Support 6174 6168 6145 6130 6110 Resistance 6202 6220 6235 6267 6300 6312 6378

Good morning. Here we are at the end of August and its been quite the rollercoaster! UK markets are closed on Monday for the bank holiday so back for the start of the new month upon Tuesday. As such I think a lot of traders will be glad to see the back of August! We got a decent rally yesterday with prices rising above 6200 during the session and peaking at 6230 after the bell. Dropped back a bit since, so we may see some profit taking today, especially as we have a long weekend coming up. A dip from the 6200 area towards 6168, and 6145 I am thinking.

US & Asia Overnight from Bloomberg
Asian stocks rose for a third day as a global rally gathered pace and the U.S. economy grew faster than expected in the second quarter.
The MSCI Asia Pacific Index gained 0.4 percent to 129.32 as of 9:01 a.m. in Tokyo. The gauge, which began this week with a two-day 5.1 percent slump, has rallied the past three days. Futures contracts indicated Chinese markets will continue a rebound, with contracts on the FTSE China A50 Index gaining 2.3 percent and those on the Hang Seng China Enterprises Index rising 1.8 percent.

Data on Thursday showed U.S. gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg, and up from the 2.3 percent reported last month. A separate report showed filings for jobless benefits declined to a three-week low.

“It gave credence to the story that the U.S. economy could be building momentum,” said Chris Green, an Auckland-based strategist at First NZ Capital Ltd. “In the world we’re looking at now, that is of some comfort. We seem to have gained some sort of stability and people are focusing more on the underlying strength of the U.S. economy.”

The data come as Federal Reserve policy makers debate whether growth is strong enough to withstand the first increase in the interest rate since 2006. Central bankers gather at Jackson Hole, Wyoming, for a discussion on inflation just as China’s slowdown renews fears of falling prices. Fed Chair Janet Yellen won’t attend this year.

Regional IndexesJapan’s Topix index advanced 2 percent. South Korea’s Kospi index gained 1.3 percent and Australia’s S&P/ASX 200 Index rose 0.5 percent. New Zealand’s NZX 50 Index added 0.9 percent.

This three-day rally halted a global selloff that engulfed markets since China devalued its currency on Aug. 11, an unexpected move that ignited concern that the slowdown in the world’s second-largest economy may threaten global growth.

“It’s been a very volatile week and I’m glad it’s over,” Green said. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Today’s pivot is 6168 and I think we will have a dip this morning to test that level, either from 6200 or slightly higher if the bulls are quick out the blocks, 6235 which is yesterday high and the top of the 10 day Raff. Generally i am still bullish going into September and I expect us to see 6420/6450 next week. I don’t think rates will be adjusted next month. As mentioned yesterday I wouldn’t be surprised if the Dow rises to 17250 on this bounce from this weeks lows. I have gone for an initial dip as the 10 min chat has swung to bearish overnight, however the 30min and above are all still bullish, hence why i have plotted fairly shallow dipping arrows for the bearishness. Its a Friday before a bank holiday so I don’t expect lots of traders to be piling into new positions. We have our GDP data out at 09:30 forecasted at 2.6% so will be interesting to see what that result is. There is also some German CPI news out at 1pm so might get some movement around then too.

44 Comments

  1. Paul, wave B typically ends as the right shoulder of a h&s. If you see the drop in wave A on daily. It went q couple of 100 points deeper, hence the right shoulder would be a couple of 100 points lower, WO I thit the top is in

    2. the only other possibility is that this is an ending diagonal of subminuette with breakout around 6208/10 which once again links it to being w-4 in downmove

      1. if you tie this with dow then they are both running a leg higher but on different counts
        if correct place buy order at 6210 & stop just below pivot 66 area

  2. Call me crazy, but if I am right dax targets for long term shorts would be atleast 2000 points south.

    Ftse atleast 800 points down and
    Dow atleast 2000 points Down.

    That’s where wave 5 on the weekly should kick in to make all time highs in 2016. And the big bear market should start

    1. though i dont see your count i agree with the down move of 800 points down but only if we reach 450 area

  3. All ftse, dax and Dow Paul. The drop yesterday on dow was wave 4. Less than 38.2% of wave 3!!.
    We completed w5 on all indices today morning. or are in wave 5 marking low volume rallies on the daily. we will either start a b.1 today or Monday.
    I am favoring today.

  7. had to have a quick peak at nick’s arrows.
    so my count is looking suspicious
    ok icarus – i will have to go back tothe drawing board

    1. maybe for you nick, you have your arrows sorted out
      i am off to staples to get a new drawing board

    1. Oh I agree, don’t you worry! Just need the BBC headlines saying stock market has recovered. Its safe to go back in the water……

    1. DAX 2hrs — Growth has tailed off for the moment, but not expecting any significant plunges right now. Could be on the crest of a ripple … … 😀

  16. Yes a repeat of a couple of weeks ago. I am now going to hold over weekend. If Dow drifts today, expect start of selloff on Monday

  18. Is everyone staying out of it for now?

    I almost fancy a short on the dax at about 250 but might just leave it for now

  19. Gutted went long from 6220 yesterday. Thought it was gonna cont up. As its last trading day and bank holiday. Thinking of holding through weekend but played a stinker. Can we see this dropping further on US open?

  20. Expect similar drift in us. Expect some buying near 10000 on dax as the bulls come to save 10000 in vain

  26. Arrrrrrgh, rode out the the drop and rise, held my position then with relief of the rise moved my stop now been stopped out and it move even higher. Should have stuck to original plan, lost out by being too bloody cautious.

  27. Some really interesting moves there today. Still not convinced that the lows are in. Would hold until Mon/Tue.
    declining rsi and higher highs don’t look good for the bulls. My reasons for staying in the trade still intact (so far) on thr Dow, spx and ftse. Surprising that ftse got to where it is now. Could never fully understand it anyway!

  30. All positions closed. Unfortunately, direction unclear…was expecting futures to look up, so closed for the moment. Will see what tomorrow brings

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