Weak still, on the way to 5400? Gold rising, equities falling

Support 5608 5604 55815579 5494 5476
Resistance 5645 5647 5650 5681 5717 5766
Good morning.
Market Summary for Wednesday
After a bumpy opening the FT100 ground its way up during the day on a reassuring statement from Deutsche Bank which helped the banking sector and markets overall.
A statement from the FED caused a small blip down near the Wall Street open but then the FT100 rose again during the afternoon before falling back slightly into the close at 4:30pm. Financials were among the best performers with gold and commodities the weakest.
Chair Janet Yellen said the Federal Reserve still expects to raise interest rates gradually while making it clear that continued market turmoil could throw the central bank off course from the multiple increases that policy makers have forecast for 2016.
“Financial conditions in the United States have recently become less supportive of growth,” Yellen said in testimony prepared for delivery Wednesday before the House Financial Services Committee in Washington. “These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market.”

US & Asia Overnight from Bloomberg
Asian stocks fell as markets in Hong Kong and Seoul joined a global selloff in their first day of trading this week.

The MSCI Asia Pacific Excluding Japan Index dropped 1.2 percent to 367.19 as of 9:35 a.m. in Hong Kong. Markets in mainland China, Japan, Taiwan and Vietnam are closed for holidays. The Hang Seng Index slumped 4.1 percent in Hong Kong, while South Korea’s Kospi index tumbled 2.5 percent. A gauge of worldwide equities slid 2.3 percent in the first three days of the week amid concern about the outlook for the global economy and as oil extended its slide.

“We’re seeing a contagion from what’s been going on in the last three days in global markets,” Tim Condon, head of Asian research at ING Groep NV in Singapore, said by phone. “This is the first day South Korea and Hong Kong are registering a sort of reaction to that. It’s a huge down day. Financial markets are repricing for a global growth slowdown. Expectations that monetary policy would be able to do much have diminished considerably.”

Federal Reserve Chair Janet Yellen on Wednesday highlighted uncertainty over the pace of China’s growth and the related rout in commodities, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market. Yellen told Congress the Fed still expects to raise rates gradually while making it clear that continued market turmoil may alter its forecasts. Her dovish-sounding comments weren’t enough to boost U.S. equities.

The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong slumped 5.1 percent on Thursday.

The Kospi index is trading for the first time since North Korea launched a long-range rocket on Feb. 7. South Korea is pulling out of an industrial complex jointly run with North Korea, taking aim at their last remaining symbol of economic cooperation to punish leader Kim Jong Un for a recent nuclear test and rocket launch.

Australia’s S&P/ASX 200 Index added 0.2 percent, after falling into a bear market on Wednesday when it plunged to its lowest level since July 2013. New Zealand’s S&P/NZX 50 Index lost 0.4 percent, while Singapore’s Straits Times Index slipped 1 percent.

Markets in mainland China, Taiwan and Vietnam remain closed for the rest of the week, while those in Japan will resume trading on Friday.
E-mini futures on the Standard & Poor’s 500 Index fell 0.7 percent after the underlying U.S. equity benchmark index closed down less than 0.1 percent on Wednesday, with gains of as much 1.6 percent evaporating in the final hour of trading.

Crude oil futures fell below $27 a barrel on Thursday after after dropping 15 percent the previous five sessions. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We had a quick foray below 5600 overnight but the algo’s managed to drag it backup above, however it still looks pretty weak. That said, I can see a possible bounce up to the 5645 area, where we have a couple of decent looking resistance levels and an area that is probably worth a short. The bulls can’t seem to make any of their rises stick at the moment, especially harder with so much negative sentiment around, as well as a dose of fear about the markets/economy/debt/interest rates/oil/commodities/company profits/war/etc! Anyway, we have the daily pivot at 5645, as well as the coral trend line on 30min which has just turned to bearish (short term trend is down that means). If 5600 breaks then there is quite a lot of fresh air below and we are looking at a possible dip to 5400. Oil has continued its slide from the $35 area, and still looks like we will dip to $16, though whether it actually does remains to be seen. I’m like a broken record on that oil price! Sorry. So, an initial second test of the 5595 area is likely to hold I think, as the bulls will want to keep us above 5600 if possible, though a third test later today is likely to break I feel. On the flip side, if the bulls can break 5645 then short term crisis averted and a rise to 5766 is possible, where we have the top o0 the 10 day Bianca channel.

