Good morning. That was quite an opening spike first thing yesterday, relief that no major bank failed the stress tests really, before they realised that in fact 25 did still fail and that €25bn needs to come from somewhere! That saw a day of steady declines as the FTSE shed 100 points, before finding support at that lower area 6350. US data yesterday was mixed, while Twitter saw $3bn wiped off its value despite the company revealing it has attracted millions more users in the past three months. Shares in the social network dropped 10pc in after-hours trading, even though it reported 284m monthly active users at the end of the third quarter, up 13m on the previous three months and a rise of 23pc from the same period last year.
Bank of England policymaker Ian McCafferty has called for the Bank to begin raising interest rates now, warning that any spare capacity in Britain’s recovering economy could be used up by the middle of next year, which could lead to an increase in inflationary pressures. [From here]
Asia Overnight from Bloomberg
Asian stocks fell, following U.S. shares lower, after American data from home sales to manufacturing fell short of estimates and investors awaited a Federal Reserve decision on its stimulus program.
The MSCI Asia Pacific Index (MXAP) dropped 0.1 percent to 138.22 as of 9:02 a.m. in Tokyo, before markets opened in Hong Kong and China. The Fed will probably eliminate its remaining $15 billion in monthly bond-buying when it concludes a policy meeting tomorrow, and leave its key interest rate unchanged at a range of zero to 0.25 percent, according to surveys of economists conducted by Bloomberg.
“We are not sure that there will be a smooth handover from Fed QE to sustainable economic growth without financial market instability,” said Stewart Richardson, who helps oversee $100 million at RMG Wealth Management LLP in London. “We fear that recession risks, even in the U.S., are higher than most would care to admit because of weak overseas economies and potentially vulnerable financial markets with no QE to support them.”
Japan’s Topix index slid 0.1 percent as the yen slipped 0.1 percent to 107.87 per dollar after gaining 0.3 percent yesterday. Data showed retail sales beat estimates in the world’s third-largest economy. The Bank of Japan will consider moderating its language on inflation in a report this week to take account of the impact of lower oil prices, according to people familiar with the decisions.
Australia’s S&P/ASX 200 Index declined 0.2 percent. South Korea’s Kospi index added 0.2 percent. New Zealand’s NZX 50 Index sank 0.1 percent.
U.S. Data
Data yesterday indicated uneven economic growth in the U.S. Contracts to purchase previously owned homes rose less than forecast in September, showing housing will take time to gain momentum. Another release showed growth in services activity slowed this month, while the Dallas Fed’s gauge of regional manufacturing fell.
Futures on the Standard & Poor’s 500 Index were little changed after the gauge yesterday slipped 0.2 percent. U.S. energy producers declined after oil dipped below $80 a barrel, while telephone and consumer shares rose.
Hong Kong’s pro-democracy protesters will this evening mark a month since police used tear gas in a failed attempt to disperse them, as leaders debate whether to reopen discussions with the government. The pro-democracy protest is at an impasse after its leaders shelved a vote among participants on its direction over the weekend after televised talks between student leaders and the government failed to yield a solution. [From here]
FTSE Outlook
Todays pivot is 6381 so we have a bit of initial support here. I have put in an initial rise, to test the 6450/6460 area where we have the first batch of main resistance and the top of the 20 day Bianca, as well as the level we spiked to yesterday. However, the way it dropped off from here yesterday means that it probably needs to test the lower 6326 support area at some point soon as well. If we do get an inverted V shaped day today and drop off from the 6461 resistance then we could go as low as that today or tomorrow. Below 6336 support is 6316 then 6279 where we have the bottom of the 10 day Raff and and the 10 day Bianca.I would expect a bounce at 6316. I have gone for an initial rise as the 30min EMAs are positive at the moment, and we have an uptrending 10 and 30 minute channel. The 10min one has resistance at 6400 and support at 6386.
Support so entry levels for a possible long
- 6381 daily pivot
- 6336
- 6326
- 6316
- 6279
Resistance so entry levels for a possible short
- 6400
- 6449
- 6461
- 6495
So nick you expect the FTSE to rise 1.5% based on what?
lol. Where it saids to rose 1,5 % ?
Nick is quite bearish today. Yesterday was quite bull to 6495.
well ok 1.5% is a bit over exaggerating on my part but Nick expect a test of resistance at 6450/60 so that is 100 points up on yesterday’s close or am I nuts? and I just can’t see such a move if I peek away from any chart and look what is different from yesterday – answer, nothing imo
I saw what you meant after. It’s 1,5% indeed, sorry. Quite strong for the FTSE, but this intraday moves sometimes appear.
Well, a close above 6431 today, would imply a visit to 6560 (major resistance) next days
Jim
Are you experience the same problem ?
Probacktest does not show the process… in the end it will show only the results
Yes PMS, I’ve got the same problem, but at least the backtest is running, which it wasn’t before! I have told IG about this new issue and suggested they have a look at it and get in touch with IT-Finance if appropriate.
