6155, 6180 resistance. 6100 support. Asia down overnight, ECB Stimulus

Support 6131 6107 6098 6082 6066
Resistance 6152 6173 6180 6182 6248

Good morning.
Market Summary for 7th March 2016
The markets were relatively quiet today with little news until Thursday’s FED meeting.
There was a quick spike up at the open taking the FT100 above 6200 which appeared to be short stop “take out”.
The market then slipped through the day until the Wall Street open which saw renewed buying on a spike up in oil and commodity prices.
The FT100 closed just down by 17 points at 6182 having been down to around 6130 earlier in the day.
Best sector was commodities and the weakest gold. This pattern is seen a “risk on” play favoured by economic growth.
Dax and S&P trades worked well yesterday and while the FTSE followed the arrows with rise, dip, rise, the levels exceeded the stop orders so the early short was stopped on the spike.

US & Asia Overnight from Bloomberg

  • Crude slips from this year’s high as copper, nickel drop
  • U.S., Japan government bonds advance as Aussie, won weaken

Asian stocks dropped the most in about three weeks, oil fell and South Korea’s won weakened as data showed Japan’s economy and Chinese exports are shrinking. The yen gained with U.S. Treasuries on demand for haven assets.

Equities benchmarks retreated across most of Asia, while U.S. and U.K. stock index futures declined. Brent crude fell, after closing on Monday above $40 a barrel for the first time this year, as nickel led losses in industrial metals and iron ore tumbled. Australia’s dollar weakened with South Korea’s won, while the yen gained ground against all 31 major peers. Gold traded near a 13-month high as Japan’s 10-year bond yield sank to a record.

Sustained demand for precious metals and sovereign debt highlights a lack of confidence in rebounds in global stocks and commodities that took hold over the last three weeks, adding $4.6 trillion to the value of equities worldwide. Goldman Sachs Group Inc. recommends betting on declines in copper and aluminum prices, while Citigroup Inc. said it’s still bearish on iron ore. Japan announced on Tuesday a drop in fourth-quarter gross domestic product and China reported the biggest tumble in exports in almost six years.

“While there’s a likelihood of a pullback in the short term, investors should use this as an opportunity to buy into value plays,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $115 billion. “The tail risk from China continues to reduce. It’s quite clear that they are pretty keen to stabilize growth. That’s positive for commodities, emerging markets and global growth.”

The European Central Bank is widely expected to deliver a package of easing measures at a March 10 policy meeting to revive euro-area growth and inflation. China’s leaders are setting out economic plans at an annual meeting of the legislature and have already agreed to target a record-high budget deficit this year to support growth.

Stocks
The MSCI Asia Pacific Index fell 0.7 percent as of 1:44 p.m. Tokyo time, retreating from near a two-month high. Japan’s Topix dropped 0.8 percent, the Shanghai Composite Index slid 1.6 percent and Hong Kong’s Hang Seng Index declined 0.9 percent.

Japan’s economy contracted an annualized 1.1 percent last quarter, and while the drop was less than analysts predicted it underscored growing concern over Prime Minister Shinzo Abe’s reflation program. China’s exports tumbled 25.4 percent from a year earlier in dollar terms in February as imports fell for the 16th month in a row.

“The exports data are very, very poor,” said Castor Pang, head of research with Core-Pacific Yamaichi Hong Kong. “The huge decline doesn’t auger well for the stock market.”

Standard & Poor’s 500 Index futures slipped 0.4 percent, while contracts on the U.K.’s FTSE 100 Index declined 0.7 percent.

Currencies
The yen strengthened 0.3 percent versus the dollar, gaining for a second day. China’s yuan climbed 0.17 percent as the central bank raised its daily reference rate for the currency following Monday data showing a slide in the nation’s foreign-exchange reserves moderated in February. The Australian and New Zealand dollars fell 0.4 percent, while South Korea’s won weakened 0.3 percent.

Commodities
Iron-ore futures on the Singapore Exchange fell 6.3 percent to $54.94 a metric ton. Citigroup said it’s still bearish as supply and demand fundamentals remain weak, while Axiom Capital Management Inc. said the price jump was probably just a “blip”.