75 Comments

  1. Morning all,pretty decisive break of that trend from Tues,thought we might see a pre Yellen rise back above it too,but 16023 is a long way for the Dow to move before it opens now. I guess yesterdays story about ECB money to Bank shares needs a new incarnation.

    1. Morning Chaps, well as soon as it broke 5600 I knew I was in the muck. By the time I managed to get out I got 5550, so total cost 220 points, bugger. Easy come, easy go. Next trick will be to pick the bottom, looks like tmfp’s 5200 is on the cards!

  2. Anyone got a new sell button, mine’s worn out..
    As I said 100 points and 1 hour ago, don’t attempt to pick a bottom today and don’t grasp at straws. Just look at what’s in front of you.
    Back to radio silence and head down.
    GL.

    1. Good man tmfp, at this rate you’ll be done for the year by the end of the month. I hjope you are keeping your mate in close touch with his rather rash bet.
      Good luck, doesn’t look like you’ll need it!

      1. Hi tmfp,guess you are looking at an Estate on Gozo now rather than a house 🙂
        Commiserations chippy,still at least it’s not bleeding anymore and you can focus on getting it back,which with recent ranges might not take long anyway.
        Hard to pick S/L areas on Dax today,preferred yesterday.Fairly certain that something will happen to attempt to turn this fall,Yellen gets a go at 15.00,some US unemployment no’s at 13.30,but cant see them mattering today.City have net Client exposure as 89% long FTSE 74% Dow,think FTSE was at 88% around 6 this morning so the 90% are wrong rule was valid and there is a while before that indicator turns Bullish.I think regardless of how you feel about the Cash vs 24hr mkt debate it’s worth keeping an eye on Dow levels.

        1. I quite agree about watching the out of hours Dow WSF……..I’m bullish by nature,an optimist,but can anybody else see this Market recovering over 6000 Ftse ……I’m doubting it at the moment and that’s not like me at all? As for the Dow It was 17800 or so before Xmas and that’s down 2200 points.i wonder if it will ever see +17000 again! Just shows you there is no true value in the markets.Oil is the only thing I can see to bring the markets up again.

          1. Yeah,8700 and 15600 lining up is well worth remembering as a guide.This will all bounce back,the natural trend is up.Dont know when though.I mean there are probably people sitting on open longs from pre Greece who will make money,they might even call it good trading,although I’d say they just have more money than they deserve to hold that position.Re Greece the thing is when that was going on it was Greece causing all the trouble…realistically we all went along with that but it cant really have been true that the whole planet was healthy and yet Global economies were at risk from a population of 11 million with a 240billion GDP which is about half what HSBC bank is worth I think.

          2. Yes it’s funny you know,I was thinking about Greece the other day,its all vanished,not a whisper about it now,same as Ukraine crisis that all went quiet after it had created a lot of volatility.its almost as if there is a string of fuss over something in the media,then when it’s created the desired effect in the market there’s not a mention and some new disastrous situation turns up…..all very handy to calm an overheated market down ……bring it down in value….so it represents better value and investors buy it again. Might sound a bit tin foil hattish but even so why is there no mention of Greece? True value in the market…..now there’s a laugh! And now since June last year the oil dropping,it’s all very handy if you ask me….

  3. I’m sorry it didn’t work out for you chippy……….To be quite honest this is too volatile for me, if there is a trend it’s up and down!……..I’m actually starting to wonder if we are on a one way trip down……but I wouldn’t feel comfortable shorting this and going long is dangerous too…….I did think something this morning,the low oil is good for the airlines because I think they buy their Fuel ahead of time………Also all the transportation costs of all businesses are reduced……..so all in all thats the only plus for low oil that I can bring to mind.It could well be the market is knackered after all…..like WSF said a few days ago maybe these rises on the Dow are bull traps to suck money in.A nice 9-5 is looking quite an attractive alternative to this at the moment! Still my hands are nice and warm!……

    1. Thanks anstel and well done for keeping out, you can’t lose if you haven’t got a position!
      Yep, low fuel does suit a lot of businesses, lets face it most retailers are really logistic companies, Amazon, Supermarket home deliveries etc etc however deflation is a very real problem that is a tricky one to get out of when central banks have no ammo left (see Japan through the ’90s).
      I know it sounds stupid but it can’t go down to nothing so somewhere between 5500 and nothing is the bottom!
      Good luck mate

      1. Hi anstel, Plenty of places used to have Only Long and everything closed by 16.30 rules and there were guys working like that who made fortunes.How much you earn this month,quarter,etc etc isnt going to be about yesterday or today anyway it’ll be about your average and how much time you dont have to spend getting losses back.

