5877, 5905 resistance today, last bit of bullishness before more downside?

Support 5842 5800 5734 5720
Resistance 5861 5895 5907 5908 5928

Good morning.
Market Summary for Monday 15th February
The FT100 had another strong day on the back of gains in Asia where the Nikkei surged more than 7 percent and a stronger fix of the yuan eased devaluation concerns. Banks were among the top sectoral gainers, with sentiment helped by news that the European Central Bank (ECB) is in talks to buy bundles of Italian bad bank loans as part of its asset-purchase programme.
With Wall Street being closed most of the moves had been completed by lunchtime with the FT100 reaching the 5845 area, which it then held for the remainder of the day. The short off 5845 managed a few bear points in an otherwise bullish day. In after hours it was little changed with no other major markets open.

US & Asia Overnight from Bloomberg
Asian stocks rose, extending a rally that lifted the regional equities gauge from the lowest level since 2012, as energy and financials climbed and SoftBank Group Corp. surged.

The MSCI Asia Pacific Index rose 1 percent to 118.75 as of 12:09 p.m. in Tokyo, after falling as much as 0.6 percent earlier. The regional gauge jumped 4.1 percent Monday, the biggest advance since September. Japan’s Topix increased 1.2 percent, erasing an early loss, as SoftBank soared 16 percent after announcing a buyback plan. China stocks rose the most in two weeks after data showed the nation’s banks doled out a record amount of loans in January.

Japanese shares added to Monday’s biggest rally since October 2008 as investors speculated a global selloff had gone too far and optimism increased that the Bank of Japan will increase stimulus. European Central Bank President Mario Draghi reiterated on Monday his willingness to act should financial turmoil threaten price stability.

“There’s enough value starting to emerge in certain areas that investors eventually start to take advantage of that,” said Sean Fenton, Sydney-based fund manager at Tribeca Investment Partners. “We are starting to find a little bit of a bottom to this trading range. Central banks will try to calm the markets down a little bit and then investors will start to step back in again.”

The Topix index erased an earlier drop of 1.2 percent. The Japanese equity market has become more volatile than China, Greece and Argentina. The measure has swung more than 3 percent each day in the past five sessions as volatility in global markets gets funneled through the yen and then reflected back into the nation’s stocks.

“The Bank of Japan does have the capacity to increase its easing program as economic growth slows,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “We see some further stimulus, not only from the Bank of Japan, but also in Europe and we don’t see U.S. interest rates rising in the next six months or so.”

SoftBank surged 16 percent after the Japanese wireless carrier said it is prepared to spend a record 500 billion yen ($4.4 billion) buying back stock after its shares dropped to their lowest since buying Sprint Corp. in 2013. SoftBank will purchase as many as 167 million shares, or 14.2 percent of its stock, using cash holdings and the proceeds of asset sales.

Regional Gauges
The Shanghai Composite Index climbed 2.6 percent and the Hang Seng China Enterprises Index rose 3 percent. The Hang Seng Index gained 1.6 percent and Taiwan’s Taiex Index advanced 1.3 percent.

Speculation is intensifying that China’s government will add to monetary and policy stimulus after data on Monday showed a slide in exports. Premier Li Keqiang said that his country will take decisive actions when needed, while the Economic Information Daily reported policy makers are expected to release a package of monetary, fiscal and tax policies to ensure economic growth is in a reasonable range this year.

New yuan lending jumped to 2.51 trillion yuan ($390 billion) last month, beating the median estimate of 1.9 trillion yuan in a Bloomberg survey. The yuan strengthened Monday by the most since a dollar peg was scrapped in 2005 after People’s Bank of China Governor Zhou Xiaochuan talked up the credentials of the world’s second-largest economy.

South Korea’s Kospi index gained 1.4 percent after the central bank kept its benchmark interest rates on hold. Australia’s S&P/ASX 200 Index added 0.3 percent. New Zealand’s S&P/NZX 50 Index climbed 0.4 percent and Singapore’s Straits Times Index gained 0.6 percent.

