Support 6070 6058 6010 5988 Resistance 6080 6109 6138 6205 6230 6270 6290 6306

Good morning. I am not sure what that rise was all about to 6245 yesterday at the open but it certainly worked in our favour with the long from 6108. After that rise the FTSE spent the rest of the day being bearish, dipping just below 6000 as the US session closed, with the Dow posting -500 at the time. However, as all the headlines started to ping up about it the bounce started and 100 was added quite quickly, with another 200 added overnight. The FTSE now sits at 6080. There was an interesting call from Morgan Stanley last night too who bravely called the bottom around the current moment in time, read more here. Time will tell if that comes to pass or not. Things look quite positive for a bullish start, if the bulls can hold 6060 support.

US & Asia Overnight from Bloomberg
Asian stocks fell, following a decline in U.S. shares, as weak American manufacturing data added to concern about a slowdown in global economic growth.

The MSCI Asia Pacific Index dropped 0.7 percent to 125.97 as of 9:02 a.m. in Tokyo. Anemic demand from emerging markets including China translated into leaner factory order books in the U.S., data showed Tuesday.

Futures on the FTSE China A50 Index slid 1.5 percent in most recent trading in Singapore, with contracts on the Hang Seng Index declining 0.7 percent.

“You have worries about the global growth outlook led by Chinese concerns at a time when the Fed is thinking about raising interest rates, and that’s leaving investors very twitchy,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors Ltd. in Sydney, which oversees about $114 billion. “I think we’ve seen the worst, but it’s an environment where volatility is likely to continue.”

Japan’s Topix index declined 1.7 percent. South Korea’s Kospi index retreated 1.5 percent and New Zealand’s NZX 50 Index lost 1.3 percent. Australia’s S&P/ASX 200 Index fell ahead of a report on the nation’s economic growth. Markets are yet to open in Hong Kong and China.

In addition to the U.S. manufacturing report, an official factory gauge in China dropped to a three-year low in August, while measures for the euro area signaled a divergence in the German and French economies. An index for Germany expanded more than forecast and a French measure showed contraction, according to Markit Economics. U.K. manufacturing growth cooled as export orders declined for a fifth month. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

6060 looks a decent support level initially, as we have a bullish set up on the 30min chart with support there. This is the first time the 30min has been bullish this week so it will certainly be interesting to see if that level holds. We have had a decent overnight bounce from the 5980 low despite a bearish Asia and more weak data – though the flip side is of course rates won’t be rising in that case, hence this rise. If the bears break the 6060 support area then I would expect a dip back to 6000 area, and maybe lower they really start getting some momentum. The bottom of the daily channels are still quite far below at 5800 for the 10 day Raff and 5766 for the 20 day Bianca. Generally today I feel fairly positive, as long as that initial support holds.

108 Comments

  1. Morning, good call with the 60/70 support and 09 resistance Nick.
    Looks like we’re testing the support again now.
    I’m quite short at 6100+ this morning, can’t understand why we are this high overnight, the MS Effect?, and will cover a little around here 65 but looking for a down day myself.

    2. Feeling a bit overdone in the 40’s so covered more and looking for any decent bounce to reshort.
      Maybe DAX will see a bit of buying around 10000.

      1. Morning –
        Trading these PRT Lines again –
        So far pretty good this morning.
        Had the initial move higher from 6070 – 6107
        Then S 6107 to 6067.
        Now S again Stop 6067 Tgt 5938 (Minor).
        The way I’m assuming these work is that you trade in the direction of the colour of the line – red/green. Generally opening a trade at the close of the bar above or beneath.
        Oh er RSI Trio looks like it may kick in soon

  2. Tmfp, that was the abc correction for 5 waves down.
    I am now short with targets over 1000 points south

  6. Hugh, look at the hourly for waves, we completed abc retrace for w1-5. of the first leg down Short on touch of 13 ema on 5 min.

  8. By the way is Morgan ans Stanley making calls for downside by any chance?why did you refer to them tmfp

    1. No, Morgan Stanley have called the bottom to this decline with the use of their patented YieldSwingometer, or some such tool of the devil.
      Apparently equities have to rise because bonds are expensive. Too complicated for me.

        1. There’s so much mud flying around at the moment I don’t think we’ll know what sticks until it’s stuck.
          Dates for your diary – Mid September 11th & w/c 14th
          Dow Megaphone <6000 then again because it's a megaphone – Q4 and higher ….Q4 ??? What more !!

    1. Point and figure charts, memory lane there, of a pencil, ruler and graph paper. 🙂
      So your short @ 49 is 76.6 fib based only, or reinforced by the proximity to previous high area?

      1. Yes tmpf – I like the Renko charts simply because it’s easier to see Hi/Highs & Hi/Lows & Lo/Highs & Low/Lows and also ranges.

        The other chart I use is this one below.

