6008 for the top of the daily channels, 6072 above that

Support 5939 5895 5875 5821 5754
Resistance 5959 5976 6006 6072 6084

Market Summary for Wednesday
Equities have become highly correlated to commodity prices and so are moving almost inline with oil and commodity prices. There was some buying into the close ahead of the FED statement which was not as dovish as had been hoped, so in after hours the markets fell back which may well follow through into today. Basically we had a buy the rumour, sell the news day yesterday – slightly annoying as it moved just past the shorting level at 6000, but not quite to the 6050. However the fall after the Fed allowed a good opportunity to regain short points as gold S&P and FTSE all fell back having slightly exceeded the upper resistance levels I had. Oil shares proved one of the strongest sectors yesterday (on the back of a rising oil price) with banks some of the weakest (related to RBS figures), with Shell agreeing their BG takeover too. As mentioned yesterday I am expecting oil to rise to $35 before dropping again towards $16.

US & Asia Overnight from Bloomberg
Asian stocks dropped, following U.S. equities lower after the Federal Reserve warned that turbulence in financial markets may pose risks to the outlook for the U.S. economy. Financial and consumer-discretionary shares led losses.

The MSCI Asia Pacific Index slipped 0.5 percent to 118.94 as of 9:01 a.m. in Tokyo, with nine of 10 industry groups retreating. The regional gauge is heading for a 9.9 percent slump this month on concern about a slowdown in China and a rout in oil and other commodities. The Standard & Poor’s 500 Index lost 1.1 percent on Wednesday as the Fed said it’s “closely monitoring” developments from China to Europe and in oil for any adverse impact on the U.S. economy.

“The market latched on the Fed’s negative growth comments,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion, said by phone. “The Fed is acknowledging reality — that the outlook has become more uncertain — and is signaling that there may be fewer rate hikes. It seems central bankers around the world are starting to respond, which ultimately should be positive for share markets.”

E-mini futures on the S&P 500 Index slipped 0.2 percent on Thursday. The Fed left the benchmark rate unchanged at the end of the two-day meeting on Wednesday. Since the U.S. central bank raised interest rates last month for the first time in almost a decade, turmoil in financial markets and a dimming of the outlook for global growth have spurred investors to expect a slower rise in borrowing costs. The median forecast of policy makers in December called for four quarter-point rate increases in 2016. Futures markets indicate that traders see fewer.

Regional Gauges
Japan’s Topix index lost 0.8 percent ahead of Friday’s monetary policy statement from the Bank of Japan. South Korea’s Kospi index fell 0.7 percent. Australia’s S&P/ASX 200 Index dropped 0.7 percent.

New Zealand’s benchmark gauge decreased 0.1 percent. The nation’s central bank left its official cash rate unchanged at 2.5 percent and said it may need to cut interest rates further as falling oil prices and a weaker global growth outlook prolong a period of low inflation.

Futures on the FTSE China A50 Index advanced 0.9 percent in most recent trading, while those for Hong Kong’s Hang Seng Index climbed 0.5 percent. The Shanghai Composite Index dropped 0.5 percent on Wednesday, extending Tuesday’s 6.4 percent plunge as slumping profits at industrial companies increased concern the economic slowdown is deepening.

Crude oil futures fell as much as 1.4 percent on Thursday after climbing 2.7 percent in New York on Wednesday. Stockpiles at the biggest U.S. storage hub dropped even as nationwide crude supplies climbed to the highest level since 1930. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Well that move up yesterday leading to the Fed announcement was built on sand as it all came dropping back down pretty rapidly. I expect that to follow though to today with a weak to flat sort of day, probably dropping to test the 5895 support area this morning, Its a shame that it didn’t quite reach the 6050 level yesterday for a great short entry, however there is still a change for the bulls to push this a bit higher towards that and possibly the 6100 level. However, I am still thinking that there will be another leg down. We are still nudging the top of the daily channels and it will be interesting to see if we reach 5976 where we have the top of the 20 day Bianca. I haven’t put it in the trade plan but this level is worth a short if seen. The 10 day is flagging 6072, so again, worth a short if seen. If we break below 5895 then the bottom of the rising 30min channel is 58753ish so if that holds then the bulls are still in the game, but if it breaks then it could start gaining quite a lot of bearish momentum so short a break of that too. Basically it looks to be weak bull at the moment!

