Support 6304 6297 6225 6215 6183 6081 Resistance 6319 6346 6385 6396 6431

Good morning. Interesting day first thing with the drop as expected from the 6320 area down to 6260, before a second bite of the cherry at 6303 for a shorter run down. The bulls kept fighting back though and that 6330 level got hit – I thought it was going to blast through the 6345 stop level but it literally stopped dead there and dropped back down. Bit unlucky with that final short in the end. That said, I am not expecting us to push that much higher above the 6346 level as the 2 hour chart has resistance there and has gone bearish, so a possible dip to 6150ish looks viable for the next move.

US & Asia Overnight from Bloomberg
Asian stocks climbed, building on their biggest five-day advance in almost four years, as Samsung Electronics Co. jumped after quarterly profit topped estimates and investors awaited a Bank of Japan decision on monetary policy.

The MSCI Asia Pacific Index rose 0.2 percent to 129.23 as of 9:03 a.m. in Tokyo, as Samsung rallied 3.8 percent to provide the biggest boost to the regional gauge. The company posted third-quarter profit that beat analysts’ estimates as the weaker Korean currency boosted component revenue and blunted the impact of price cuts on Galaxy smartphones. Japan’s Topix index added 0.2 percent before BOJ board members and Governor Haruhiko Kuroda decide whether to expand already unprecedented monetary stimulus.

“As chances for additional stimulus are very low, even if stocks rise early on anticipation of easing, they will probably pull back in the afternoon,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “And with Kuroda’s press conference coming after the market close, today might be a day of simply waiting for further clues on direction.”

Thirty-four of 36 analysts forecast that the Japanese central bank will forgo further easing, with just two predicting a move, according to a Bloomberg survey. Fifteen are forecasting additional stimulus at the next meeting on Oct. 30.

Australia’s S&P/ASX 200 Index slid 0.4 percent and New Zealand’s S&P/NZX 50 Index was little changed. South Korea’s Kospi index rose 0.4 percent. Mainland Chinese markets remain closed for a holiday, while Hong Kong is yet to open.

U.S. Shares
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent after concern over pharmaceutical pricing and company earnings spurred a slump for drugmakers on Tuesday. The underlying measure slipped 0.4 percent to end its longest winning streak this year.

“The recovery in U.S. markets began to show signs of fatigue,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, wrote in an e-mail to clients. “There was little macro data out of note last night, which provided investors with time to analyze what had changed during the recent five-day rally and the answer was not a lot.” [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I have a possible swing short entry around the 6347 area off the 2 hour chart so this is worth a go with a slight wider stop than I usually use for day trades with a view to holding this for a drop to the 6150ish area where there is support from the 25ema on the daily chart. Initially we are within a pretty decent looking 10 min channel. with resistance at 6330 first thing, and then 6345 later on, if we get a bounce from the 6303/6297 area – there is the bottom of that channel, the daily pivot and the bottom of the 10min channel at that area. I am wary of this bounce getting aead of itself as its had a good run and there are only so many up days you have in a row till the worm turns, profit is taken and we drop back down again. Generally I am feeling cautiously bearish at the moment.

121 Comments

  1. Catching the top day, then. according to Nick’s arrows.
    As for me gutted that missed all the fun in the morning. I only open terminal after 9 when I am lucky.

  2. Morning All, well i held that long from 38 and 20 overnight giving an average of 29,it dropped quite a lot so I added at 87.8 giving average of 6320.Sold the lot just before open for 51.4 a nice 31 points then went short at 49.6 took 4 points and lost my nerve! Then long at 36 took 5 points,lost my nerve and it went up to 80 plus, presently short from 76.2.Im trying to become more confident with shorts so we will see how this goes,Good luck everyone.

    1. Well done for holding your nerve overnight, but I thought you were in for the long haul up?
      Just a thought, but if you’re looking for double figure profits and you get a good entry there’s not a lot of point in taking +5’s, just bang on a break even stop and see what happens. DWISDDWID…
      GL.