Copper fell 1.3 percent in London, trimming this month’s advance to 5.1 percent. Nickel slid 3.1 percent, retreating from its highest close since November, and aluminum lost 0.6 percent. Goldman Sachs Group Inc. reiterated its view that the structural drivers for last year’s slump in industrial metals prices remain intact, predicting drops of as much as 20 percent for copper and aluminum over the next 12 months.

Gold was little changed at $1,266.71 an ounce, after recording its highest close in more than a year on Monday. The precious metal last week entered a bull market — commonly defined as a 20 percent advance from the most recent low — and platinum and palladium followed suit on Monday. Platinum retreated 0.2 percent on Tuesday, while palladium dropped 1 percent.

Brent crude fell 1 percent in London to $40.22 a barrel, after surging 5.5 percent on Monday. It’s advanced more than 40 percent since slumping to a 12-year low in January amid speculation a proposal by major producers to freeze production will trim a global glut. Data on Wednesday is forecast to show U.S. stockpiles increased last week to the highest level since 1930.

Bonds
The yield on 10-year U.S. Treasuries fell three basis points to 1.88 percent, retreating from a one-month high. The rate on similar-maturity Japanese debt dropped as much as four basis points to an unprecedented minus 0.085 percent. The Asian nation’s government sold 30-year securities with a record-low 0.8 percent coupon on Tuesday. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

The bulls haven’t been able to hold above 6200 so far despite a couple of attempts, and also despite the expected stimulus that is coming on Thursday from the ECB to revive euro-area growth. Overnight we have dropped off from the 6180 area on Asia weakness. However, we are sitting on a support area at 6130 as I write this so we may well get a rise towards the pivot at 6173 this morning. The 2 hour chart still looks bearish with the coral T3 trend indicator turning bearish on this current candle, with 6180 as resistance. The 30min chart has resistance slightly lower at 6151, so there are a few hurdles to jump for the bulls if they do manage an early rise. In the trade plan I have put a couple of short trades, you can either do smaller stakes and fade in at those levels with the higher stop or use tight stops and trade off both levels. Generally I think we will see a bit of a dip today, probably down towards the 6098 20 day Bianca channel area. I still think we will see 6000 this week. The daily RSI(10) is highish at 60, but not overbought as such. Generally I am watching that declining 30min channel with the 6180 and 6100 edges and expect the price to stay within that today.

153 Comments

  1. Having bottled it a bit at 6160-ish yesterday and looked for a re-short at 6200, then not done it I’m feeling a little silly! I’d like to see Nick’s rise to ’78 (to sell some more), but not sure we will. Plan for today is watch half size Dave – buy some back at 6075, 50, 25 if it really gets a spank or sell some at 6150, 75, 6200. Good luck all.

  2. Morning all.
    Bumping along the recent lows on the FTSE but DAX already broken theirs.
    Seeing as Thursday ECB would have more direct effect on them if stimulus etc. that’s not a particularly good sign for the bulls, but while their daily uptrend still holds around 9580, ~equiv to our tail low of 6099 then downside seems limited till after Thursday.
    I’m just trading the range for the time being 12/30’s with a small o/b short bias for a possible look at <6100 before the DOW.

    A quick look at the calendar shows British Retail Consortium released their terrible yy figures at midnight, nothing like burying the evidence.

    1. Morning tmfp, I have been working off 12/30’s range as well this morning.
      Managed to scalp +35 so far.
      Currently short at 29

      1. Good stuff, now in the happy position of continuing with impunity, happy to stop the last one out -12 when the range breaks.