168 Comments

  1. Morning all.
    Important level this for the medium term like I said yesterday, get through 6000 and hold will break us out, another fail will break us back down. Bumpy though probably.
    Short term very overbought, with two sessions to go this week, I’ll be surprised if we go much further but might have a short term blow off top to 6060ish.
    Trying short today, scaling up 6010, 30, 50, stop 70.

    1. Well that didn’t go as well as I’d hoped! Took 35 points on the option last night, all good, then got cocky, short at 75 before walking the dog, ooops. Forgot to take limits out from last night so came back from walking the dog and another short at 15. Bought them back at 05. Agree with you tmfp, so will be letting more go as we rise.

        1. It’s good to get away from this lot sometimes…….takes away any stress…..that’s why I like to post all the lighthearted comments on here in an attempt to lighten the mood for everyone.I think if we are more relaxed we have a better chance of success.Glad you had a good night matey.

    3. Looks like the beginning of a bull run/grind up starting, out of short for 10 on break of 99, reshort 20

  2. Morning tmfp, been told this rise back from last night’s low is window dressing for the end of month books. short at 6006 on Nick’s analysis, medium stakes. targeting a break of 5950ish again

  3. interesting divergence from yesterday night, pre fed announcement-when Ftse was around here 6000-6010, Dow was pushing through 16200?
    Stop to b/e 6006

  4. GG33
    Your trade after Fed was tremendous analysis and execution.
    real bad luck you got stopped out at 84
    keep it up, and blog your thoughts

    1. And you don’t get to pull of big bank jobs from a prison cell without knowing a thing or two :0)

      1. He wouldnt have fallen for the old free download of Self Preservation Society only to get The Underdogs version that’s for sure,Riot in Rothwell,I’m not surprised and I usually like 80’s Punk,so it’s not as if I’m hyper critical.

  6. Morning Paul, thanks for that but I view that as a lucky trade now as we are back at 6000 with no extra news. One thing I am looking at is this divergence from last night, i.e Dow approx. 162000, Ftse approx. 6010 and current levels of dow 16000 & Ftse 6000. I am short at Nick’s level of 6006 and if Dow is through 16000 before 2.30 I add to my shorts.

  8. FTSE 100 is too heavily influenced by crappy mining companies whose fortunes are tied to energy prices. Most of the volatility in the FTSE, up and down, have been mainly down to them. These companies have little substance behind them. But it allows traders, particularly now, to take advantage of the volatility in their share prices provided they can play the movements right.

  9. GG33
    Good short at 6006. Not sure whether Nick mentioned this as a short though as the arrows don’t go beyond 5960 ? To be honest I am finding it difficult interpreting Nick’s analysis and the arrows. As I am the market itself.

  10. Nick, if you don’t mind, can you please write a blog (whenever you have spare time) to explain your graphs. It can be stickies at the top in the menu section. How you work out resistance and support lines using the various indicators (the points and lines) to day trade.To someone relatively new the graphs you post can look really messy, but someone who is good with technicals would probably make sense of it fairly quickly. I know there are other sites with explanation of technical stuff but it’s not nicely packaged in one place. Of course, if this is not something you can do because it is available only to paid members, then it’s no problem.

    But can someone please point me to a really good site where I can learn about the technical elements written in an easy to understand way.

    Would appreciate it. Thanks

  11. short at 6006 stopped out at b/e….mmmmm. Wait and see what the price action is like if Dow moves through 16000 which I think is on the cards. Putting in a sell stop 15 at 5940, looking for downdraft of stops to 5900ish and reassess. Could go anywhere while hovering around 6000.

  13. You know what, I’d buy clever and safe over lucky anytime but that b/e stop at 6006 is highly annoying-the beauty of trailing stops. Next stop I see is a test of 5950is then we’ll find out where the real money is…….5700s?

    1. I’m just as pissed as you, stopped my short out too on that short lived rally, missed an rsi short by .2 at 10 as well 🙁
      Difficult to trade with tight stops these days, the alternative is to be pig headed/sure and I’m neither. Lots of opportunities though, just be patient for the best R/R entries.
      5700’s? That would pretty much wreck the TA bull case for me, confirm the 6000 lid and be likely to keep going for a lows test I reckon.
      Bizarrely I’m looking v short term for a long around here (65/9800).

  14. Read a piece the other day on Marketwatch where the guy suggested Dow stocks won’t be cheap even at 10000. I am not sure if it will go that low but one gets the feeling there’s a strong case for 14000s or even down to 12000s. The economy has weakened considerably in the last couple of months and there seems to be a domino effect, where weakness is being passed on from one country to the next.