      1. Morning Tmfp thanks,yes I do think this will get pushed up overall but i think it’s going to be taking any trailing stops out on a regular basis like I mentioned yesterday, so for me overall I think long but I’m going to try and profit on some of the sell offs in between.Its mainly because I think it’s important for me to become confident going short again.I have been burnt badly going short before and it’s been sticking with me.I’m going to need to be confident going short ultimately as you well know. All the best and good luck.

        1. Understood, but not the ideal market to practice shorting in atm.
          If you’re overall bullish then take profits into strength and be patient for a pullback re entry.
          And be ruthless with your R/R, there’s always another trade.

        2. Tmfp, I Just read your comment again about putting on a break even stop I like that I will give it a go thanks.

          1. Yes that bit about being ruthless with my R/R is one of my recent big failing points,I’ve made some bloody stupid entry’s this last month or so,sometimes I think why did you put that trade on,wait for more pullback.Hopefully it will become automatic like I think you and nick trade,I think it becomes second nature eventually but I have a way to go yet.thanks for sharing your experience on Nicks site,I think everyone appreciates your input good luck.

  3. Despite the DAX going mental on the back of those awful industrial figures?, looks like we’re a bit toppy short term.
    Missed the 30 long entry, but managed to catch 86 short cos crazy RSI, still holding half with an 02 stop and maybe a breakout long.
    Now we appear to have broken out supported by a solid looking bottom formation, while it stays above 6200ish the only way is up to ~6530, where we meet the downtrend, daily 76.4% and RSI weekly resistance around 60.
    imo.
    🙂

  4. Personally I am scared to take shorts on the tops (with bottoms for some reason easier). I think the ordeal last Nov-Dec when I was losing for nearly 2 months on that rally had it toll on me.
    What I am wondering, is anyone looking for taking a long instead of short?

  5. Think we’re probably nearer some kind of intermediate top which may take a couple of days to form. Expecting to see 6175 on the next move south. I have a sell order waiting at 6417 which I’m going to try and hold into next week. Just can’t bring myself to go long at these levels. Looking to get long again though once 6175 has been hit. Bottom fishing zone will be 6050-6175.

      1. Hi Jack, I’m swing trading at the moment – so the risk/reward of a long here is not as good as a short from 6417. There’s no guarantee it will hit 6417 and I may miss it – but I’m playing for the next move down rather than trying to squeeze the last bit of juice out of a 500 point rise.

  6. Looks like those crazy Germans are going to have another crack at the highs, covered my short for +14

      1. Yes jack, difficult to know now after the Lord Mayor’s Show. They seem comfy back in the 10000’s at the moment though.

        1. With all due respect anstel, that looks like a bit of overtrading.
          Talk me through the decision making process behind that 65 long.
          Tell me to shut up any time you like too.
          🙂

          1. Ok well you had mentioned earlier this is not a market to practice shorts in and to be quite honest that worried me a lot because I respect your judgement.you also mentioned wait for a pullback to renter long which I have just done now at 52 and 54.also I have been in profit many many times sometimes for quite large amounts of money and let it slip away hence the reference to Mrs H about “the thief in the night. So I just thought I think overall it’s trending up ,take a small profit and go long.its really hard to know what’s best but I know you can’t fight the FED.

          2. Fair enough.
            Judging what is far enough to qualify as a pull back but not too far and maybe a change of trend is the trick that we all find difficult.
            When we have 100+ range days, 20 or 30 points isn’t really that big a deal though.
            Do you use Fibonacci retracements?
            They can give a bit of perspective.

          3. I think that one of my big areas I can improve on tmfp is what you have just identified.I don’t get my best entry on pullbacks because I re enter to early,thinking it will bounce sooner than it does,it costs me lots of missed points.I use RSI on standard 14 day,macd and SMAs.and a big chunk of gut feeling,the Fibonacci sequence is something I don’t use but I need to look into,it’s actually all around us in the natural world,small nautilus sea shells,hurricanes,and spiral galaxies,yes that’s my homework now Fibonacci thank tmfp.

