6355, 6339, 6295, 6272 Support, 6450, 6467, 6541, 6603 Resistance

Good morning. Well, yet again the bears were out in force, the bulls failed to break that 6560 resistance area and it was one of those days where you wonder why you didn’t just go short there and leave it for the day. Needless to say every support level got broken, 6525, and even the pivot which was 100 point below where we opened! Overnight we have seen 6313! All on worries over Europe again (did they ever really go away?) and George saying that the UK will be dragged down by Europe. Bear in mind there is going to be some political background to all these sort of things now to ensure victory at the GE next year. Anyway, The bottom of the Raffs at 6294 and 6271 are coming into view today, especially with another dip below 6339. Europe is still pretty sickly, and October once again maintains its track record as one of the most volatile months.

Asia Overnight from Bloomberg
Asian stocks declined, with the benchmark index headed for a six-month low, on concern a slowdown in Europe may hurt global growth and as Hong Kong’s government scrapped talks with protesters. Bond risk rose as metals retreated and Brent crude fell to the lowest since 2010.

The MSCI Asia Pacific Index lost 1.5 percent by 12:46 p.m. in Tokyo, set for its lowest close since March. Standard & Poor’s 500 Index futures declined 0.2 percent after the gauge fell the most since April, while contracts on the FTSE 100 Index sank 1.1 percent. Copper in London slid 0.7 percent while Brent fell as much as 2.2 percent. Malaysia’s ringgit retreated from a two-week high before the budget. The cost of insuring corporate and sovereign bonds rose in Asia, Japan and Australia. (AS51)

European Central Bank President Mario Draghi said there are signs the region’s recovery is losing momentum, sending a gauge of volatility to an eight-month high. Federal Reserve officials said the U.S. economy may be at risk from a global slowdown as the International Monetary Fund this week cut its outlook for global growth. Hong Kong canceled talks with protesters after leaders of the movement called more rallies.

“Draghi’s been saying a little bit of this for a while but people start listening more when the market is fully valued,” Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas Asset Management LLC in Norfolk, Virginia, said on Bloomberg Television’s “First Up.” “Europe is crawling, their economic growth is very slow. The Fed can’t raise rates, there’s no way.”

Equities Rout
The S&P 500’s 2.1 percent drop yesterday erased the 1.8 percent jump recorded Oct. 8, which was the index’s steepest one-day advance in almost a year. The Chicago Board Options Exchange Volatility Index surged as much as 28 percent to 19.38, the highest level since February.

The MSCI All-Country World Index dropped 0.4 percent, extending yesterday’s 1 percent loss. Minutes of the Fed’s Sept. 16-17 meeting released this week damped speculation that policy makers will bring forward their timeline for benchmark rate increases.

The MSCI’s Asia Pacific gauge is headed for a 1 percent drop this week, its fifth straight weekly decline and the longest run of losses since February, data compiled by Bloomberg show. Equity indexes in Australia and South Korea fell more than 1 percent. Taiwan’s markets are shut today.

Japan’s Topix (TPX) slumped 1.4 percent, set for a second weekly loss, as the yen headed for its first weekly gain since August. The currency was at 107.86 per dollar after yesterday reaching 107.53, the strongest since Sept. 17. It’s set for a third week of gains against the euro as Draghi pledged yesterday to expand stimulus measures if needed.

Hong Kong Protests
Sagging exports to Russia and China are putting Germany on the verge of recession and Chancellor Angela Merkel’s domestic policies are also holding back growth, according to an outlook report presented by the four institutes that advise the government. The group cut its 2014 German economic growth forecast to 1.3 percent from 1.9 percent in April and trimmed next year’s to 1.2 percent from 2 percent.

Hong Kong’s Hang Seng Index sank 1.6 percent, while the Hang Seng China Enterprises Index fell 1.7 percent. China’s yuan halted a four-day advance against the dollar in offshore trading. Pro-democracy protestors who want China to scrap a plan to vet the city’s election candidates have been blockading key roads for almost two weeks. The occupation is illegal and must end, said Carrie Lam, Hong Kong’s No. 2 official.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Well its pretty bearish isn’t it. Rare to see the FTSE drop so much, with a complete crossing of the Bianca channels in one day, and an overnight low even further below – though it was a spike down to that 6315 area. Todays pivot is 6467 – possible that we bounce 100 today of course the way things are. Above that the next resistance is 6524 (10 day Bianca) and 6532(20 day Bianca).