The bank testing was no news and had no affect on the market. People are only concerned about the Fed meeting. It will be bad news but expected so market will go up.
you seem more cynical day by day 🙂
Irrespective of Fed’s meeting outcome market will go up – traders just need an excuse 🙂
or spike and down, who knows.
They got me this time, bas..rds. FTSE and Dax retraced many times, Dow not. I’ll give it a week and close next week unless they close, whatever.
FTSE 5 mins weakening.
I’m running my system on FTSE/30 mins. Much less busy than FTSE 5 mins. — one or two calls per day. My expectation at the moment is for a sell call within a couple of hours, taking us in the direction of 6370.
Dutch, you still holding that short in DAX?
I closed it for 30 points but short again just now at 36
Thanks dutch. do u have stop for this short?
I don’t use stops 99% of the time and in these market conditions in my opinion the use of stops is going to catch you out too many times anyway.
yes Dutch i have been stoped out so muck in the last few weeks i am now stop Drunk
Closed short from 6405 at 6380.
Ooo what to do
Just an Opinion!!!!
The S&P continue to push higher. Wave (a) has nearly retraced 78% of the entire previous decline. This is unusual, this kind of retracement is normally seen after the complete three-leg upward retracement. But we are in a first degree extreme in bullish sentiment, this condition has been in place for the last two years. This is characterised by a high proportion of bulls, when the S&P completes a decline, too many people believe that the S&P will make a new all time high. This explains why the rally from the October low is in a straight line, there are too many buyers chasing the market. But it’s never a good idea to chase the market unless you are a long term investor. The next move will be wave (b) down and the target is 1875.
Thanks nelly, where do you think this wave will stop?
as high as 1990 -1985 it cant go up for ever
waiting now over the next few days looking for the right short
Watching for 1985 – 2000 on the S&P in the near future
DAX is not giving up yet ..
Dutch, you still have your short in DAX? I am planning to go long in FTSE and short DAX
yep still short but now at 71 (closed the other for like 12 points). I basically want to stay short because I just think there is too much out there that can upset the markets big time and once again the DAX is outperforming other eur bourses where I can’t see why (apart for the old US money goes there story) as they are economically in serious trouble (and politically as well I might ad). Sure looking at a 2hr or 4hr chart I too can see reason for a long as its breaking out of a channel but end of the day I think it will revert and will just ride th wave for 10-20-30 points at a time.
thanks mate.
So SPX at 2000, will place FTSE at 6650 . Sounds reasonable
FTSE above the 50 ma and below the 200 ma at 6650
HAving a buy signal on all indices…FTSE as always is the worst performer of all.
SOmetimes I’m embarrassed to just talk about this index and waste time with it.
But mainly by sympathy with this discussion blog…
What about Dow and dax, pms?
Since last buy signal… FTSE is only right now 27 points from the trigger.
DAX is 138 points from the trigger.
If I go to US, it’s better not mentioned… it’s just too embarrassing for Europe
Finally FTSE started moving like yesterday. One way till end
Dutch you still holding Dax short?
nope I got out with a small profit, sorry I have a day job so not always time to post. I am tempted to lay on another short but i think this now will run and run, just seen FB beat market expectations so its all going to be happy donkey doddle for a while. Let it rise a bit more, maybe 9200-300 on the DAX but it will come down (famous last words)
hmm….punters are betting on fed outcome tomorrow. Never know all indicies might end this month green candle.
All except the one I’m interested in Sam! The FTSE will have to go some to finish positive. 200 points from here. Maybe finally the straps will come off tomorrow and we will see a 3 digit move up above 6500.
This sluggishness is very annoying….Dow now up 3% for the year and the FTSE down over 5%.
I look at the FTSE and its the sensible index to me, it is not going to get carried away and understands not all is well in the world. The DAX is like an idiot following whatever else happens anywhere else and always, always moving more extreme up or down, great for day trading and scalping in my opinion (also much more risky!). S&P is like a difficult child but in the end reliable and always the one to follow. I don’t really know why the Dow exists to be honest, its an old dame, confused most of the time and refuses to die! i’m on bottle number 2 of a lovely Crozes Hermitage (as I’m sure you can tell from this post)as I had a good day (nothing to do with trading)and I wish you all night night! Life is SHORT
Yes javed, I too got 30 quid per point in FTSE green at the moment but not at the expected levels. I got another 30 quid in SPX and DAX very well. I see it as putters have brought DOW and SPX to a point where it can shoot to all time highs or a big fall, if it does fall then expect FTSE and DAX reach new lows after the FED announcement. I might just close my ‘shallow’ Longs and put trail stops on longs taken at deeper levels just before FED news.
I should have cut my losses sooner. Now my little stake short became a big loss. It turns out everything is against me. Just don’t know why.
OK, I thought it might go a couple of hundred points but this… is dreadful.
Also as the missus is watching Downton Abbey or something I just dod a quick analysis of the DAX. Trend is up on a 2 hour chart but reaching top of the channel at 9118. It will might go to 9150 which would be excellent short opportunity with a target 8955-80. If anyone has got the link and credentials for the photo upload I’ll post the analysis if anyone cares.