    1. Hi rich, welcome to the centre of the trading universe.
      Re: your comment, yeah, get yourself a 30 minute chart up, you’ll see that recently this area 6100/6120 has rebuffed (great word) three previous attempts at being broken, so conventional wisdom has it as a support area.
      The more times it holds the stronger it is, but conversely if/when it does break then (depending on other signals) the bigger the fall is likely to be. So conventional trading approach says look to buy or cover shorts in this area but be ready to sell if it breaks.
      With this trading malarkey it’s perfectly logical for 6112 to be a good buy, but 6095 to be a good sell 10 minutes later. Get your head around thinking like that and you’re good to go. 🙂

  5. Morning Chaps,
    Interesting couple of days.
    Given the ups and downs of the last week ..
    I’ve got 3 charts giving me Long signals …6135

    1. 2 of the 3 confirmed & an RSI >70
      – scratch head
      – wait for a pull back
      – Inital Tgt 6150

  7. Spot was easy too make money when central banks were firing at the market ( even though I still listed money ) but now the money drying up and considering all the money that was put into the system did it make much difference… Has caused stocks to go higher house to go higher credit to go higher and the biggest wealth gap.

    1. Maybe that was the plan all along aces, what’s the point of being rich and powerful if you can’t make yourself richer and powerfuller?

      1. Off topic perhaps – The other day I watched that film called The Big Short …great movie & perhaps explains better than anything else I’ve watched the credit crunchy. Recommended if you find the time.

  8. Morning All,

    It was my 4th attempt at the Dax short since Friday searching for the 630 level. I had a overnight short from 9770 with target at 640 and was hit this morning.

    4 trades – First 2 trades stopped out for a total of 30 points, 3rd attempt yesterday – made avg 30 points, 4th trade – 130 points profit. Nice R/R lesson profitable with 50% win rate.

    Still looking for more dip to go long next level on Dax 565.

    1. Only reminds me of the crocodile sequence from “The Hunt” and the quote
      In the hunt, the outcome is never certain 🙂

  9. Lower highs from 6150 – 6140
    Higher Highs from 6111 – 6117
    Looks like a pennant ..
    Could go either way 6117 – 6130 .
    MA Indicators Mixed.

  10. Thanks tmfp

    Can I ask who actually writes the blog? Do they have a user name? Must say the blog is really well written and very helpful.

    1. This page belongs to Nick who kindly lets us cheapskates talk nonsense for free.
      He has a FTSE trading subscription system for the price of a few beers, I’d recommend giving it a go and following his logic to learn more, whilst hopefully making some money.
      GL.

      1. good point thanks for that! i was expecting a bit more movement today, maybe Thursday will be better.

  12. Twice the Dow has bounced down off 17050 odd which is the 61.8% retracement fib level in recent days. Don’t think it will get there again. 3 weeks of downside on the way FTSE 5850 Dow 16000 by Easter

    1. Hey Argyle, pretty good for a guy who doesn’t do TA 🙂
      I don’t disagree, but I would wait for a good short entry when this ECB hype climaxes, Thursday maybe. Feels like it may have another stab at 6200+ left in it.

  13. In terms of the ECB news on Thursday, should we be expecting a positive or negative reaction?

    2. Both, it will probably be quite volatile.
      The rate announcement comes first, then the press conference with further Dragispeak. Reaction depends on what he says and how much cred it has.
      The recent G20 made it clear that continued CB manipulation with QE, neg rates etc. is vulnerable to the law of diminishing returns and that sooner or later, “structural global reform” will be necessary, but they didn’t give any insight into how that would be gone about.
      This upcoming announcement will be the first one made for a while when the markets are on a bull run, so expectations will be high or a disappointed sell off could be quite sharp.

  15. Stressful this trading haha.

    6000 or 6300. That’s the question, which will we see first. Need to get better at this chart reading!!

  16. A couple of nice hour long 1min uptrends in play atm.
    Ftse needs to have another go at 40 pretty soon to keep momentum going, back below 30 says game over and 24/18 again.

    1. Mixed signals here, we’ve broken ours but DAX hasn’t, covered 40 short at 28 and neutral now.

  17. Just looking at those Chinese figures again, they are super awful terrible!
    25% yoy fall in exports, 50% fall in surplus???
    If that was a business, you’d be locking the doors….

  18. Yep thought that data would of sent the market dropping but holding up well. Think a further drop will happen this afternoon.