I hadn’t expected the pivot to be hit yesterday as it was so far below where we opened but just shows how weak it was – and very hard to trade. For today we have initial support at 6355 where we are as I write this, with 6339 below that. The 2 Raff channels have their lows at 6295 (10 day) and 6272 (20 day)and considering we dipped off the top of them less than 48 hours ago, the 6272 area might well hold. If not then 6230 is support below that.

For today I have plotted an initial rise up to the 25EMA on the 30min at 6375, based on this 6355 holding initially (though technically its weaker now as it has been broken overnight). From 6375 a dip down to 6339 before a bit of bull to 6400 – the top of the 30 minute channel. Make or break there for a push to the pivot at 6467, or more downside, most likely to 6272. Could well get another dead cat bounce today.

204 Comments

  3. Bad news is back too being bad, but this is short term until such time as interest rate rise then stock are still the favour & with Europe not looking to raise interest rates until at least 2017.
    Also the media now hammering on about this is the start of a major correction so now for me it’s time too start buying just like I sell when the media hype the new high.
    Media is one of the best indicators!

    1. Certainly is. With any luck the BBC will wheel Peston out and a chart with red arrows. Best buy indicator of them all.

  4. Nick

    You have got 6355 as support. What is there as per your chart?
    The software gave a 2nd target as 6357 ( cant make out anything
    as being there )

      1. RC – Did your software do some iffy calls yesterday ??
        ( They kind of looked similar to mine – and they were a bit c**p!)

      2. Hugh

        Cool
        Yes looks like good support there.
        I am trading today. Am on a sell from 6405
        Yesterday was a great day. Had to go out
        most of day & missed the lot. Software
        managed to pick up most of the moves

  8. Hugh

    No the software picked up all the trades….
    one sec … I think I posted it yest.
    ————–
    RentalCollection says:
    October 9, 2014 at 4:51 pm

    Jim

    Yes –
    Sell at 10.15 6530 target 6493 6449
    buy 6499 tagret 6478 & 6493
    sell at 6493 target 6422 and 6412
    now buy 6412 / 6405 target 6462 & 6478

    —————
    The last one did not make it.
    But I think the Todays Sell came from that ??!!

    1. It’s the Buy 6499 tagret 6478 & 6493 – – don’t really understand that – but it can wait ’til later..

  19. PMS — Do you mean the BUY / SELL points? The software doesn’t produce targets as such, although one always has likely levels in mind I guess.

  22. Not using small timeframes like the 5 minute chart, but changed to that timeframe with some settings.
    Nevertheless it gave me a buy signal this morning at 6362 and then after reaching 6405 gave a sell signal at 6377 (bit lag that sell, but the buy was ok at 7:05 am)

          1. Jim – I’ve been using the ADX to sift out “iffy signals”.
            I ignore everything unless it’s above 43 and below 30

          2. Thanks Hugh, I can see that should work. (Incidentally RentalCollection, the ADX is a good momentum indicator.) Do you mean ‘above 43 OR below 30’?

  28. out of Dax again @20 – tidy profit for the day now. Tempted to short Dax as I get a sneaky feeling 1900 might get tested (or near enough there) by bears later today…

    1. yup, 1900 is very much on cards today. Will long @1900 £50/point with 10 point stop. If 1900 breaks decisively, all gone pear shaped!

  30. RC,

    How are you doing?
    I have a omnitrader and wish to know which plugin did you uses.
    Hope you can help me.

  31. Should have stuck with day trading lol, atm still holding out on a £12k figure loss, -300pp and that’s with only a 42 pip trade, with my original intention going as high as 100pip lol.
    Already closed out -£2k, though scalped £500 yesterday evening.

    Well done to those who still had the cajones to hold short 🙂

    1. hello mate, i was about to ask you on your DAX trade from 9100ish. Well, am still holding ftse long@6430 £15/point. But using other account for day trading to recovery by shorting the rallies with stops.

