Support 6352 6346 6319 6316 Resistance 6369 6373 6377 6419 6449 6475

Good morning. It was a mainly quiet day on the FT100 on Friday with Wall Street having a shortened day of trading. The 6350 long ran up for a few points, whilst the Dax was the best performer for the trade plan, playing out as predicted rising to 11350 then falling back. The only news which moved the market was some weak China economic data overnight and a fall on the Shanghai index due to some broker irregularities. This and a negative announcement from Anglo American had a knock-on effect on the commodity sector which fell around 4%.

US & Asia Overnight from Bloomberg
Asian stocks fell after Chinese shares posted the biggest one-day selloff in three months. Material and consumer-staple shares led losses on the benchmark index at the start of a pivotal week for the region’s markets.

The MSCI Asia Pacific Index lost 0.3 percent to 132.82 as of 9:02 a.m. in Tokyo, headed for a monthly loss of 1.2 percent, its sixth such decline in seven months. This week brings a decision by the European Central Bank and the last reading on U.S. jobs before the Federal Reserve decides on whether to raise interest rates in December. The Shanghai Composite Index dropped 5.5 percent on Friday, its largest retreat since the depths of a market rout in August, as regulators clamped down on brokerages.

“The main event is the ECB moving on Thursday and the U.S. non-farm payrolls on Friday,” said Mark Matthews, head of Asia research and a managing director of Bank Julius Baer & Co. in Singapore. Friday’s move in Chinese markets was “a positive because they were investigating brokers, which is a sign they don’t want another bubble to form, which was happening as it was up about 25 percent just in the last couple of months. It was oversold on Friday and I would expect it to bounce today.”

Japan’s Topix index lost 0.3 percent. Data Monday showed a preliminary reading for industrial production rose less than economists estimated in October compared with the previous month, while retail sales climbed more than they had expected.

Regional Gauges
Australia’s S&P/ASX 200 Index added 0.1 percent. Dick Smith Holdings Ltd. plunged 47 percent in Sydney after the electronics retailer said it sees a A$60 million ($43 million) writedown and abandoned its profit forecast.

New Zealand’s S&P/NZX 50 Index increased 0.4 percent. South Korea’s Kospi index fell 0.8 percent. Futures on Hong Kong’s Hang Seng Index added 0.3 percent in most recent trading, while contracts on the FTSE China A50 Index slid 0.2 percent.

China’s securities regulator is investigating Citic Securities Co., Haitong Securities Co. and Guosen Securities Co. over alleged breaches of rules on margin and short-selling contracts. Shares of Chinese brokerages led the decline on Friday.

E-mini futures on the Standard & Poor’s 500 Index fell 0.2 percent after the underlying gauge climbed 0.1 percent on Friday in a shortened session. As investors await payrolls figures for November, traders are now pricing in a 72 percent chance the Federal Reserve will raise interest rates in December.

ECB Meeting
European policy makers meet Dec. 3 to discuss monetary policy and what the ECB can do to prop up sluggish inflation within the region. The central bank is considering cutting its deposit rate further below zero and adding to its program of quantitative easing.

International Monetary Fund Managing Director Christine Lagarde and some two dozen officials on the fund’s executive board gather Monday in Washington to decide whether to grant China’s yuan status as a reserve currency by adding it to the fund’s Special Drawing Rights basket. While Lagarde has already announced that fund staff had recommended the yuan be included and that she supported the finding, the IMF is likely to give more details on how it arrived at the decision.

This week also sees a policy decision from the Reserve Bank of Australia, while members of the Organization of Petroleum Exporting Countries will gather in Vienna. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

I am feeling a little bearish this morning looking at the charts, with a decline from the 6380 level towards the 6315 area looking distinctly possible. We have the daily pivot at 6369, as well as the hull ma (2hour) showing resistance at 6377. A short around this area first thing this morning could set the tone for the day, especially as Asia stocks have fallen during Mondays session. The ASX200 (Australia) had a little rise initially then fell back also. I think the FTSE will follow the same pattern today. However, if not and the bulls manage to break the 6380 area of resistance then a rise towards the top of the Bianca channels at 6450 is possible. We have an ECB meeting on 3rd December which may yield further monetary stimulus, so might see some more bullishness around then in anticipation of that. 6345 area is going to be initial support today, as that was Fridays low that we bounced off, the bottom of a rising 30min channel and the 200ema on the 30min there also.Therefore the bears, if they show up first thing, will be keen to break through this strong area of support to target the 6315 level. Below 6300 and there is quite a lot of fresh air till 6200 and 6140 so the bulls will be keen to defend this area.

59 Comments

    1. Yeah, it was all going so well this morning, until it started going up!

      Watching it tick by tick, it was the DAX once again that dragged us up, the FTSE was teetering on a test of 6300/10 imo.
      I don’t know how much of this expected extra QE is now discounted in the DAX price, still a thousand pts to go till ATH.

      1. Funny thing is that Europe seemed to stand up well after China had a bit of a nightmare on Thursday night/Friday morning so maybe QE “good news” mopped up by Asia bad news?
        Personally, if I see 6330/40 again I’ll cover the rest then sit on my hands, hoping for the Santa slap (to around 6250) so I can load up for Santa rally!