  15. I agree tmfp, what level close do we need for confirmation of a shooting star?
    Have a trade on my divergence noticed from last night, mentioned above, short 18 ftse at 6000 and long 6 dow at 16027-working okay at the moment {11.00}. what would be your guess tmfp, cut the dow and run the ftse with a stop in at 5985?

    1. There’s a rather squashed shooting star on the cash 1 hour. I prefer cash to index platform charts.
      I’d hold that arb for a while myself, pre earnings announcements US optimism and all that. If you want to take a spec, I’d unwind the other way if anything.

  16. Divergence trade, cut dow at 15988 for -240, running short in ftse 18 @6000 with stop loss at 5980. see where it goes.

  17. mmmm, sorry tmfp delayed response, cut the -240 already. But I appreciate the insight for your view on the dow so have chopped half off my ftse short at 5952{11.13} for + 432. Will run the other 9 with b/e stop loss at 6000. Cheers

    1. Fair enough, not quite what I was meaning though, I think there’s more downside potential in the ftse than the Dow fwiw.

      1. Dax just closed it’s 7 am gap.Nothing seems to be moving with oil today,oil is up almost a dollar in the last couple of hours.

      2. Yes I’m holding them tmfp,I have two positions,one from 55 and one from 63,be good for some pointsI think,could have dumped the pair of them this morning at 6010 again but figured I’d sit on them instead,didn’t expect it to pull back to be honest,don’t mind taking a bit of heat…I think it’s all going up as you know.

  20. GG33
    Great trade.
    curiously, How would you have handled it if the market had moved to say 6050 ?

  21. First (miniscule) higher high since 6010, looking for high 60’s, then 10 pullback for entry to add to my 50 long.

  22. Getting a feeling that a 500 plus drop in the Dow is imminent. Apple’s poor results pretty much confirmed China slowdown. Yesterday, the Fed all but admitted to reading the economy wrong in their last meet. With all the negativity it’s a wonder how the Dow is being so persistent.

  28. Sure Paul, the divergence was meant to be a bit of a medium term trade. Last night Dow was at 16200 & Ftse 6010 pre Fed. This morning Dow was 16030ish and Ftse still at 6000-6005. Shorted Ftse 18 @ 6000 & bought 6 Dow @ 16027, the idea was to unwind it over time but the ftse came off 6000 so quickly and the Dow didn’t move to far from 16000 so cut dow for a loss of 240 and half ftse on tmfp s advice for +432. I added extra short on a sell stop @5940 for the simple reason that when we broke 5950 last night it sold off to 5920 very quickly. Currently short 9 @ 6000 & 15 @ 5940 with stop in at 5955, my target is 5884 by Dow open.

    1. Thanks, only a scalp for a bounce, miss the 40+ reshort (was waiting for 60 rsi on 1min), but replaced long at 25.
      If we can hold 20 (680 DAX) till the DOW, then I think there could be a bit of a runup, but these days 50 either way on the ftse is nothing.
      Still smarting from missing +90 on that short, 920 was the vague original target, but I’ll get over it.

      1. Still grinding slowly up, may add to long on a break of 50, still thinking DOW strength later. Not in any way married to it though, they can have it back at b/e 25.
        Although I’m very much a bear and hope to win my 5200 bet this year, I don’t think it’s cut and dried now for a lows retest, certainly while 5870ish holds on the 4 hour close.
        The market had everything chucked at it and still basically held the August low apart from a weekly tail.
        6100 before 5800, how’s that for a bear speaking?

          1. All we needed to do recently was to trade your post headlines and make a fortune 🙂
            Let’s hope today’s no exception, 6072 would do me.

          2. Great stop placement 🙂
            Will be interesting to see if the Yanks react negatively….
            5% miss on estimates lol

            “An economist is someone who doesn’t know what he’s talking about – and make you feel it’s your fault.”

  31. I think you said a few days back that 6000 sits over this market like a black cloud, I agree with that and feel we could be making the same reference about 16000 on the Dow very soon. The right people are starting to question the theory behind QE working and in my mind that is the big picture as it was QE that moved us from 4500ish to 7000 and 12000ish in the Dow to 18000+. Won’t happen in a day but your call of 5200 is realistic in my eyes. Simple example is to look at the Nikkei which is 3000+ points off its high with more QE than us and now no growth…….mmmmm 5945 has just pinged, all shorts stopped out.
    No position.