  4. In the spirit of full disclosure(!) I am gently dribbling some money into single stocks. Added to Barclays at 1.49 (average price around 1.57), Lloyds at 56.75, GKN at 2.50 and Shell at 14.35. Am itching to buy Tesla motors not for the cars but battery technology but it is a lairy old mistress!

    1. chippy,I was reading RNS’s from BlackRock yesterday,buying into U.K banking,they tend to know what they are doing timing wise.

    2. In the spirit of full disclosure…..I went shopping on Saturday and bought £20 worth of food…….it’s quite a novel idea…I can actually eat it….and it does me good…..There is Risk though……sometimes it goes out of date before I eat it !!

      1. I have been thinking recently about the time we all spend watching these markets.For me this week it’s really just been a waste of time.i don’t mean to be negative about trading because I enjoy trying to learn how to improve and read the charts and patterns…..I really enjoy the interaction with you guys too ….and I have learnt quite a bit really….but I think in all honesty these markets are more than I can cope with.Im sure I will be back to my normal optimistic self soon ,and I feel I have improved with my trading quite a lot since I started but the problem is the Markets are getting progressively harder at a faster rate than I’m learning.It seems a waste of time watching if I’m not trading so I’m a little bit disillusioned at the Moment. Might go out for a walk.come on anstel get a grip!

        1. Yeah,people dont talk about the boring bits waiting for trades, having something that doesnt need 100% concentration for too much time helps. When Henri Simoes had his free trading blog I used to read it and he spent days watching DVD boxsets.

  5. Hi chaps, just stretching legs and brain after 5 hours full on, thought I’d pop in and say hi.
    Readin what you’re saying, yeah this is a very demanding job with great rewards if you get it right but you have to work at it hard.
    As I said, much as I like you guys and having a chat, there’s a time and a place. Ten hours full on concentration is very demanding for sure but we’re living through history here and a chance to make some serious money.
    I decided on Friday that to increase focus, best way is to have an open position at all times, so that’s what I’ve been doing, and because I’m a bear (did you know?) it’s been a pleasure. (lol just got stopped out and switched to l*ng).

    Re: Greece, they are totally f*cked, but it’s not just the misery for the Greeks that’s important, it’s what it says about the systemic imbalance in Euroland.

    Free markets are like wild animals, and Draggie & co a lion tamer who is just becoming aware of the fact that he’s in a cage with them and all he has is a chair and a silly hat. The lions are just now smelling his fear.
    They don’t care that if they eat him they’ll get shot.

    Enough pontificating, where’s that sell button?
    🙂

    1. Good man tmfp, keep going! Pretty much agree with everything you say but really thought that it would be let to run a bit before a smash. Hey ho- good January, poor February, can’t have everything.
      You are quite right, we are seeing history and have been doing so since late ’08. You are also quite right that if you are going to be a “Professional” at this you need to be right on it. I for one am not right on it as I have a day job. I have a punt, get it wrong, get it right all works ok and gives me a bit of income. I’ve done it as a pro (with someone elses money) and wouldn’t go there again.
      Good luck mate, make plenty of hay whilst the sun is shining!

