Support 5940 5834 Resistance 6035 6080 6180 6200 6330

Good morning. I hope you had a good weekend. Well the Bulls managed to break that 6275 resistance on Friday morning but the 6335 pivot held fast and decline it did as a wave of fear swept thorough markets during the day. Fear and greed, always has and always will be the two main forces that move markets! Today that has continued and its been along time since there has been a sea of red across the indices first thing. Going to be some forced selling today and margin calls I think! Once again its China as stocks plunged the most since 2007 as government support measures failed to allay investor concerns that a slowdown in the world’s second-largest economy is deepening.

US & Asia Overnight from Bloomberg
Asian stocks extended declines as a global rout deepened, dragging a measure of regional equities down 20 percent from its April peak. A close at this level would mark the start of a bear market.

The MSCI Asia Pacific Index retreated 4.4 percent to 125.75 as of 12:35 p.m. in Tokyo as stock gauges from Sydney to Hong Kong tumbled. Global equities have lost more than $5 trillion in value since China’s shock currency devaluation on Aug. 11, with U.S. shares succumbing to the selloff at the end of last week.

“Things are probably going to get worse before they get better,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which oversees about $118 billion, said by phone. “You really need rate cuts and more policy easing in China. In the meantime, things can get worse. We’ve got to see more clarity around the Fed” and its timeline for raising interest rates.

Hong Kong’s Hang Seng Index, which entered a bear market last week, fell 4.6 percent. Japan’s Topix index dropped 4.7 percent, heading for a correction. Singapore’s Straits Times Index slid 3.2 percent, set for a three-year low. The Shanghai Composite Index tumbled 8.5 percent, while Australia’s S&P/ASX 200 Index retreated 3.5 percent. New Zealand’s NZX 50 Index lost 2.4 percent.

Calm in the U.S. stock market was shattered last week, with volatility soaring by the most on record as the Dow Jones Industrial Average entered a correction and investors dumped the biggest winners of 2015. E-mini futures on the Standard & Poor’s 500 Index fell 2.7 percent Monday.

Taiwan on Sunday slapped a ban on short-selling of borrowed stocks at prices lower than the previous day’s close, while South Korea’s finance ministry said it will act “pre-emptively” after the nation’s largest exchange-traded fund suffered the biggest weekly withdrawal since its inception 15 years ago. The Taiex index slumped 4.9 percent on Monday, while the Kospi index fell 3.5 percent in Seoul. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Tricky one to write today thats for sure. Its been a long time since we have had such a sea of red first thing in the morning, and with the China falls shaking off the stimulus, the Yuan rate cut the other day has really let the genie out of the bottle and its going to be tricky to get it back in (and all sorts of other analogies about horses, barn doors and bolting). Once the charts do start to show any sort of bounce then the slightly more positive news flow will start. There is bound to be a bit more forced selling today so those brave bulls around might start to slowly build up positions or add to last weeks longs to target 6300 this week. When its like this there is no clue as to where the bottom is. That said the bottom for the 10 day Raff was 5940 for today and that level has been tested and has held so far today, and obviously the markets are pretty oversold right now (RSI10 is reading 9.8). Mostly this is being driven by fear so most technicals are irrelevant, however that level and 5835 below that are supports on the charts. Rate cut in September anyone? I can see an initial rise to 6075ish pre market, and maybe then some more bear, a bit of a repeat of Friday really with the rise and dip. If 5940 holds then a further rise towards 6100 when the US come online is possible, though maintain a bearish vibe for the moment, though interestingly Gold has slipped off its highs today, and if it was all 100% bad then that would still be rising.

108 Comments

  1. Morning. Hope nobody got caught too bad trying to pick a bottom, must admit I was tempted but luckily aborted it on Friday.
    This is what bear markets do, not so much just drop as melt away.
    That’s all my targets met anyway for the time being, 6200 FTSE, 16000 DOW and 4 figures on the DAX. Obviously pretty oversold now but doesn’t mean it’s the bottom.
    Anyone remember the start of 2013?
    Made a new high ~6150 and became heavily technically overbought, then carried on up for another 700 points………….