        It’s a stripped down version of Ichimoko Clouds – but it’s good for indicating Range Trading – when the the two lines are bumping into each other.
        http://tc.md.it-finance.com/ProRealTime/display_chartimage.phtml?name=0lzxuagw4pato24uw2gttseru&type=png&purpose=file

        Posting these – as I’m appreciative of any thoughts anyone may have.
        Below is a wider version of that Ichimoko Chart
        http://tc.md.it-finance.com/ProRealTime/display_chartimage.phtml?name=l2ew671efqgvy8xeiuvpe8fsu&type=png&purpose=file

  11. tmfp –
    You may be interested ref. that short RSI Trading idea – I’ve trimmed the stops & limited profit so it’s 3/1 (2S/6P) and have set it up to auto on a demo a/c. So far since 7:00 this morning it’s done 24 Points. Going to let it run for a bit…

    1. 1:3 is good, maybe you could auto adjust the extension to trading points i.e. 3S/9P etc. using VIX, to match it to prevailing volatility?

      1. Issue with IT Fin. is that you can’t reference another instrument which is a shame…I think it can use the ADX, but I’m not going to try now – later perhaps.
        Promised myself I’d try not to get drawn in today !

  12. Got a Re- draw on the PRT Lines
    6043-6021 – Major 6016
    So the trade is break of 6040 S Tgt 6021 – as I’m interpreting it.

    1. Hmmm had a feeling that 65 wouldn’t hold for very long, but the benefit of a good rsi entry, out for nothing.

      Try again at 82 for a quick turn 10 either way

      DAX is driving this

  18. It’s trading the breakout from 6060 from what I can see.
    6089 would seem a good place for Stops with a Short.
    Can wait for the RSI 31 but maybe it will never happen.

      1. Easy to get lost in the woods with tmi.

        Got my 66 long, 10 point stop
        Early bearishness has been satiated, I think a low volume bit of up from the DOW will be in order later, especially without the Yellow Peril threat for the rest of the week.

        Taken 10 while typing lol, looking to replace on a revisit to 60’s

        2. tmfp was that the 11:34 (1 min) ? 66 L
          Can see why …
          Just waiting to see if we get a print of 52 ref…the PRT sig

      1. Got a bit of a pennant shaping up for resolution by 14.00, 6068 either way.
        Still lightly long and lightly bullish, current stop at 57 (for a bit of variety)

          1. Also Brazil bad industrial output stats, -1.5% mom.
            The emerging markets are really under the cosh, trapped between expensive borrowed dollars and shrinking exports.

        2. Well that’s the top of the pennant broken, now 77 needs to go, then an attempt at 90 would seem in order.

        1. There’s a lot of silly HFT stuff going on, like yesterday’s opening and that nonsense to 66 just now.
          Out of all at 30, let’s see some dust settling

          1. Good play tmfp – lovin’ it when you get your heels stuck in !
            Have a look at that divergence on the 1 second chart …always easier to see after the event..

          3. gutted I missed that 6150 entry – could have kept that for a while. Bit of weakness into the close?

          3. So far the grand total is………
            ……..wait for it …………….wait for itttt….
            ……………41 pints !!!
            Reach for the sky – push the ceiling ….!!

          6. That’s cool. 🙂

            Does that mean 71% of longs stopped out and 59% of shorts?
            Would be good to run simultaneous 2:1 and 1:1 S/L and compare them.

        3. I’ll try to go through it all later.
          It was 33% successful.
          The figures have changed a little as it’s put a few more through.
          I thought it was pretty good as well.
          The thing is, with a 2 point stop – it obviously puts a few trades in that get blown out so maintaining the 3/1 is fair. If this was reduced to less I think there wouldn’t be any lift to it.

          4. Yeah probably Jim 🙂
            I don’t like it in the MHH when it makes several attempts at a level, usually means that will hold.
            This +10 in the last 5 minutes is a mystery, no divi, looks like driven by DOW so might be swaps.
            Needs a short between 6105/10, buy it back in 20 mins for +15 I reckon. But not for me, I’ve had enough today. Again.
            🙂

    1. Good idea, although I’d probably wait till 0830, purely random whether a small stop survives the volatility before then.

      1. Guess it cuts both ways…
        Interesting day today
        Think I’ve made some headway with things I’d like to achieve.
        Close on the AT was 59.
        Got to go – Need to get some work done !

  29. tmfp — Fast ROC has peaked and slow ROC is already negative, so a further fall possible — the whole thing could go bear shaped!

  30. Hi Hugh,

    What platform are you using for your auto trades? Can’t see that option on mine.

    And what are your criteria if you don’t mind me asking. Your RSI trio has served me well the last few weeks.

    Cheers mate

  31. The price is unable to complete a simple reverse h&s pattern on the 5 min.do you really think there are enough bulls around to complete the same pattern on a 4 hr chart!

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