  35. Made 300 points on short from 6900 till 6600, went long from 6430 and currently down by 100 points. 🙁

    All I want for xmas from santa is ftse 6430 🙂

    1. Sam – What about FTSE 7400 ??
      Just browsing a booklet I picked up at B & Q a look through
      Career Prospects with B & Q at Aged 80
      Sorry – just can’t help being flippant

  37. So far these new approach with the 1 hour settings in the 5 minute chart, looking good. With some lag, but maybe that´s a strong signal. Like the one at 6377 short that come to 6330
    But the 1 hour did not yet gave any signal. Short is still in sell mode

  38. But I still trust my 1h chart. That’s the one that give better performance in the long run. The 5 minute chart could give some good performance, but in some places only.

  39. Jim did you notice that the lag is +-20 points between you and me.
    When you sold at 6405 mine was at 6377
    now you at 6334 and me at 6358

  41. Now a sell signal at 6351. That’s what I was talking about. Not trusty at all. Some lag, etc

        1. As I understand it Hugh the first order closes the open trade and the second enters the new one — could be vice versa. That sell is looking suspect at the moment.

    1. Hugh
      Looks like the software picked up your PRT Zone
      as a target 6383.
      Missed the entry by 6 points – Probaly an increase
      in the entry area from normal approx +/- 3 to 6
      as a result of the volatility. Not sure – but preety close.

      1. RC – That PRT Line Hot Zone has disappeared now.
        5 Min Chart
        I’ve got green upward sloping channels.
        Also – price touched 30 MA and bounced off – pointing up – that’s trend direction.
        Also 30 MA just covering 200 MA (changing colour now)

  48. Hello Guys…Hope everyone is making loads of money 🙂 I haven’t traded all week because of work and other issues and also had to withdraw my small capital as I needed it for an emergency so no trading for sometime until I find some capital. I had a look at the markets last night and wow what a week for trading.

    As I speculated around mid September, there would be like 10% correction it did happen on FTSE and DAX. Its a shame I didn’t trust my gut to hold my shorts.

    I am 90% sure that FTSE is reversed and won’t go below 6300 before a bull run and this will be confirmed with the daily close. Again its all PA that I follow, no news or anything. The hovering last night on the FTSE signs a reversal with a pin bar on the 4 hour chart. This is a behaviour I have noticed before reversal and it happens out of market hours.

    Still not sure about the revesal on Dax and Dow.

    Good trading all 🙂

  49. I read this in an article about trading thought will share this. “We are in the business of making mistakes one who makes less mistakes will win and make more money”

    1. Nice one RJ..
      I saw something a couple weeks ago – can’t remember where it was but it went something like …
      The 5 Stages of Learning to Trade.
      Stage 1 Unconscious Uselessness
      Stage 2 Conscious Uselessness
      Stage 3 Unconscious Improvement
      Stage 4 Conscious Improvement
      Stage 5 Mastery

      1. Hugh
        The signal for the Up trade from 6321 / 11 is also turned off
        as soon as the 6383 target was hit.
        Unfortunately – like your software I do not have a signal now,
        no Buy or Sell

        1. Hugh
          When there is no signal – one thing I have come to understand from the software.
          There is no momentum – so looks like sideways movement.

          1. The software is probably using this as a filter to judge – if no momentum.
            Somehow integrated into the algos?

            Hugh says:
            October 10, 2014 at 11:37 am

            Jim – I’ve been using the ADX to sift out “iffy signals”.
            I ignore everything unless it’s above 43 and below 30
            Jim says:
            October 10, 2014 at 11:46 am

            Thanks Hugh, I can see that should work. (Incidentally RentalCollection, the ADX is a good momentum indicator.) Do you mean ‘above 43 OR below 30’?

    2. Dutch, I wouldn’t short and especially it being a Friday 🙂 may be I will stop for today and see how the daily candle finishes. It looks like a reversal to me.

          1. it might be a good long for med or long term..if only we knew the direction, we wouldn’t be on this forum 🙂

  54. Did you manage to open the chart RentalCollection by right-clicking on the link? Quite happy to e-mail you but don’t have your address. Last BUY signal not good — I think the Dow is throwing things about. System is up 80+ pts. on the day.