      1. Yes your right tmfp i cocked up again! I will just look at a bit of red for a bit.like you said it’s generally positive I think.

  7. tmfp
    Thank you for your remarks pasted last night.
    Could i ask for some advise regarding stops pls.
    As we gather you mainly scalp for 5 – 20 points.
    How do you manage to use stops on these trades as
    your risk to reward can only mean a very tight stop
    in the region of 5 – 10 points.
    How do you determine this and also you have often
    mentioned a manual stop, surely applying this from
    an emotional point must pose problems.
    Thanks
    (mrs)

    1. Hi Mrs. H
      The first thing I think about before a trade is where does the stop go?
      Second is, what’s the potential profit, although I don’t always have a hard target.
      That’s the R/R sorted, at least 1:1 and off I go.
      The manual stops thing is probably overall slightly positive financially, and I do cheat sometimes, depends on the circumstances, because the way I use RSI means, more often than not, that a stop will be in an overbought or oversold area where actually I’d be looking at doing the opposite. Seat of pants thing really.

    2. Hi Mrs Paul,it’s interesting to read your comment,I think females probably make good traders,you seem more analytical than most of us males, ,An interesting comment you made about the emotional side of trading.In my limited experience I think it’s 90% psychology.Have a look on you tube, a trading psychologist called Rande Howell, and in particular a video called ” The thief in the night.”Good luck.

        1. Hello Jack
          Anstel was referring to me. My husband & I trade.
          It is mainly Paul who comments here, but when he is
          away I take over.
          ———-
          Anstel
          You may be correct on this, Paul wants to be in a trade
          every minute and this often leads to some irrational trades
          on his part. When I am around, we always discuss every
          trade and this always results in fewer trades.
          ————
          tmfp
          Thank you for your insight. You always make me think
          about trading with new ideas.

          1. A beautifully formatted reply 🙂
            I bet things get a bit animated in the Hamley household sometimes?
            One of the best female traders I know is Brenda Kelly, she’s on Twitter.

    1. Out for nowt, not really doing it for me despite the possibility of being a short term double bottom.
      Maybe look to buy a break of 56, or do nothing.

  8. Anstel, your decision to take long was an emotional trade like: “I need my money back” or “It’s gone too far now, it will reverse now, I’m sure it’s the end” and “Oh I missed/got out of my short, I will go long now out of spite”. If you recognize yourself in any of those statements, let me know.

    1. Hi Jack to be totally honest I’m not comfortable going short,it scares the hell out of me.if this market collapses which it will eventually it’s going to be a global disaster and I think the chaps running the show would like to avoid that as long as possible so long for me mate but I will try to profit on any profit taking when it gets overbought.The other thing is the time,in the next hour or so I expect the Dow to start pushing up again.who knows ? its seat of the pants stuff for me at the moment.The market is going to try to shake us off so in my opinion we need to be very flexible.good luck.

      1. Anstel – I can’t see that going Long at 6365 was all that bad – it just didn’t work. Stop at the 6360 ?
        Just as 6348 is a good entry – but that’s looking a bit shaky now as well.
        Anyone for 6332?

    1. Sure Jim, but most of that chart is when the cash market is shut. I know everything’s 24/7 these days but it’s just ghosting the overseas markets then imo.
      What do you think generally about out of cash hours data? I treat it with suspicion.

  9. Taking a fundamental overview, recent FTSE gains have been mainly on the back of commodity/oil/mining stocks which were battered on the back of the Chinese slowdown. Also emerging market exposure has been a plus.
    The basic problems that hammered those sectors to oversold still remain, global slowdown/stagnation and a strong dollar, so any rises should be seen as dead cat bounces in bear markets.
    Just in case anyone thinks I’ve turned bull because I think there’s a bit more upside at the moment: nothing could be further.