    1. Good patience on the long Hugh, next 1 min rsi at 40 worth a think about for a protected long.

  23. Be interesting to see if we get a double top on FTSE , Dax, and pre market Dow then maybe we could see some progress towards Nicks 6000 level.

  24. ECB leak prior to Thursday for that?! Those that need to know what they need to know, know in advance.

    1. The games people play, not like it’s important or anything, just keep the trough full and heads down….

    3. I think it was Carney, he is having a fun day today!
      Carney: leaving EU could lead to a reduction of foreign direct investment. “It is a function of the degree of uncertainty.” #EUref

      1. I will be very very surprised if we leave the EU……just my opinion….it’s all smoke and mirrors if you ask me.

  27. What’s the theory behind you’re 6000 target this week? Based on to much to quick last week? Or just a gut feeling?

    1. That would be logical, but these aren’t so much price moves as revaluations….the long off 40 rsi is working for the moment, 51 the new short term base.
      Basically it’s p*ss into the wind and you end up smelling like a tramp.

      1. If you want a price to go up, what better way than demoralise shorts by strategic squeezes and get them to do your work for you?
        Out of half at 64, in the name of liberty 🙂

        1. Moving target isn’t it..
          Using 1 min – 2 min and 3 min at the moment
          6151 @ 12:45 (1 min) would have been an entry.
          But anywhere between 6140 – 6150 would be OK..(short term trading)
          Otherwise I’m standing aside…

        2. Faintest sign of weakness now with rsi topping out at 60, so took out rest of long, do nothing for an hour I think.

  29. Hi guys. Still sitting on my longer term short, which I have named George in sympathy with his friend Dave and recently dearly departed Brian, if that’s OK with you. Would I have taken a different approach to that trade if I could do it again? – sure I would. Anyhow.

    I’m looking at a divergence on the one and two hour, going back to last Wednesday. Only just noticeable on the four, not there only the daily and above. To me, that suggests a smallish pullback may be at hand, e.g. back into the 6000’s, but then another go at setting up a proper negative divergence on the daily. Or not. That’s too far ahead. If my little pullback materialises, it might just turn into more. We’ll have to see. I suppose this run in oil needs to run out of steam too.

    1. Hi Cowboy,
      Yes all the indicators look toppy on the daily at the moment…
      A kiss of 6050 would be technically possible when it’s ready…

    2. Good man Cowboy, just back from lunch to see that I’ve been taken out at 50 and 75, so Dave has got some of his old shape back. Had my calculator out last night and whilst all was looking good this morning with clouds of blue ink, reality is that I’ve paid more dividends than Glaxo! With those 2 shorts just taken on I reckon I need to see around 6110 for Dave to break even properly.
      I’ve got ammunition to short it at 6200 which seems to be the “glass ceiling” and now that even the Queen’s stockbroker (Cazenove) is saying short am looking forward to the “obvious” collapse!
      Good luck George!!

  31. I quite fancy having a short with a name……I think I would call mine cliff……….as in falling off one.

  33. Good point that. Should have gone a touch higher. I’ll see if I can alter it.

    Looking like 6200 today anyway. Should have sold this morning and took some profits. Just convinced we will see 6000 before 6300 but again that’s a gut feeling and there is no logic behind that theory.

  34. Back to our uptrend line @58, worth a long if you think the DOWs going to ignore China too.

    1. Talking of the DOW, I suppose BTD to 16900/20…
      So what was all that 6175 b*llocks about?

    1. They’re trying their obligatory opening runup, not looking to good if 17000’s the best it can do, short at 50

          2. Faint heart there, which goes first 950 or 700?
            A long off 30, but we’re not looking too convincing

          3. Yeah, problem is for me I’m downside oriented, took 5 waiting for a bit of direction now

          6. Way to go Rick…..just don’t get overconfident and up position size and give it all back.

          7. Hi Anstel, I always use stops and scalp with regular size.
            I have been doing this for over 2 years now 🙂

          9. That’s okay Anstel – I blew my account for like 5 times lol
            Glad I used to play with a couple of quids those days 🙂

    1. That’s todays video that went round to members just after 7am in case anyone is interested.

  41. Dow keeps trying to run up to 17,000 and getting “rebuffed” so just put in a small limit at 95 to see whether that gets taken out. Stop at 17050, target 16925

  45. So MHH, ftse on its arse and last bit of support, DOW one step up and two back but nearing support at 920, I still think there’s a bounce in it

  46. Just bought a bit back at 25, lighten the load. Sell more if it bounces, pulled the limit at 6075.

  48. I don’t know if any of you are too bothered about trendlines. Tmfp said lately not to take them as strictly gospel for a few points either side.