  32. Just popped by my computer, all looks a bit sickly. I’ve not been convinced of this rally since the mid 5800’s so going to leave short in “The back book” until back to that level. Bit cross with myself for bottling it over 6,000 yesterday and this morning but can’t win them all.
    I’ll check in later to see how wrong I’ve been!

    1. While 9680 holds I don’t think anything’s broken on the upside, a break of that lelvel could run on to 23 imo.

  34. Afternoon Jack,

    I noticed earlier you were asking if you thought 10040 was possible and now questioning if we will break down to 9623. I think that highlights the uncertainty in the market-since the move lower in August we have entered a new world from the last 7 years, i.e buy the dip is dead and rallies should be sold. You called a great level yesterday in the Dax to sell 9940ish if it got there, I hope you acted on it. If you don’t get back above 6000 and have a weekly close nearer 6050, I think the next move is down to 5200 in the ftse. Take care

    1. I beg to differ GG………I don’t think its quite as clear cut as you suggest to be honest…… Time will tell.

    1. Well FWIW I think the output of WTI is going to be reduced and I think the market with rally.If you combine the oil with a reversal of some of China’s recent losses it could be quite a strong bounce up,just my view.

      1. Also if the positive sentiment gets some momentum I think some off the biggest rises could be from the Dax

  39. So much annoyed with today’s trading. Because I am alone at home for the first time and I think all bad habits crept in because I felt a bit of freedom. As a result made one massive mistake but other trades recovered me right now to a little profit. That short which I had 9733av really irritated me as I held no matter what from 12.39 and closed 13.44 which is an hour hold. Honestly, I was going to kill that price at some point. At 13.44 I said enough is enough and collected +25 or something.
    So many times my strategy gave me false signals which tells me there’s no trend. Like that trade long 9780 at 11.30, it nearly turned into disaster when I wanted to recover on a punt long 9735 with double stake, youppi, I closed it +2 at 11.53 but said myself calm down. Then nice short 11.55-12.00 and now short.
    Great I was out of the last short, it was DB after all.

    1. Just stay caaaaaalm Jack.slow and steady and don’t act on those emotions,.feel them yes…… But recognise they don’t always work in our favour.

        1. Yeah deep breaths help…….it gives you time to get the initial emotions you feel in the brain that cause you to go into fight or flight mode….the emotions that make you want to instantly react……..it gives you time for those emotions to get to the higher areas of the brain where we are able to reason things out…….How many times have you closed a trade on impulse and then thought…..why did I do that? That’s the fight or flight mode overriding rational thought. You will nail it,I know you will.

      2. I wouldn’t, you haven’t seen the state of it!
        I think you are right and as I said yesterday, I don’t think this “nonsense” is over, just got carried away. So 3 out of last 4 of my last trades have been a lucky escape. I’m going to take the dog out, smoke 100 fags and have a rest – might be a couple of days!

  42. stopped 88, you’re right Anstel, should probably hold off till 6035-6050 before putting the goggles back on

  43. So, DOW nearly upon us…will the heavyweights pull us through our cash highs (6014), or will the terrible durable goods stats bring a breath of reality?
    Buy the dip….if there is one?

  44. Good long missed while I was dealing with my stupid short. Glad at least I was out of it when long started.

  45. Right, 3 times fail at 6000. We’re up here on the back of something, some guy said about cutting oil production! Not really concrete to move us 60+ points. But to prove I can go with the flow who all want to see 6050, gone long at 10 at 5976, stop at 5955 as a move to here before the close will see us back at 5920.

    1. Hey GG mate chill out FFS………. Rome wasn’t built in a day,……..it didn’t take long for Pompeii to get turned to ruins though.

  46. Joined you at 5972 tmfp
    looking for 6072 nicks headline
    can’t make sense of the other analysis of nicks at all

          1. tempted to take profits here – just under a grand
            going to sit on my hands till 5860
            probably will curse myself

          2. Doesn’t do any harm to take half profits mate, that blue ink can turn red a bit quick.
            Sorry bout the 72, was a shit entry (hindsight)

          5. Lol breeeeathe
            So, you’re short average 35 and it’s 11, that’s good 🙂
            What’s the exit plan, Stan?