  2. Morning All,
    Mystic Meg’s Market Mumbling’s had all the trades set out for this morning set up on Friday night 9:00pm. Long 6330 – eased out bit by bit as we approached 6360.
    I think the penny is finally dropping for me – cut the crap trades stick to the good one’s.
    tmfp – You should have had some trios down around 6330 area.
    http://tc.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=mgs5p723d671jyjm3udfeqc1d&type=png&purpose=file

    I’m thinking it’s just going to mess about now – so not going to watch for the time being.

    1. Lol, yeah Hugh, good idea to stick with the good trades and cut the crap ones, the tricky bit is identifying them at the time.
      I did indeed have rsi buy flag up around 30, but only covered 25% and ran the balance of the 44 break too long, expecting/anticipating the bounce to dead cat <50 before having a look at ~310 🙁

        1. I’ve just shorted 74, more at 86 and 98, stop 14, based on declining momentum and a disconnect with the DAX widening, haven’t had a medium term trade for a while, although will probably regret it/take profits too early/delete as applicable…

          3. Custard, target=any profit that’s too tempting lol.
            Certainly 50 first this afternoon hopefully, then a retest of that surprise (to me) support at 30 and see how we go from there.

      2. tmfp – Cutting the c**p – LOL – yep I know …
        I just did really well last week (& this morning) from taking some time in the evening to look at the charts and look for decent trade “areas” that would possible yield the 50 point moves that the FTSE seems to deliver everyday (probably to give traders an opportunity to turn stuff )

  3. Morning all,well I didn’t end last week on a high note,my rules are to be out at weekend so I took a 9 point loss on Friday evening but this morning I have gained 43 points on four trades so I’m quite encouraged.

      1. Bare with me hugh I have been having a few issues sending emails something in the settings on my tablet.I don’t have email on my trading laptop it’s just for trading.thanks and good luck.

      1. Thanks tmfp,but you are consistent and that’s more important,I have regained 52 points since I started again,it’s small stakes but it’s the process and consistency I’m trying to find,if I can make myself £100 a week while trying to improve my trading that would be fantastic GL

        1. Try to avoid setting profit targets, it puts you under pressure and makes you vulnerable to compensatory and revenge trading.
          Get the process and R/R right and the profits will hopefully follow.

          As a serious hobby, I build custom motorbikes. I don’t have the necessary skills in all areas to do it singlehandedly, but concentrate on the aspects at which I’m good.
          Same goes for trading, long term I have no idea of price movement, but short/medium term I have organised a system which I understand and am comfortable with, even when it’s not delivering every day.

          1. Thanks Tmfp that makes a lot of sense,im in no rush to enter the market at the moment,I’m going to be more picky and wait for setups that look favourable to me.

  6. Interesting little micro situation that I’m calling the Bungee Effect, the DAX has been the more bullish of the two this morning, but since 12.30 has lost ~30 pts whereas we are nett level around 86.
    I’ve noticed this a couple of slow sessions recently where the lagging index has one more bounce (hence bungee) after the primary one has lost momentum.
    Quite how to capitalise on this without arbitraging is not immediately clear though, will be interesting to see if the DAX bounces off 11400 whether we catch the updraft, having ignored the prior weakness.
    Just for the fun, I’ll try short 2 ftse at 86 long 1 DAX 11400, see what happens.

    4. Just undid the arb, sold the DAX at 82 so -1×18 and bt the ftse at 70.5 so + 2×15.5 = +13 on balance.
      🙂
      Yes, custard, short ftse 74 and 86 apart from that.

        1. Draghi should have just given it to me, I could do some serious economy stimulation with wedge like that
          🙂

  7. I’m looking at the 1 hr Ftse and last Thursday’s 6400 looks like an area I may consider a short.the Dow seems to be finding a higher resistance level around 17920 – 30 recently if they come together especially if the Dax is towards a daily high I may think about trying a little short,does that seem a reasonable plan anyone?

    2. There’s two ways to play widely recognised resistance areas, trade with history, i.e. in this case go short at 400 anticipating another failure, or stop buy on a breakthrough expecting further gains now that resistance has proved futile.
      Or both.

  8. Interesting, that -9 points at 15.15 nothing to do with DOW, this is looking a little vulnerable for 50 methinks.
    What’s your plan re 83 long anstel?

    1. Well I didn’t expect that drop on the Dow,seeing as it’s minimum stakes I’m going to hold and hope it bounces.

          3. My master plan is up there somewhere anstel ^^^^ this is part of a bit of scale up selling that I decided on earleir, re that 400 level we talked about.

          5. When I do this type of series of trades, I lump the profits of trading off of it into the whole thing, so effectively I’m short 2×86 and shorting again there if/when it reaches it, covering a % on oversold dips.

          6. I think I understand what you mean,seems a little complicated I’ll read it again,meanwhile MHH might give me a boost.

  9. Got quietly 30 points today on Dow after suffering with long on it first, after coming out b/e, got short 4.23 on which the winnings came.

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