  55. Jim Hugh
    Looks like the sideways is being held by the – former 2 targets
    of the last buy signal i.e. between 6348 & 6383.
    Looking more like a breakout trade.
    ( all this is my thinking – like you said Hugh -fitting into stage 1
    The 5 Stages of Learning to Trade.
    Stage 1 Unconscious Uselessness

    1. Sorry –
      What I was thinking is that the next Trade will Probably be a Break-out trade
      out of 6383 – Going Long
      or 6334 – Breakout – going short

      But No software signal as yet

  58. Digger is still short and that last SELL is now just in profit. Quite an excursion. Expecting a further drop now.

    1. I had the same problem there. The market just gone sideways and this is when you start loosing money, going in and going out. When it decides to break that range, than you have a better signal.

  59. Hi All – Hope everyone having a profitable day?!

    Sat back for most of the day taking it easy and just watching. I have recently gone short @75 though. S&P’s steadying up. This is when we are bears!

  60. crap I turn away for 15 minutes for a phone call and what the heck! What do I do now, long bloody DAX again…(@41)

    1. keep your eye on it pal this will fall yanks closed monday thats 3 days when new shit could hit the fan stalking it all the time

  68. My last signal on FTSE was a sell, yesterday morning. DOW and SPX also.
    DAX the weakest link, is still the stronger one in the sell side, giving no sign, since I started the system Oct.1
    Nothing new to report

  69. time to be brave or foolish.. Long Dax 8790 – can someone please remind me every 10 minutes not to sell and to keep this for long term as these are good levels for genuine bounce back later this month?

  70. Dutch think after all this selling we will see 9300 by the end of October, but may still drop too 8500 ish

    1. I can live with a downside of 290 points if the upside is 600 points! I’m just terrible at the long term game, not enough patience and I’m too much of a trader.

      DAX is oversold compared to FTSE and SPX in my view. I also expect that the recent German data is actually not so bad.

      Who knows, but we sure as well will find out!

  72. Hey all. Semi newbie here. @PMSinvestor can I ask what system you are employing? Is it automated software? Thank.

      1. Thanks @PMSInvestor appreciate that. Now just to learn how to make use of it…would you suggest any reading material or ways to learn how best to use it? What indicators are you personally using? what do you find is working more often than not for you? sorry for the questions…. im in a bit of a sticky situation with my trades at the moment :-S

        Thanks again!

        1. I recommend the tutorials from Prorealtime.
          I follow price action, nothing special (Price average in the longer run versus the shorter run)… I use the simple approach which I prefer the most. But this depends for each person.
          You need to have your own thing about what suits you the best.
          This takes time.

          1. Thanks mate. Again, I appreciate you sharing. Gives me something to use as a foundation. Good Luck!

  73. Dutch I believe that most of this sell off was due too world world growth issue 60% of the dax indice is made up of money invested by America. Just seem the American have cashed out but Germany is still the power house of Europe and money will flow back into after this all simmers down.

  74. 410 points since Oct.1 and without leaving the market…. changing from short to long and vice versa

    1. the total points are from DAX, FTSE, SPX and DOW

      We have the option to leave at anytime, in the top of EC or use trail stop (if in manual trade, as the auto has some bugs)

  75. The next signal I will entered the system for real. Meaning it will be a buy, as all of them are sell right now.

  76. 60 points already, the DAX is now in my black box and under my control, I repeat under my control 🙂

    good weekend all

  77. Looks like worst is over, that 1912 on snp, 8780 on dax and 6301 on ftse could be the lowest for now. Unless there is a major sell off in next few hours.

  78. What a day! Digger got a BUY in @ 6349 and is now up > 120 pts. on the day. Better go live next week. 😀

  79. Hugh Jim MLawrence01

    Something about this software.
    The BUY signal at 6348 – Never went out.
    But a new Buy signal came on at 6321
    The targets still remain.
    I have no idea how to deal with this – when trading.
    The move against the first trade was 20 points
    A stop – which is probably too large for day trading.
    So have to find a solution for this.
    But i have little doubt that the targets will be met.
    But dealing with the stop – I find diffficult.
    So in this case – I just leave the position on till the signals
    disappears.
    This is where some of the ideas – that you Hugh
    & MLawrence – if modelled into this – may work ?
    Any input welcomed
    RC

    1. RC –
      So as I’m reading this as follows…
      Long entry at 6348 – Tgt I think somewhere like 6383…
      This stayed on the screen as an arrow.
      But a new trade appeared : Long 6321 – no Target stated in your text.