Crude oil extended its advance, adding 4.2 percent amid prospects of a meeting between Saudi Arabia and Russia, which buoyed energy producers. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

The US returns from their day off yesterday so we are likely to see a bit of a pull back after all the rises in their absence. They do like to try and close a gap if possible. Today has initial resistance at the 5861 level for R1 (5877 R1 on live charts) so we may well get an initial dip from here down to the 5844 level where we have a green coral support line on the 10min chart. If this early support holds then I think we will pop above 5900 before a decline, as we have the 20 day Raff here, and also the daily trend line resistance. It feels like things are a bit more upbeat than they were last week and we have had a decent bounce from the 5500 level, and gold is back below $1200 for the moment. If we do get a dip down from the 5900 area then the 2 hour chart has support down at 5720 currently, whilst the daily pivot at 5800 looks a distinct possibility. We may well see quite a range today after yesterday’s fairly slow moving rise. There is also a large 24.7 point dividend tomorrow so that might temper any major short term bearishness. I have gone for a rise off the 5844 area this morning, however, if that breaks then a decline down to 5800 is likely this morning instead, before a possible bounce there.

90 Comments

  1. Morning all, a flying visit before hopefully a more interesting day than yesterday.
    The opening triggered the first of my medium term shorts at 75 (just missing 50 yesterday gives me a 25 higher entry), next at 900, 950, 6000, 6050 with a stop at a break of the weekly downtrend and above previous high, 6150.
    Small stakes, risking all the profit from my big recent short gamble, should it go pear shaped.
    Overall bullish factors are euro QE in March but mainly oil, and the meeting in Doha.
    Even in the unlikely event of the Russians and the Saudis agreeing about anything (especially after Russia’s last double cross, surprise surprise), it doesn’t change the bigger picture, which I think is firmly bearish.
    Nice catch on the 44/77 move Nick, I caught a bit of that, currently short off 74 10 point stop looking for 60 to break to 40 as DAX sets up a down channel.
    GL all.

    1. Morning tmfp, with you on nearly all of the above. Scaled up a bit this morning at 70 and now sitting average around ’45. Silly, cheap short yesterday at ’09 means next sell level at 5920. Don’t think it’ll get there.

      1. Think about taking a little out against average and replacing it higher chippy, I don’t think it’s one way traffic today.
        Out of both scalps at 32, awaiting developments and radio silence for a while. 🙂

  2. Morning all,Nice call Nick.Quite a few gaps on the Dax below that 53 area support,or maybe that is just on City’s charts.

  3. Interesting blip up to 78, similar to tmfp short at Nick’s 5877 level, reshorted at 5840 and have a sell stop in at 5770 to double up. See little apart from a relief rally that has taken us from 5500 to nearly 5900. Only blot I see on my radar is possible early divi hunters for tomorrow but agree if we can break 5800 today we could restest the recent lows quickly. Short 16 lots and looking to add on the way down, stop at 5920.

    1. Yeah, classic “revisit the scene of the crime” rally there on both, previous short term support at 9220 and 5860 now resistance, great shorting setup.
      20 may hold but no magic about it, looks like the big number if it doesn’t. Half out at 30 for the greed, running balance stop 42 (another Douglas Adams ref lol).
      Last visit for a while good luck chaps.

  7. Morning tmfp, looking at 10 minute shorting areas for scalping in between building a sizeable med term short, do you have any level around “the round number 5800” that is a noticeable clean break and hold level? I am looking to double my shorts on a sell stop and the only noticeable level I have is 5770ish

    1. I’m not so keen on getting too excited for the Big One GG.
      One thing both bulls and bears should have learned this year is not to chase the market unless there’s a compelling short term set up. They could both have made money buying the weakness and selling the strength.
      Less is more, trade that clear daily channel (that we are currently slap bang in the middle of) till it breaks and let the market come to you, is my medium term approach.

  9. Back in for cup of tea. Closed 40’s at 20, as tmfp says, for greed purposes. Now only looking at ’09s. Zaphod’s anti peril glasses for any bulls out there tmfp?

  10. So as I understand 5907 left unreachable? So where’s it going?
    I did a tiny scalp for 20 points on dax, as soons as I logged in pressed short.