    Anyone trading without stops, please seek professional help.

  2. Game on tmfp..just don’t leave stuff open overnight is the best policy.
    Helpful just printing off a daily chart and just drawing 45 diagonals from each base & until this pattern is reversed – I guess, the bear persists.

    10 Min Range
    6000-6060 (approx)
    5 Min
    6007 – 6060
    2 Min
    6012 – 6035
    1 Min
    6008 – 6035

    So for time being – (L) – Stops 6008

  3. Currently got a small long, think this rally might slowly develop maybe towards the highs, stop at 17.

    1. Highest tick I’ve got here is about 37.5-38 – anything below 25 and think we’re maybe heading down a bit..(FTSE 29-30)

    2. must admit I’m licking my wounds from trying to catch a bounce. I’m going to wait for a few days. I expect David Cameron to come out and advise people not to sell. I expect they will continue selling on the fear factor and then I will look to go long.

        1. no closed out this morning. I’m now waiting. I remember posting an article from Bob the Bear where he mentioned 15% correction. I’ll now look around 5750

          1. Nah, custard, but it was only for that overbought/prev high conjunction, I still think the bull side has some legs.
            Whether we’ll manage 68+ this morning, I doubt.
            If we break 35ish then I’d go neutral/short maybe.

        2. So, I guess 38/40 now looks to be a long entry, a bit of a trendline, ~30% pullback, prev minor resistance etc.

      1. Just in time too, where’s this going to stop?
        If it get through 80, Nick’s arrows suggest 40, but where’s the short entry? A bounce from here to 6005-10?

        1. Aaaargh, missed the entry by 2 points!

          Now we are getting used to meltdowns, they will become increasingly sharp because of the number of people who have recently been knife catching and providing temporary support, are not trying it again because they got burned..

          3. Call me a cynic, but it was a huge red flag when Osborne started loosening up regs to allow more man in street pension investment directly into equities.
            The Man on the Clapham Omnibus, Bagholder of Last Resort.

          7. Osborne and he have been preparing the argument for a long time, Britain rah rah rah, it’s all bl**dy Johnny Foreigner’s fault.

            Short again at 38

  5. Frustrating morning Tmfp, tell me about it. I can’t get on board with a decent trade at all. Need to recollect my thoughts and plan again.

    1. While this attempted consolidation continues anything much over 40 is a bounce I suppose.
      Difficult to anticipate the DOW opening, would really want to be short I think, if we have any sort of rally before then.

      1. The problem is more the exit than the entry, when do you take a profit and freeze yourself out of any further downside?
        Trailing stops are ok when in freefall, but we have a little bit of resistance right now to trade off of.

      1. Er no, but if you think the DOW’s going to close up another 600+ points from here (164560) you can still buy at 5 plays 100 i.e. 20/1, no wonder IG make £30 m a year profit.
        😉

        1. well I bought it at 5.6 about 15 mins ago.
          We’ll see. I don’t expect an up day but we could get quite a big dead cat. Plus i cant lose more than 30 quid

      3. got there even sooner than you thought mate

        As for me, i’m going away to work on my charts and alerts…. i’m getting buy signals all over the place so I think i’ve plugged them in to the wrong socket haha

    1. and stopped straight out at 80
      Just going to watch for a while and get my breath back, still more downside to come later I reckon, but this could be a large dead cat

      short again at 900

    1. Unlucky Jack but, just maybe, you’ll look back on today and it will be the best thing that happened to you in the long run.
      I am seriously thinking about stopping, it’s taking over my life again. F*ck the money.

      1. I know, I feel exactly the same. What gutting me most that I don’t feel sad, it’s like nothing happened. All this gambling was getting out of control, maybe it’s not for me after all. I was having it as an extra hobby but it takes so much time and in the end the results are usually the same. I found myself hating computer already, and it was going on for months. Living in fear is not the best option.