    I’ve got two drawn on my daily that are currently relevant. One connects the highs since away back in the autumn/end of summer. Cash has just, and only just closed back on the bottom side of it. Not clear enough. Other one is the bottom line of the rising wedge of the advance from 5500. This is the first day we have traded below it, and have in fact spent the whole day below. It’s rising at quite a lick, heading well to the high side of 6200. These usually resolve e downwards, don’t they?

    My other line for that matter is a horizontal band around 6100-6110. Trading below there just might make a few traders pee their pants.

  51. Got sidetracked at the close by the outside world 🙁
    The DOW almost seemed to be glad to see the European closes so it could go off and do its bull thing.
    We don’t seem to be having much of a pull back, sub 6120 keeps getting bought up, although the daily’s looking toppy we don’t appear able to go down very far.
    Really Thursday’s ECB will be the key to this, I think.
    Yeah cowboy, I see all of those trendlines and I do take notice of them. I didn’t exactly say, or didn’t mean to, that they can be bent to suit, more that tails can break them but just so long as the close is within they are still valid. This obviously depends on the time frame, i.e. don’t trade short term against a long term trendline.
    The long term downtrend broke hence RIP Brian and it’s quite common for a breakthrough to be followed by a confirming pullback to or below the trendline.
    The daily uptrend was unsustainably steep and has indeed broken and yeah, that band of 6100/10 support appears to be rock solid at the mo, although as I said to rich earlier, the more times it holds potentially the bigger fall when it breaks.
    Some people measure these things, but if 6100 broke and closed below then I don’t see much support before 6000, maybe a little at 6050..

    1. Yes and with the 61.8 % fib retracement being reached, it’s only a matter of time before the real downturn begins. Just needs a catalyst.

      1. I would expect the Dow to knock off a 100 points before 9 tonight. Seems slightly out of kilter at the mo. Bulls trying for one Lat rise which will lose momentum and pull back.

        1. Your line of thought is precisely what ‘George’ wants to hear. And it’s for precisely that reason I am doing my best inside my head to find reasons why you could be wrong.

          Despite the bearish case, I can also see a nice uptrend off 5500, which was preceded by a very strong divergence on the daily. And as those vulgar Americans would say, it’s an uptrend until it’s not.

  53. It’s up and down like a yo yo. The ftse keep bouncing of around 6125…like you said we need a catalyst for movement either way and I think Thursday will be that day!

    1. You may be right Rich, but Nick thinks 6000 is possible this week. If Thursday is about up then where does 6000 come from. I think Thursday is priced in already and this is about to fall off the cliff.

      1. If you keep saying this enough times, you should be right in the end! I’m short again, fwiw.

        1. Si, this is a bear market. We have had a 61.8% retracement. The next leg is down below the previous lows. It may hang around a bit but again tonight the Dow drops off that level. Keep the stakes low to start and give it time to trade.

  54. Got stopped at 50 with my Dow short, wobbled around there, I thought about re shorting but then it smacked 30 points, bugger! Amazing the ‘stretch’ between the ftse and Dow, keeps on growing. I think we may well be in a ‘buy the rumour….’ And am looking forward to Thursday now, having stated previously I wanted to be out before then!

  55. Argyle, if you are still there, what chance of a 5 to 9 run over 17000? Since you called this drop bang on I’m thinking you must be mystic meg?!

    1. No chippy. Belong to an American blog, same as Nicks. I pay for it and 9 times out of 10 they are spot on. 7050 to 7080 sell every time is the recommend. They are predicting 14000 to 15000 on Dow by the summer.

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