on the upside going long. Selling both DOW and FTSE on 20 point rises and make the money on the way back down.

  7. When it’s as volatile as this it does work great. When there are trends it’s a bit more difficult. +800 points on Dow in 2 days trading.

  9. my thoughts as i drudge through another day without much to show for
    watching some of you trade just mesmerizes me and i begin to doubt more and more if i am fooling myself about trading with such dismal results
    —————
    Nick of course – just a master , genius of analysis with awesome accuracy
    tmfp – scalper extraordinaire – how you know where to short and long defies gravity, and now you reveal that you are a long term trader rolled into one – with “”I have been doing exactly that since 23rd Jack.
    So far +241 pts excluding day trades “” wow just incredible
    marketmaking – new face – but none the less with a 800 point profit on the dow over 2 days – sire i bow down to you
    the others – probably too shy to reveal their great results
    i sometimes feel shameful and tired.
    I think my wife spoke here as well. we talk about how where but nothing to really show for it. gutted – just feel so small
    sorry for the rant

    1. Hi Paul
      I’m interested in what you’re saying…typing 🙂
      – Do you “work” as well ?
      I find trading really does require alot of concentration & time.
      I “work” as well and know too well that I just haven’t the time to be really effective e.g. pre – planning / mind set..
      I can suggest a few things if it may be of any help..

      1. Hugh
        yes i work – self-employed. i dont allow this to interfere with trading. either my wife or i look after the business while the other trades.
        your last chart – just a stroke of genius
        any advise welcome
        thanks

        1. Paul – Working and trading = hard work & difficult to juggle.
          I think sometimes there is a tendency to over complicate “trading”.
          If you take this morning so far ..
          The market closed at between 5925-35 (9:00PM last night).
          After hours the price rose to 5952 then fell away over night to 5874 (7:30am).
          So there are two levels to watch Resistance at 5952 and Support 5874.
          Now, put your GAMBLING hat on – that’s the one where you say “I Bet we see a higher price or a lower price and I accept that if I’m wrong it’s going to cost me £PP times Stop”.
          So when the price went to 5877 this morning, you could have said to yourself ” I Bet 5874 will hold” on the understanding that you were wrong if you see 5869.
          And Likewise, When the price was in the area of 5950 – You could have said to yourself ” I Bet this resistance will hold and accept that if it doesn’t it’s going to cost me £PP times Stop.

          These two decisions would have yielded results – so what’s the issue? Fear.

          You have to accept this emotion however uncomfortable it feels.

          I know it is easier in hindsight to point these things out…

          What does matter is what will happen if the price moves above 5954, for example – this is when it gets difficult. If it breaks – you know you should go Long, yet this feels wrong today.
          So don’t trade it ….simply wait for the right moment when you have a moment to absorb what is going on..

          There are other things I could suggest which I can’t cover here – just email me on statsuk@aol.com and can include more.

    2. Hi Paul, Its the hardest easiest money you will ever make. Its certainly not easy otherwise everyone would be doing it. The key is to have a proper strategy, and lots of patience. I think a lot go wrong by feeling they always need to be in a trade. Overtrading kills many a trader. Also, different strategies for different people. Its easy to have your confidence knocked too after a few losses.

  10. Hi Paul, you are not alone finding these markets extremely difficult.Im personally viewing it as very good experience,which hopefully will see us in good stead in the future.I don’t think any of us relatively inexperienced traders have gone through all the different market cycles which we need to trade through to become rounded traders.When you have tried everything that doesn’t work you are left with what does :0) Not quite sure how many more things I will find that don’t work,but I will keep trying.Good luck all.

  11. Hi Hugh,just read your post,yes trading takes up a lot of time,patience,nerves,and mental energy.Im full time at this,sometimes 17 hrs a day and I have been trading 2 years,My first year I did extremely well twice but then overconfidence caused me to come down to earth with a big bump!!!!! I’m finding it very hard at the moment but I have learnt quite a lot I think,I’m just hoping I can use my experience to get back to some positive results like I had my first year,if I had known in my first year what I know now I would have had even better results,for now though it’s back to the wall time and try to improve my trading.