  6. Wise words. Anstel, you’ve probably learnt the most valuable lesson without realising, “If in doubt, sit it out”. 2 big trades I have done in the last 7 days that should have made a lot but didn’t because I over analysed what everyone else was doing which lead to itchy finger syndrome—-I bought 50 x 5500 puts in February Ftse last week for 16 ticks because I didn’t want a big open position in the ftse…..I closed that at 45 on Tuesday because all I was reading about was the impending bounce back to 6000{the puts are currently 90+}. I also bought gold at 1191 for £10 with a stop at 1184 looking to run it through all this turmoil but sold it back at 1199 as everyone was saying Yellen speech would be dovish & good for stocks etc, today gold is at 1240+{cost me £5000 in 24 hrs}. What I am trying to say is, don’t give up, be selective, don’t ignore other people’s viewpoint but make an educated guess on who is got a strong reasoning and who hasn’t. I am a natural bear like tmfp but I can also see that we have seen these moves before and when it is trading like this it pays to play it small & be selective, don’t put financial targets on yourself. GL mate.

  7. Thanks for your reply GG…..I have had a walk and got some fresh air…..I’m going to watch what happens with the Dow.i have no idea what it is going to do on open…….with all the nerves about it could drop I suppose.I haven’t seen it this volatile I don’t think…..well I’ve not given up yet but it’s whether the market survives I’m more concerned about.if it collapses it’s going to be bad for everyone.dont think money will be much good if there’s no food in the shops. Hopefully it will be ok but how the central bankers are going to sort this mess out I don’t know…….if indeed they actually want too…….Very Best of Luck mate.

  8. Does anybody actually think this can recover? How about you GG,I wondered what your opinion was because your bearish.? what about you WSF? Chippy any thoughts ?

    1. Sorry anstel, been out and about. I actually do think this can recover (no surprise). As you rightly point out oil cannot go down to nothing and it’ll get to a certain level when producers start going belly up. Less producers, less production. Equally, lower fuel costs is good for anyone who does logistics, as mentioned above. Banks, there may be more casualties but not here and not in USA. Countries – Greece is pretty knackered, France is putting a brave face on it and Spain not looking to chipper. That said, the amount of money (dare I say it, black money) that has come out of Greece into, for instance, London property is nearly on a par with Russian money. Employment here and the US is ok and wages are starting to inflate. Finally, I’ve just been up the road to a place with a fine view of a large container port. All berths are full. That may sound stupid but in October 2008 through til early 2010 it was working at, as an estimate, less than 50%. Simply, someone is buying stuff.
      So, that is my point of view, the only problem is I’m not sure when it will all be over.

      1. Thanks chippy,interesting about the container port having full berths……maybe QE 4……..oil supply cuts and price rises….. And gold is up that should help the mining sector..plus QE in euro land till sep I think.i think it could go up but we will need a few of our surprise rally’s to calm everyone’s nerves………unless of course a collapse is the desired ending and seen as a way out of the situation….

  9. 🙂 🙂 Yellen bad answer,evaluating negative rates as a possibility and no denial of the idea they are out of ammunition.She seems a bit pressured 🙂 🙂

    1. It wouldn’t surprise me if they had another trick to roll out,,,other than oil I can’t even begin to imagine what though. The cupboard is looking pretty bare to me.it has just got to be the black stuff surely!

          1. i reckon Janet will be knocking on tmfps door soon for a loan……..and I can just imagine his reply too!

          2. Yeah can you imagine…….hey lend me £100,000 and then you can pay me 0.5% interest For the privilege of lending it!

        1. if all the money comes out of the PLCs how on earth can they keep trading…….it’s two things that keep capital markets going I think………capital and labour……without capital labour goes away. No wonder Janet is under pressure!!

        1. Well if gold is going up that should help the miners!!…..whatever happens somebody benefits ,and the mining sector is a big chunk of the FTSE.

          1. I can’t help wondering WSF who is actually buying equities and pushing up the market……….do you think it’s a pump and dump?

          2. Well if you mean right now there are always buys from shorts closing + every new low is a chance to average down a position,depends on your timescales and wealth.Why not buy and buy lower too,if it isnt going to 0 and is below what you think fair value is now and what you think mkt value will be next yr,or even after the Spring.There are fantatsic dividend yields out there if you think the Co’s have safe incomes and that the divs wont be cut.

          3. This looks like it’s on the verge of collapse WSF. I think it’s getting pumped up and then when that stops it drops.somethings wrong

  10. Hello nick et al,

    Been searching for this site for a while and have finally found it lol.

    Hope everyone’s having a successful year so far!!

    1. Hello argyle, how have you done? Like you say, could run a couple of hundred points but could also get another smack. I might have a little play at 8.45 for the last 15 min run. Good luck sunshine!