    2. Wait for it to come to you chippy, watch that rsi for entries.
      Plenty of opportunities here, be patient. A 20 point move is nothing, try to get the scale of the swings right. 🙂

  12. Back again, still hanging onto the small 60 short despite technically stopped, but will hang on till DAX breaks 9165.
    Edit: bingo, non negotiable stop now at 52 🙂

    This oil situation
    In themselves, low oil prices because of an oversupply are bearish because they indicate low economic activity = lower equities because lower profits and capital investment, esp in the related industries.
    But higher oil prices (that’s higher in terms of $40, not $100) are not in themselves equity bullish, apart from their effect on inflation targets, which are being used by CBs as a measure of economic health..
    This is fallacy, strong economies traditionally are inflationary but only because of increased consumer demand creating it, not because of increased commodity prices per se, that’s the wrong way round. Any argument that oil based savings on household budgets are going to be splashed in a buying frenzy by consumers is nonsense and also cuts both ways.
    Good concise article
    http://seekingalpha.com/article/3897346-oil-shorts-attack-bulls-panic-mode

    @goldtrader, thanks for your charts and thoughts, as I said earlier, the only thing I can see on the weekly is that beautiful downtrend line. It may get approached, but I see no reason why it should break.

    Re: medium term downside targets, fib says 5740 if 5880 is the high, I won’t disagree with that.

  13. thanks tmfp, 5740 ties in with my medium/short term target. Just looking for a realistic breaking level for the downside but it’s looking more and more like the 5815 level.

    1. Yes, 15/20 has held well twice today and there’s always third time lucky, but try and rein in your natural bearishness.
      Resistance/support is not broke till its broke, selling (or buying) potential breaks is risky and low r/r.
      Wait for them to actually break first.

  16. thank you tmfp. Being shorting rallies , not interested in selling down at 5815, just trying to get a feel for support/potential breaking points

  18. That phrase never relates to me as I’m always learning, thought I might have seen t all in my Salomon Bros days but when it’s ur own money it pays to listen to others!

  19. The psychology is the hardest part-since doing this on my own I’ve had a success rate of ~80% on Monday through to Thursday and a dismal 10% success rate on Fridays! No rhyme or reason and have even done the opposite to what I had set out to do to break the run. Now the only way to succeed is not to trade Fridays…funny isn’t it.

    1. I get tired come Friday, judgement gets erratic
      Looking forward to tmrw, you mentioned divi earlier, the closing MHH should be fun.

  21. Dunno whether I’m playing with fire so closed 60 short at 52. The cheap ones are going to have to be keepers for a bit.

  22. Looking at the DOW after their long weekend, they closed Friday 15973 which was equiv then Ftse 5730.
    ATm ftse 5845 DOW 16140 and DOW resistance around 16240…
    Makes us look a little dear (esp with the DAX nearing today’s lows again)?
    Direction needed, maybe a short if they have a silly opening run up.

    1. I’d say it had a couple of go’s at ’80 first thing then got a smack, it has just had a couple of go’s at ’60, if they run it on the dow open I’d like to think I’ll have another little short at ’60. Downside – looks like ’15 to 20 as mentioned above for a first go but medium term 5700? Clearly I’ll bottle it miles before then!

  23. always like looking at that differential, thanks tmfp. for a bit of fun and observation short 3 ftse at 5849 long 1 dow at 16141 see what happens at 5pm.
    No other positions till US open……ftse up 23 dax down 70 strange market

    1. I played with Dow/ftse last year a bit. Just before Christmas it was around 11600 difference! It is a feisty game to play with a nice reward but can get a bit sweaty.

  24. Short some more at 52, where I closed last one. Starting to think I’m not playing with fire, famous last words.

      2. Typical. It didn’t. I was out for the whole hour and hoped it would reach there so I could get a short right now. Oh well, not always.

      1. It’s about a 50% and there has been strong support at the rising 200sma on the 15 min chart all morning so I hope he gets it,but the Dow doesnt seem to be cooperating.

  26. Hardly inspiring the DOW, is it? Really needs to maintain hourly closes above 16132 according to young Joshua from IG.
    All three markets seems to be looking at each other, going “You first”.
    Short at 62 atm with 10 stop

    1. Where have you happy DAXers got support now?
      If DOW’s after a look at 16000 that breaks ftse lows I reckon.
      Difficult..