          2. Break even stop and go and have a drink. Never count your profits before you press the ‘collect’ button.

  49. Mad Half Hour (to follow a mad 24 hours)
    Depends on the DOW, trying to hold above 880, not convincing, and we can’t break the teens.
    If the DOW breaks 895 I’ll short the FTSE I think, and if 960 goes then long it.
    (all square atm)

    1. Very lethargic ftse, longed like I said at 16 on the break of 60 but when the DOW turns I’m out and short (pretty soon, now 24)

  50. Crazy stuff again.
    This 5900/6000 band of trading: the longer it goes on, the bigger the support or resistance it will become when it breaks.
    Time for a stiff drink.

    1. Crazy indeed, too difficult for me. I’ve been really lucky over the past few days, could have been burnt fairly badly but got away with a small turn. I’m going to hide up and have a quiet contemplate before I start chucking cash away!
      I think, like you, there is going to be a massive break, could be 6300 (go on anstel!) or 5500.
      Time for several stiff drinks, by the way tmfp, did you see page 5 of the Torygraph this morning?

      1. I don’t touch the rag chippy, what do they say? Another one of Mr. Hyphenated weird fantasy articles?

        2. Picture of a load of hairy arsed metal traders in the LME. One of whom looking pretty dapper in waistcoat, wondered whether he had black shirt on!

  51. Closed my 6900 for 250 loss
    still holding 6962 & 26
    Should never have gone into 6900
    was copying another traders trade
    but a scary ride
    lets see what happens

        1. I think he may be busy just now Jack…..I think he means 5900 and that 250 loss was probably 50 points at £5 a point so my guess is he dumped it at 5950 to reduce exposure.

        2. I think the 6900 is a typo for 5900 Jack. I thought the 250 referred to Paul taking a £250 loss @ £5 pp on his added 5900 short, but can’t work out how he did that as it’s only just got to 950 now.

          Anyway Paul, what’s done is done. Got an exit strategy on the remaining short? Any stop, or are you just convinced it’s going down?

    2. Hey Paul,whatever happens you can get it back,theres more than enough movement lately and there are at least two lessons there that will turn out to be cheap,Zanger turned 10k into 2 mill in 2 yrs and what he says is,
      “I learned something in this biz once I had my method down. If I did my homework and controlled emotions I could afford anything I wanted.” If that isnt inspirational then just take a break until it is,all the best.

      1. Yes all the best Paul……..I have done the same thing as you quite a few times……eventually it sinks in. I remember once I was 8k up and I was greedy ended up making £4 !! It’s how you learn I reckon.

  55. Thanks guys
    £1ooo up to just under £ 400 loss. That was easy.
    Hurts badly. Not the loss – well that as well, but my tunnel vision.
    stupid stupid.
    yes jack 5900 not 6900.
    150 loss on my 5900. I read it as 250 because of the earlier loss added.
    came out of my 26 at 35 or something like that, then went back in and all that
    crap to eventually end at a loss.
    Wife visiting her family , so instead of going to the pub decided to play the lottery.
    going to order a takeaway after opening the whisky
    take care guys,

    1. Live and learn Paul, if any consolation I’ve been doing this shit for longer than you’ve been alive and I’m a nervous wreck too.
      Lottery, takeaway, whisky….life ain’t too bad really.
      Take care, all the best.

      1. a bit tight but I see where youre coming from
        Friday though, bulls will give it a go for a barnstormer espec if DOW gets bulllied through 250 could trigger short covering
        Be careful as ever

        V short term if it gets through 05/770 DAX and holds, could have another go at 20

        1. Also stopping at prev high cost me +90 yesterday but then we seem to have break of p high then fail so giving it say 5-10 pts doesn’t work either
          Momentum lost short term if we don’t kick on this time short 02 6 stop for the fail

  58. Hi all,

    Had two orders in at 6000 and 6010, closed with trailing stop.
    Have placed again at 10 and 20. The 20 with slightly higer stake. As soon as they show blue ink I will trail stop both. Stop at 30 for both.

      1. Hello mate, sounds reasonable, would you turn around to long at 30, on the basis that to get uo to there things will have turned a little rabid and the 050 target isn’t far away?

  59. Hi tmfp,
    No, will sit on my hands and see what happens at 50, if it doesnt break I will short the seconds test, normal stake.

  60. Oh and just fyi, I trade on Plus500, which is about 50 points out (below), so my numbers may not always be spot on…

  61. DAX lost dodgy uptrend and looks weak, wants to hold 20 really, any more and we’ll have a look at the strength of 980 support

      1. Not much real DAX support for me till about 9600 but they’ve been lagging on this recent rise, so yeah that would = about 50’s for us

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