6380 support, 6435 resistance

Good morning. Well, it wasn’t looking too bad initially for the bulls, then the Americans logged on and the selloff started. I was too early with my early longs at the pivot unfortunately, as the dumb money came into the market first thing and is what drove it up. We hadn’t had that for a while so not sure why they decided to do some buying yesterday morning, it looked initially like it was going to dip. Anyway, it still looks pretty bearish (as mentioned yesterday short the rallies, at present its better to be short than long as there are more points on offer) and does seem to be following that weekly chart I have been sending round (with the drop to 6000/6200 area); with the S&P dipping past 1750 and the Dow shedding over 300 points yesterday, there isn’t an awful lot to be excited about. Still, it made Janet Yellen’s first day memorable – probably the markets opening salvo for getting her to increase QE. I do think they have been a bit hasty is tapering that though.

Asia Overnight from Bloomberg

Asian stocks tumbled, extending a global selloff, with Japanese and Hong Kong shares dragging the regional index toward its lowest close in five months. The Australian dollar surged as the country’s central bank held rates, while emerging-market currencies rose.

The MSCI Asia Pacific Index lost 2.6 percent by 3:17 p.m. in Tokyo, the most since June. Japan’s Topix index plunged 4.8 percent, entering a correction, and the Hang Seng Index slid 2.6 percent in Hong Kong. Standard & Poor’s 500 Index (SPX) futures rose 0.1 percent after the gauge sank the most since June in New York. The so-called Aussie climbed 1.3 percent while currencies in Malaysia, Thailand and Indonesia gained at least 0.2 percent. Zinc fell 0.3 percent, declining for a 10th day and heading for the longest run of losses since January 1989.

U.S. factory-orders data today will add to evidence of a slowdown in manufacturing in the world’s two largest economies, according to economists surveyed by Bloomberg. About $2.9 trillion has been wiped from global equities this year as slower Chinese growth, cuts to U.S. stimulus and unrest in emerging markets from Thailand to Ukraine spook investors. UBS AG (UBSN) reported profit that was twice analyst estimates, Toyota Motor Corp. raised its full-year profit forecast by 14 percent and BP Plc reports earnings today.

“Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon,” Mitul Kotecha, head of global markets research for Asia at Credit Agricole CIB wrote in an e-mailed note today. “A combination of tapering, a confluence of country-specific emerging-market country concerns and weaker growth in China provide the backdrop for a volatile few weeks.”

Factory Data

Measures of volatility surged across the region, with the Nikkei Stock Average Volatility Index and similar gauges in Hong Kong and Seoul at levels unseen since July. The Chicago Board Options Exchange Volatility Index, or VIX, for U.S. equities jumped 16 percent to 21.44 yesterday, the priciest since December 2012.

American factory output expanded in January at the weakest pace in eight months as orders slumped, with the Institute for Supply Management’s factory index dropping to 51.3 in January from 56.5 the prior month. Readings above 50 indicate expansion. The median forecast of 85 economists surveyed by Bloomberg called for a decline to 56. New orders slipped the most in five months in December, Census Bureau figures today will show.

FTSE Outlook

FTSE 100 prediction
FTSE 100 prediction

I got it wrong yesterday expecting the dip first so apologies for that. Today I think we will see a bit of a bounce initially., though after such a big down day a bit of consolidation. That said, it is pretty volatile at the moment so the usual rules are possibly out the window! The top of the 10 day Bianca channel held yesterday in the end and was tested twice around the 6533 area. Today’s channel top is 6500 and the bottom is 6350, a level that should get hit if the bears come out again. 6380 is showing as support for the 20 day Bianca channel.

Today’s pivot is 6488 so likely to be resistance if seen, an area that tallies with the 200ema on the 30 minute chart. On the 30 minute chart we have a few ProTrend lines in play and I have plotted what I think will happen.

33 Comments

  2. Yes, while yesterday FTSE was going above the pivot (was it 6493?), Dow was actually just coming to its pivot, I think it was 15728, and it turned at 15740ish and drove FTSE with it.

    1. To be honest I was a bit stressed yesterday as I’ve never experienced a 350 point drop in my entire trading history and was happy at least to bag 61 points out of all this, however the points were made not in this fall, unfortunately.
      But it’s always another day, another trade, I’ll take it easy today.

    1. got stopped out earlier went short abit early i guess..looking to short again though possibly around 6460 get a few pips when us opens.

    1. Could it be the start of a reversal perhaps nick? im not so sure either way to be honest, all this talk of a correction here and there hmm

      1. Doubt it Deez. We will see 6200 imho. This pullback is not bulls fighting back just a bit of relief from the bears cashing in. Might see Nick`s 6350 by the end of the week.

        Normally we need a decent pullback to really prove there are bulls in the market, otherwise yesterday`s beating shows bears are in town.

    2. I agree we could hit 6530 if 6435 holds. However I do think in the medium term (February) we may probably hit 6338 one more time before rallying back to 6650 (March / Early April).

  6. Over the past year it has not held below the 200ema for very long… Might be good medium term buying opportunities..

  8. Went short@6460 for 30 points this morning! My last 6 trades were stopped at b/e. I am a happy bunny 🙂

  9. DOW breaking into new territory while ftse lags slowly behind. I guess it makes up for last years slow ftse rise

    1. FTSE is the less bear of all indices. Believe it or not. It is always lagging the others. If we have a decent consolidation/bounce in DOW, who knows what levels FTSE go, but surely it will pass 6500

        1. Ftse down 4.35% ytd compared to 6.75% and 5.2% for the DOW and S&P respectively. As I said last year I do expect the FTSE to outperform in 2014 as tapering hits the US and we actually get some decent growth in the UK.

          Far too early to say though but it will be interesting to see when the bounce comes…whether the FTSE will rally comparatively more strongly.

    1. none. it was paid on positions held yesterday. it only applies to positions held on tuesdays at a time specific to your trading platform.

  15. Took it just as pull back of this pop up really, so shorted 15432 her to get a pull back, closed 15409 +23 easy points. Hate such set ups, it goes down, then up, who knows where it will go now.

    1. This pop up retraced 61 percent where I closed, so it may break up easily. Let’s see. FTSE bullish

Comments are closed.