6393, 6384, 6354 Support, 6436, 6461, 6495 Resistance

Good morning. Sometimes it feels like IG have read my trade plan, as I had the low of 6370 pencilled in as support on Friday and a long order at 6371…. which missed by half a point! Anyway, I know some of you got that manually and that level certainly held well during Fridays session, fuelling a rise back above 6400. The big news over the weekend was Sundays ECB stress tests results. The scenarios simulated how banks would fair if Europe collapsed back into recession, unemployment rose and house prices collapsed. 25 banks failed, mainly Italian and Greek ones, and it flagged up a €25bn (£19.7bn) hole that needs plugging. However, no major banks failed and I expect it will be seen as a positive overall as it eliminates another unknown with regards to the fragility of Europe. The key level today is the top of the 20 day Bianca at 6436, if the bulls can break this then 6495 looks possible; support is 6393 where we have the daily pivot, with 6350 below that.

Asia Overnight from Bloomberg
Asian stocks rose, after the regional benchmark gauge capped its first weekly advance in seven weeks, as a stress test passed by most European banks added to signs of recovery in the region.

The MSCI Asia Pacific Index (MXAP) gained 0.5 percent to 138.22 as of 9:01 a.m. in Tokyo, the highest intraday level since Oct. 10, before markets opened in Hong Kong and China. The gauge last week surged 2.9 percent after U.S. earnings beat estimates and a measure of European manufacturing unexpectedly showed expansion this month.

None of Europe’s largest banks were found lacking in the European Central Bank study. Smaller lenders found to be deficient now have as many as nine months to fill gaps identified by the ECB, which is aiming to close the door on half a decade of financial turmoil in the euro region.

“Most people expect markets to grind out some further gains,” Donald Williams, a Sydney-based chief investment officer who helps oversee about A$1.6 billion ($1.4 billion) at Platypus Asset Management Ltd., said by phone. “The authorities in Europe have chucked so much at the problem and will continue to flood the market with liquidity. The major issue of Europe of the past few years is old news now.”

Japan’s Topix index rose 0.6 percent and Australia’s S&P/ASX 200 Index gained 0.5 percent. South Korea’s Kospi index advanced 0.5 percent. Markets in New Zealand are closed for a holiday. Futures on the Standard & Poor’s 500 Index added 0.1 percent after the underlying gauge surged 4.1 percent last week.

About 79 percent of S&P 500 companies that have reported quarterly earnings this season have topped analysts’ estimates for profit, while 61 percent beat sales projections, data compiled by Bloomberg show. Caterpillar Inc. and Yahoo! Inc. surged last week after posting better-than-expected third-quarter revenue.

China Growth
China’s economic growth will slow to 7.3 percent in 2015, Song Guoqing, an academic member of the monetary policy advisory committee for the People’s Bank of China, said at a forum in Beijing on Oct. 25. That view contrasts with a prediction by Fan Jianping, chief economist at a state research institute, for 7 percent growth next year unless the central government imposes stronger-than-expected stimulus measures. [From here]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

As mentioned above the key level initially is 6436 which the bulls will be keen to break, fuelled by relief that no major banks failed the stress tests., with 6460 the next resistance above that. Initially I have put in a rise to that 6436 level before a dip back to test the 6410 area, before another rise. I wouldn’t be surprised if today was bullish and the bulls will be keen to push on before the US opens. They might well be aiming for 6495 by lunchtime. On the flip side and its not bullish, despite the current moving averages on the 10min and 30min being bullish, the first support if todays pivot at 6393, with 6384 and 6354 below that. A long off the pivot with a stop just below the 6384 could well be good if the bulls push from that area instead. The S&P moving averages on daily are just rolling over to bullish, but I wouldn’t rule out a dip to test the 1947 level soon, to spring a rise from (dipping to test the moving averages).

43 Comments

  1. FTSE is up about 300 points since Oct 16, but, ROC has peaked for the moment and SMA 200 is still falling — the ‘recovery doesn’t look very definite. (4 hrs. timeframe.)

    1. Hi Jim

      Yes, I’m experienced some issues… but mainly on FTSE, when the Probacktest is ending it’s optimising test at 100%. It stops there and do not load the report….

      1. Hi PMS —
        Yes, after which it usually chokes up completely. I am told that a solution was tested extensively last week and will be installed this week. Here’s hoping!

  4. Nick you seem very optimistic with those arrows in the start of daily trade… I will be looking closer to those arrows, specially the 1st one at start of trade.

    FTSE has a special thing with a sell off hard at the open, when the prices are stabilised in upper levels before the open.

  5. My fellow chaps, until I see sell signal at SPX, I would not place any short order on FTSE, DAX or even DOW, if these 3 last indices give sell signal in the short term. I had one last week on DOW and did not take it, because of SPX.
    \Right now I had two in DAX and FTSE, at 10am

    1. Worth noting maybe that S&P 500 recently crossed below SMA 200 for the first time since mid-November 2012. A second crossing; it has since rebounded above SMA 200, would be a strong sell signal I think. 7-10 days?

      1. Surely, but the sell signal would come in a much upper level. Around 1950 right now in a close bar 1 hour chart. But that would not place SPX immediately on a break of the 200 MA, only a strong reverse sentiment in all indices, which right now, not seeing yet

  8. following two successful shorts on the DAX its now signalling a long 8912 and target 9000. might not get there today and it might even get below 8900 if the US decides to tank it and test SPX 1945, but think we now oversold on DAX again looking at 2hr chart

      1. bad business confidence numbers did not help but it also had gone up way too much on the back of the US so this was coming. Being a bit overdone to the down side now, I decided to average down and see how this plays out.

        1. I got a bit greedy today because I’d made 20K in the last 5 days, I think I thought I could do anything…put £200 a point… :/ Lost it when it crashed. I must avoid doing that ever again!

  9. At the 4 hr. level I’m seeing a general easing of growth (ROC of Linreg) which, if it develops, will imply reduced index values. (S&P 500, Dow, DAX and FTSE.)

  10. 124 points made today. Again basic market principles no need for charts.
    If the market opens up it will dip. Look at S&P’s as well If them steadying up isn’t telling us to be a bear i don’t know what is.
    Sell on strength, buy on weakness.

  12. For a tiny move in the last second, SPX did not trigger a sell order.
    So no reverse sentiment yet.

  13. What’s going on – do you think it will bounce back? Where from and how much do you think it will go?

    1. Crude broke the 80 level and now is bouncing to the 80 …see if it breaks again to the upside or only a test to now resistance

  14. PMS —
    You should find that your backtest runs OK now; an update for ProRealTime was made live this morning. You need to close and reload the programme.

  16. Good luck Sam

    You must be suffering like me then…..although I think you would have averaged down……..

  17. Thanks Javed. My net P/L is in green as I went long at much lower level in various indices. My net position would have be much better had FTSE not been sluggish.

  18. Been interesting these last signals in US.

    Today SPX was by a thin fraction for a sell signal, but it hold… in the meantime DOW was quite strong, not giving up…

    LAst week was the opposite… I see a lot of opportunities in the future with this system I have.

  19. Morning, short dax 8985 and ftse 6404. Think we need to move a little lower, saw lot of weakness yesterday in both Europe and states and all the bad news has not gone away.

  21. Jim

    That probacktest does not start on FTSE. It’s again with problems and is always the FTSE.
    SPX, DAX and DOW work

    1. Wait, is working…only does not show the process… in the end it will show only the results

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