      This software is really clever .

      Obviously 6321 has not been filled.

      I would have thought that it was another Long entry at 6321 in addition to 6348.
      I’m thinking this because it is probably using something like the ADX which has been below 26 for much of the afternoon and the RSI has been stuck between a range as well. So it is trying to suggest that you trade the range.
      6348 to 63880 & also 6321 to 6348.
      That’s my take on it …

  80. Don’t get to confident yet Dutch but reckon we have seen the worst off it… It will be the retail investor that have took the brunt of this dirty bastard in wall st

  81. My candy indicator is right now saying to stay out (meaning no buy or sell), it gives this many times when the trend is pausing. In a top of EC works has a good advice signal to take profit, if you want… you always have the option to remain and reverse

  82. Hugh
    Thanks for your notes.
    You always make me think outside the box. Apprecite that.
    Lot of backtesting over the weekend =-O
    any other ideas about how to trade it, with your trading techniques.

    Can i also this question to
    MLawerence

    Thanks

    1. Does your system not give out places to place your stops? or does it only give out new positions to take and you have to manage the position as how you see it? If not I would be interested in helping you tweak that side of the position?

  83. I made the wrong calculations, concerning the points, the system gave me already since Oct.1. Instead of 480 (SPX has a different amount of leverage), it’s 2118 points (which is about 1000/week) and counting, as the positions are still in the market. With dead cat bounces in both SPX and DOW, which added another bag of points when it reversed from sell to buy and again to sell

  84. 872 points were made only on SPX and DOW yesterday, as you recall with the short positions on 1958 and 16908 and still this is the average on both today. I could have exited yesterday evening in the top of EC.
    Or remain for a reverse buy, which could eat a bunch of those points in the dip , but would catch them again in the buy.

    I’m writing these as a way of me to deal with these new approach of how stay in the market or not…week, daily targets, etc.
    The performance of the system will be beat by the market in the long run. That happens when market starts to sideline, giving false signals.
    That’s why I’m going for the manual approach of entering and exiting on my own.

    The backtest for now is doing ok without any human contact

  87. given Monday US markets are closed, Dax and ftse might go down further. Tuesday Yankees start buying stocks at cheap price. 🙂

  88. S&P downgrade France to AA negative more trouble in euro land Ecb are getting deeper & deeper into this hole.

  90. Yes Sam look like it can’t see anything else for European indexes think it will be a little bit better for ftse 100 but still further drops.

  91. This could be a little saver for Dax indice

    Assets worth as much as one trillion euros could qualify for the stimulus program, which begins this month. The euro has fallen 9% since May to a two-year low against the dollar.

    With more stimulus & a cheaper euro maybe this might just fire up the exporting market in Europe.

  93. PMS —
    Impressive results. I have been concentrating for the moment on short timeframes, appropriate for day-trading, but will be testing 4-hr. and daily also. No system (or person) is going to pick up all of the available points in a series, but I don’t see that a system will necessarily be beaten by the market in the long run. 😀

  94. Nelly don’t see any point at selling at these levels, my long term account has a Dax buy which has been hammered with my other account have a small dax buy my next buy range for dax is 8500 and my sell range would be 9000 these are all on my short trading range we are bang in the middle of that so will be a relaxing week in saying that may have a small long on Ftse if it go’s a little lower. Share are on sale but that will soon change and think year end we will see 9400 dax and ftse 6800. The bubble blowing bull markets is just letting some air out of bubble.

  95. Any thoughts on this? I would usually be in long at this moment but this time it feels a little bit more aggressive. I did think I would jump in at 6200 ftse and 8500 Dax but we’re nearly at these levels (ftse) before a single share has traded hands! Tempted to hang on and see

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