    2. Lol “Did somebody order a totally authentic rally?”

      You must have been a little concerned at 15502 Argyle…I just shorted it at 720 for some pick the top fun.

      1. Closed it at 15680 for 120 points. Still think 15900 by tomorrow though, but not brave enough to have a punt.

    1. I think bottom has been reached for a while. 5700 before further downside possibly next week but not convinced there will be. I think there will be considerable tinkering by the powers to be, so that a collapse is prevented. This will delay the inevitable but for a while normal service will be maintained.

  11. Evening chaps.
    A quiz:

    Ftse’s now 5540, will the next 100 points be up or down?
    Will it happen tomorrow?

      1. tmfp do you actually think this is going to be total collapse or do you think it’s saveable…….it looks knackered to me. As much as I am a bull It looks totally shot,apart from oil and QE4 I don’t know how they can save it.

        1. Hi anstel, you really shouldn’t worry too much about this macro stuff.
          Lose the notion that bulls can’t make money in a bear market and vice versa, it’s not true.
          Just get a trading system sorted and you’ll be able to make money out of The End Of The World. 🙂

  12. Interesting timing for Monday, President’s Day so US is shut, but the Chinese come back from New Years.
    That means that tomorrow the US are going to be book squaring for a long weekend in the knowledge that there will be a full Chinese session before they get to trade again.
    I reckon that’s bearish and on its own means that if we rally in the morning tmrw, that will quite likely be the highs of the day.

      1. Sorry chaps, looked at an out of date screen on my phone, posted, then got up to date. Ignore that bollox above.

  13. The easiest way to make money at this game is log on at 7. Wait for the Dow to drift down by 50 odd points and then pop a long on, wait for the inevitable rally and when the momentum ceases, pop on a short and it will no doubt drop back from where it came. I think tmfp comes on here every evening to sell the totally authentic rally which occurs 2 or 3 evenings a week.

    1. Interesting bunch, the Americans, a blend of total unpredictability and total predictability. A bit like a whole nation with PMT.

  14. Evening all. I read a lot on here about people saying QE4 is the thing that will save/turn this market round. Personally I think that is the final nail in this markets coffin…..why……3 rounds of QE haven’t brought any economic benefits but just inflated share prices via buy-back schemes etc. Look at Japan’s last attempt at QE…..2 weeks ago last Friday they went -ve on rates to pump more into the system…….it caused the market to rally 800+ points overnight to 17600ish and where are we right now on the Nikkei…..back below and near 15,000. Everyone is getting wise, QE doesn’t work and when more QE tools are brought out the Central Banks bags, the positive effect on the Stock Markets are getting more short lived, why…….because more and more people are looking at the real world of poor growth, low wages, deflation and also staring to realise that QE is looking like wasted money and when the time comes for the Fed, BoE, ECB, BoJ to say “QE isn’t working like we hoped”{sometime this year} all the big guys will have worked that out and we will be talking about the Ftse with a 4 as the first number and Dow holding 10,000. It may rise tomorrow, next week or have a good end of month but I am with tmfp, short rallies, keep some shorts open, buy out the money puts. I certainly wouldn’t be buying if the reason was there might be QE4 from the US. Sorry to sound like a bore or sensationalist, it’s just my view and for the record, the only position I have is a 5 lot short in the Nikkei at 16200{and that was from Tuesday night!} Sleep well and GL
    GG33

    1. GG QE does work, however there is a price to pay for it and that is devaluation of the currency, which results in inflation. At the moment it doesn’t seem to be causing inflation, but with Euroland and Japan without it deflation may occur. This will result in reduced demand , because people will wait to buy on the grounds of it will be cheaper tomorrow. This is the big danger. The QE isn’t to support indices but to prevent deflation. The extra cash in circulation tends to end up in equities.

  15. Your talking the way you trade argyle, without doing any homework. Find me moments in the last 80 years, going back to Germany and post WWII, tell me how many times QE has been used and when it worked and you’ll find the answer begins with 0. If it’s all about devaluation of currencies why is the UK & it’s Stock Market at lower levels than say 8-10 years ago versus say the US & Dow when GBP/USD was 2.11 & is now 1.4?

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