  12. 25/09/2015 09:54:43 Wall Street Rolling 16400 Open
    25/09/2015 09:58:14 Wall Street Rolling 16457 Open
    25/09/2015 10:43:22 Wall Street Rolling 16451 Open
    25/09/2015 14:35:52 Wall Street Rolling 16375 Close
    25/09/2015 18:02:49 Wall Street Rolling 16425 Open
    25/09/2015 18:13:39 Wall Street Rolling 16450 Open
    25/09/2015 19:19:54 Wall Street Rolling 16375 Close
    25/09/2015 19:32:40 Wall Street Rolling 16325 Close
    25/09/2015 19:49:19 Wall Street Rolling 16275 Close
    25/09/2015 20:48:30 Wall Street Rolling 16325 Open
    27/09/2015 23:06:02 Wall Street Rolling 16250 Close
    28/09/2015 06:03:54 Wall Street Rolling 16300 Open
    28/09/2015 07:32:50 Wall Street Rolling 16350 Open
    28/09/2015 09:38:34 Wall Street Rolling 16300 Close
    28/09/2015 10:17:56 Wall Street Rolling 16250 Close
    28/09/2015 11:35:00 Wall Street Rolling 16200 Close

    808 points. Should have sold more confidently yesterday morning as well, plenty of missed opportunities. Never mind.

      1. Confidence might have got the better of me but yes. Try and keep the book small until the odds are in your favour – so no reason for me to get as short as i have done today. Definite bear though so fairly relaxed and have to believe there will be chances to make money as it zig-zags.

  13. But yes this unrealistic i suppose. No way would i do this consistently. I only trade FTSE really and would be over the moon just to make 350 points a month – this month made over 1,000 points but some months you may only make 40 points and some you will even loose.
    So Paul keep it up, i’ve just been very lucky with the volatility in the markets and a dream for my personal strategy.

  15. So, just got back after being called out by my better half because she had a puncture (would have been cheaper to get a garage, then I wouldn’t have missed reshorting at 50 🙁 ).
    Interesting reads ^^^ up there 🙂

    The question now is DOW? and will we hold this general support today around 25-30?
    I think we may, but not convinced enough for a long just yet. (Just as well, gone to 17 as I type).
    I think we may close at 16.30 higher than this though.

    1. General support didn’t hold and I lost, then I had longs 15968 and the one higher so got the stuff back. Now my long because of EMA is cancelled.

  16. And just to put all this in perspective, on the way back from the garage, two cars collided on the ring road flipping one on its roof, just missing me coming the other way, and I ended up pulling a baby out of an upside car with smoke coming out of it.
    Unhurt thankfully.
    Her mother (the driver) certainly knew some language.

  17. One more big 3 min down candle and it’s time for a little long methinks, in the 90’s for a good bounce, don’t think it’s dead yet.

  18. Bad luck. lost 100, won 110. Should have waited longer for the drop. Now, don’t even ask what I am going to do. Not sure if I should go long right now again. As usual they deceived me with their stupidity.

  20. DOW’s retraced about 50% of its run up and we were a bit oversold so I think another go at 40 is more likely, but not enough for a long.
    Oh, alright then, a small long at 22 10 pt stop.

          1. Oh well, got a bit greedy, then missed a failure short, then tried to catch a knife and got whipsawed.

            Object lesson in how not to trade the MHH lol
            🙂

  22. I think SnP will test 1877 region again, this evening, but wont be trading it, just checking if my analysis works, based on failure from pivot, so then would take rest of indexes a bit further down….not sure after that test, but lets see if we get 1877 later…GLA

  24. +146 points banked on the DOW – still short of 5 @ average of 16075
    +39 banked on FTSE – still short of 2 @5930, 5950

    1. Hello mate, I wasn’t trying to start a competition earlier mentioning how many points I’d made on shorting the FTSE, just reinforcing your point that it’s a good strategy at the mo.
      We try not to do that on here, it only pisses other people off.
      All the best.

      2. Sorry tmfp, didn’t mean to annoy anyone. Trying to give clarity on how a long term view (bearish personally) can help in the short term and maybe help ones strategy and positions and to stick with it even if the market appears to be going against you.
        Hope everyone’s had a good days trading.

        1. No prob.
          We tend to talk about the psychology of trading as much as the actual trades, as you can see from some of the above posts. We’ve all been on dick measuring forums, not really a lot of help when you’re struggling (or even when you’re not).
          By all means post in real time what you’re doing and why, that’s really helpful.
          Enjoy the purple patches while they last, I had one for a couple of months and then bang, I couldn’t hit a barn door with a banjo.
          Luckily I saw the signs and took a break rather than chase it and lose everything I’d made, came back refreshed and my mojo seems to have returned.

          Good luck.

      3. It does frustrates as I only managed to escape with 9 points of profit today. Got it all wrong with a long again.

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