  27. Afternoon chaps,might as well shut your eyes and toss a coin….this could go to 6100 or 5500 ……. No rhyme or reason……If the oil supply situation had come to some sort of resolve yes I can see rises but I don’t know what on earth to expect with this market….Good Luck all.

      1. anstel,I think you are creating and feeding that belief,technically it is Tradeable,believe me I dont have the luck to be winning 50/50 bets.

        1. Yes its tradeable WSF I’m sure it is,but there are no firm footings based in reality……..for me,it would be nice to see some sort of fundamental reason behind the market movements.

          1. We dont know Fundamentals anyway though usually just stories and misrepresentations.With major themes we can be sure about like Decline of the american Empire etc etc,you’ll always need a bigger timescale than intraday.Nothing ever moves straight,so for for best entries/exits,even if not for the whole trade you need a filter to look at Price action and basically that filter is a Chart.Then Trade mgmt.If you can chart it you can trade it…cant remember who said that,might have been Arthur Daley 🙂 – Just had a ghost trade on my acct,40 mins to get CityIndex to remove it.

      2. I don’t see how anyone can make any sort of decision tmfp.we will either get one of those rally’s that keep showing up or it will fall out of Bed..its 50 / 50 no denying it really is there?

        1. anstel, put your chart on a 1 day thing. Have a look at how far it falls before stopping and how far it rises before stopping. Go back centuries and essentially you’ll see why it is tradeable – It has gone up 350 points (6%) in a straight line so it is much better than 50/50 that it is going to go down a bit, simple. That is my trading system and I haven’t even charged you for the info!!!! Good luck sunshine but once again, sitting on your hands if you think it is in no mans land means you can’t lose money.

          1. Thanks chippy, I think it’s the wild swings that have made me unsure……this is the most volatile trading I have experienced so I think I’ve just lost my confidence….probably just feeling out of my depth to be quite honest.

        2. We make decisions based on our trading systems, that’s why we have developed them.
          They may be a delusion/illusion but my bank balance isn’t.

  30. I’m not going to put the farm on it or anything, but I think the next hour has a bit of potential for carnage.

    1. I was thinking just that so nipped outside for a gasper thinking if it gets to ’50 I’ll crack some more out. Seems I’ve missed that (it didn’t happen!) so sit on my hands and wait for the cheap ones to come into play.

  31. Going to go out on a limb here, close by tonight in the ftse will be sub 5800, why…..seen 3 patterns like this this year where other markets are down 1% + and ftse is still positive, almost in denial only to play catch up into the US close. Of course Dow may rally and ftse close above 5900 but technically 5860-70 looks to have put a lid on that scenario. I don’t have a position currently, this is just my observation. GL

      1. ….and as I covered that it shanked again. Best I go and do some real work now so good luck tonight and I’m hoping for a proper smack. Back later.

  34. Dax through 9110………ftse…….come on-about as stubborn as my missus unfortunately. stop down to b/e in case we have any crazy moves on the close.
    Bid in at 5880 for 9pm !!! LOL

        1. stopped myself out finally at 53, so came away with a handful…looking to short again now in high 60’s

    1. and out for -11, was looking for the rally to fade after the run up for our close but was not to be.
      Would think that the DOW will run into selling again around 16130/50, so I’ll leave the next of my short orders overnight at 5900.
      Cheers.

  41. Nope, enough for me today…..5 attempted shorts around 5250-5280. 3 successful, 2 b/e/ As for our dow/ftse spread…..-63 on ftse “and” -51 on dow. So short ftse long dow is not the way to be at the moment!

    1. Yeah, tbh ftse put in a creditable performance today on the upside, could have folded a couple of times.

    1. In the great scheme of things it didn’t do much, opened at 80 dipped to 20 closed at 60, a bit of a tentative extension of the oversold rally from the lows.
      The weak £ against $ and Euro wouldn’t have done any harm.
      I think bears are learning to pick their entries, the higher it goes the further it will fall.

    1. That was cold. Had a bit of a daydream so moved limit for ’98s down to ’50, think it might try and have a go at 5920 but think that’ll be it for the Bulls. If so possibly looking sick over the next few days but I may have to pay the dividend! Good luck boys

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