    1. I was worried there !
      I’ve always found thinking about market direction gets me into a whole lot of trouble. It’s better I don’t and somehow try and let the charts speak to me… Napoleon…

        1. Hmmmm….opening a position now is essentially speculating on the DOW opening and I don’t fancy picking a top on that.
          They’ve got 17000 in their sights, driven along by money going into the safe heavyweights like Microsoft.
          Could overshoot that big number today too, then it’s looking like a scale up sell imo.

    2. Dangerous to rule out the history of stuff being pushed into the year after a US election though.

      1. Sure, kicking the can down the road is something politicians are good at.
        Structural problems can only be toshed over for so long though.

    1. Excellent.
      Was that a target or couldn’t you resist the temptation to bank a profit? (Nothing wrong with that.)

  10. I had a mental target of 6380 but I had not set a limit I just closed it because I felt the market was running out out steam and it was offering me a reasonable amount of money and I didn’t want to be greedy and lose what I had.Im very mindful of “The thief in the night” I’m pleased today though tmfp I have had six winning trades today 2 big ones and four little ones.Its a much needed boost to my confidence because I had been in a slump as you guessed the other day.

      1. There’s only one thing I can suggest because my trading is no where near as refined as yours but it’s this,If you can trade without fear I think it gives you a massive edge.My mistake has been trading to big I’m keeping it smaller so if I need to take some heat it’s easier.Btw I have just gone short at 90.8 only small so no sweat :0)

        1. Oh yeah another little thing I have learnt…..the more success I have the smaller I need to keep my next trades! Overconfidence is financial suicide in this game!!!!

          1. I have added to my short now still small and manageable and I’m now short from 92.7. We have had some pullbacks around midnight last two nights im wondering if it will be three in a row?

  11. Out at 78.9 for about 14 points or so,if it bounces I will go again if not I’m quite happy to not be greedy.

  12. Hope you don’t think I’m over trading but I’m long from 75 now small and manageable if it drops further I will add long.

  13. Short at 6390. Shooting star candle on the 5 min and price action at R2. Aiming for R1 6361.

          1. Thanks for your advice Senu I’m at my max position size now that im allowing myself,I know my failures are overconfidence and getting in too deep, well that and entering pullbacks too early,I think it’s finally sinking in,but it’s been an expensive flipping lesson!! If it was easy everyone would be doing it,I’m committed to learning what works. Very best of luck Senu be nice to see you back here a little more :0)

  14. Lost my confidence today
    but would have been Long 6362.
    I know the rule book says — but all this “Stop” seems a little bit of a pain in backside.
    All of my trades would have been crackin’ today were it not for “Stops” .
    What’s that tell me ..

    1. Stop are too close?
      Or just that it’s an extremely difficult way to make money regularly?
      Or both?

    2. Stops can be a double edged sword,thanks to tmfp though I like trailing stops as soon as I get some blue numbers I can slap a trailing stop on and relax,I tend to move them up and down though like fishing as the market breaths.

    3. How’s that 62 long looking now mate?
      I remember being told
      “Stops are like condoms, by all means go without, but how many kids or diseases do you want?”

      1. Oh I like kids tmfp :0) anyway I’m long now from 64.1 im down about 15 points as we speak and very calm :0) it’s not going to kill me is it ?

  15. I’m going to give the Dow until tomorrow to form some new levels.Have a good Afternoon and Evening everyone,congrats on the day anstel.

      1. Senu I have a confession to make……. I added one more at 22.9 gee wiz you are right it is an addiction,

        1. what is price now?
          naked trades and averaging are the biggest DONT’s for any trader in my view

  16. People getting out before China come back from their 5-day holiday tonight and wonder why we’ve gone to the moon?

  17. looks like a full retrace like last friday, hammer candle on the 5min.

    anyone know why it dropped so hard and fast?!

  18. Hi guys it’s the night shift here,well I closed that long at 72.3 giving me 8.2 points ….not a massive number of points but I’m concerned that if China opens and shows weakness the Dow and Ftse are vulnerable to a big downside risk so I will bank my profits and have a restful nights sleep.Catch you all tomorrow. Good night all.

Comments are closed.