    2. Jack. My condolances. This selloff has buggered me a bit as well. But not permanently as it has in the past.
      I think everyone who tries this trading thing has to fail at least once.
      My problem is that I’m naturally bullish. I find it very hard to sell short.

      I’m trying to train myself to be more neutral in my views

    1. yep. very dead. don’t feel anything yet, but possibly will. it’s just first day of trading after holiday which showed me that I am rubbish. This shows that any breaks are deadly for traders, head goes completely blank.

      1. Like consolation prize just won 250 points/pounds on another account. Doubled that poor little account. but comparing to 2600-800£ gone it’s nothing (of which 1800is£ was mine) the rest – bonus.

        1. Unlucky Jack, its very hard and definitely not a day for traders with small account to trade !! I have seen my 10 point stops go in flash sometimes but today even 100 points looked like 10 points.

  16. If you look at the 5 minute, excellent example of twin exhaustion candles @1430.
    If we get through 5920, could be on for 5950, a good shorting chance I reckon.

    1. I’m really hoping that was the bottom now. There’s just too much armageddon stuff in the media now for there to be too much more immediate downside.

      1. In fact, theres a good case for big squeeze on all those shorters who thought they were safely sitting 350 points in the black

        1. LOL, it doesn’t work like that dc.
          The -1000 was margin called longs, no-one who has been shorting is the remotest bit worried or squeezed.

          2. Sorry, didn’t mean to sound like a smart arse, but that DOW opening liquidation was pretty much a shut in tactic, forced deliberately by the shorts who then covered into the extreme of the drop (like what I did see my post at 2.22).
            That’s the exhaustion candles I mentioned, everything under 5840 was margin calls.

          1. For a dose of reality, just look at the longer term charts mate.
            It was only Thursday night that I was looking for something absurd, the DOW under 17000.
            Now, only one and a half trading sessions later, we’re 750 points under that AFTER a 1000 pt oversold rally!

          3. I don’t mind admitting to feeling the pace, shattered now. Will turn BH weekend into a long one I think.

        1. out and back short again. This is something else I can’t remember seeing so many 20+ pt 3min candles.

    3. Two PRT Trend Lines in this area 1) 5975 & a 2) 6008 – Below 5909
      (Bit busy – so no trading for me !)

      1. Just reading some of the posts higher up.
        Jack sorry to hear about your a/c…
        If you’ve got the peace of mind (unlikely, I should imagine) …What happened ?
        Were you Short from Friday or something like that ?

  17. Well had the craziest of days, down to the last few trades in my account, a bit of advice from the Guru ( tmfp) followed by the madest of drops and all of a sudden the account looks healthy again. Worst morning best afternoon. This trading game is bonkers at times. Rest day tomorrow. I think. Thanks again tmfp.

    1. All good mate.
      After today I am full of admiration for Chinese housewives, apparently they trade mental stuff like this every day on their phones and still manage to cook noodles and shark fin soup and things like that.
      I’m going for a lie down in a dark room.

  18. Jack you’ll be back. In May I was £40k up on the year then the Greeks poured on a £60k swing. Sent an email round the office on Thursday ‘calling’ the bottom of the market. Oh dear…

    1. Hope I will get back on track. It was a historic (for some “hysteric”) day and no way I would have survived with no stops on a 600 points plunge on Dax unless I didn’t have lots of positions above…. Well, I’ll try to get a lesson out of it, maybe.

  20. Yes, RJ, weird day. And it happened to be the day when I started trading after hols, not exactly the best coincidence.

  21. Sorry to hear about your account jack. It’s always a good idea to open positions after the market settles down a bit.
    There are trades I do without a stop and I make sure I have the time to watch every single tick. Anyway, I wish you the very best and I hope you can recover losses soon.

Comments are closed.