6450 for resistance today?

Morning all. I am back in the land of the living today and thanks for the emails. Shame to miss yesterday as the short from the 6474 area looked like a stunning call in the end good for a 50 point drop pretty much. Glad to hear some of you got on it though but apologies I wasn’t able to SMS that one. The US situation is still at a log jam, though interrupted briefly by a woman in a car ramming a Congress security barrier – got the bears excited for a brief spell but soon recovered as news broke. Bit weird as she had a 1 year old in the back so must have just flipped out. While the US impasse continues I expect it will still be bearish, and it fuels worries that they might not raise the debt ceiling in time for the 17th October, which if they don’t will mean a default on US debt, which is unprecedented and won’t be good.  The IMF have urged them to sort it out and stop their political infighting. Christine Lagarde said, “The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the US economy, but the entire global economy,” she said. “So it is ‘mission-critical’ that this be resolved as soon as possible.” Maybe they are going to bundle a solution to both into 1 and we will then get a rally, maybe after the S&P hits 1660/1665. Dow hasn’t been in a rush to regain 15000 either. Either way, failure to resolve either and both these issues is not good and will jeopardise the tentative “recovery” that we all keep hearing about – will they risk that? I doubt it. But as per usual its just politician’s playing to get as much as they can for them and their side as the real issue drags on. Ideally someone would just bash their heads together and we can all move on!

Asia Overnight from Bloomberg

Asian stocks fell, with the regional index heading for its first weekly loss in more than a month, as concern grew that the U.S. political impasse could lead to the government defaulting on its debt. The MSCI Asia Pacific Index lost 0.2 percent to 139.25 as of 2:21 p.m. in Tokyo as seven of the 10 industry groups on the gauge fell. U.S. President Barack Obama canceled plans to attend two economic summits in Asia next week as the fiscal standoff with congressional Republicans kept the U.S. government partially shuttered for a third day.

“Creeping worries about the U.S. debt ceiling are starting to unnerve investors,” Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients. “Expect more whippy and nervous trading.”

The Asia-Pacific gauge is set for a 1.1 percent drop this week as the failure of U.S. lawmakers to avert a government shutdown fueled concern they won’t be able to agree on raising the nation’s $16.7 trillion debt limit later this month. The Treasury Department warned that a federal default could lead to a recession as bad as the 2008 financial crisis or worse.

S&P Futures

Futures on the S&P 500 slipped 0.1 percent today. The gauge declined 0.9 percent yesterday, the most in a month, as Treasury said the government will run out of borrowing authority Oct. 17, leaving only cash to pay the bills.

“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments and slow economic growth could last for more than a generation,” the Treasury said in its report.

‘Catastrophic Effect’

“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth — with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the department said.

A report yesterday showed fewer Americans than forecast filed applications for unemployment benefits last week. Jobless claims rose to 308,000 in the week ended Sept. 28, from a revised 307,000, the Labor Department said. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 315,000.

U.S. payrolls data won’t be released as scheduled today because of the government shutdown. The department said that an alternative date for the September payrolls report and jobless rate hasn’t been scheduled.

“The absence of the U.S. jobs data creates uncertainty, which is reflected generally in greater equity market volatility,” said Chad Padowitz, Melbourne-based chief investment officer at Wingate Asset Management. “The longer the current situation holds, the less information people know about what’s happening in the underlying economy.”

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

Today’s pivot is 6452 so I expect we may get some resistance there initially. The daily trends are all down and as with the DAX, a failure to resolve the US situation is going to drag on things. The 200ema on the 30minute chart is 6455 which may act as resistance also, so I think a short around this area could pay off. We have the bottom of the 2 Bianca channels as viable support areas – 6403 and 6367, with the top of the 10 day at 6489 likely to gap any bullish exuberance. With the price looking at opening below 6432 I think we will dip to the fib pivot area at 6411 then an initial bounce which may or may not get as far as the 200ema. Looking at the S&P I think it might dip to the 1660/65 area today, and then bounce which may coincide with an announcement on resolving the current standoff. Who knows with the US though! The 30 minuet FTSE EMAs are still bearish currently which is why I think we will dip a little further before a climb to the 200ema. There are a few resistances around the 6435 area too in terms of safezone, 25EMA and coral so it might struggle to break that area.

112 Comments

      1. That proves my point, Senu. Remember what I was telling you about EMA and puffing along until it runs out of steam?

          2. had to take another short to cover. Do I need this nervous ordeal?
            Too late for this short to me. If I don’t get a good entry I don’t care any more.

  11. I am expecting max rise to 6471, otherwise a decent drop to test the 6425.
    P.s I was at uni but my stops and limits got my money from yesterdays long.

  12. I’m seeing the last 3 daily candles all bullish, could run to 6600… All waiting for what happens across the pond. JPM up 0.8% pre market…

  13. Jack you’re very impatient…
    Keep the stops in recommended 6471, which if it exceeds will go to 6480ish. Otherwise i believe it would drop as it would coincide with the expected DOW drop.

    1. Great, I’ve just escaped stop loss at 6466 and closed b/e, thank you very much. I’d rather wait for the price to get where you say 6471 or even 6480 and short it again. If it doesn’t get there, I don’t get hurt.
      You are right, I am impatient. However I was sitting short 6452 since 9.51 and closed at 13.00 – I’ve tested my patience enough I suppose for a 10 points stop loss trade.

  15. Im Short at 6462… Think the US markets will drag this down But SL is at 6485 in case of any sillyness… Targeting 6425 area initially

    1. Also on IG Index R1 is 6463 and it looks like its double topped at that level. Moved stop to b/e and holding for hopefully a nice ride down

  16. Likewise, quite a few people expecting another 20 pips to go up, personally looking for the drop to 6420

  18. I tried little short, just too much. Got out with little profit. But I don’t think it will break pivot and go somewhere. More like to bounce about for the rest of the day or even go long.

  19. This forum is sounding more and more like old ladies in bingo calling out random numbers…lol…

  20. I don’t really understand, all EMA are above 200MA in a strong upward trend which pierced the pivot to R1, then retest of the pivot and as I understand off we go. Why why shorting from 56 area in the first place???

    1. It was clear that it wasn’t going through the pivot, all ema are standing upwards, crossover on 1 hour.
      Oh well.

        1. It happens sometimes, we are very much used to short at highs for recent days. Now they reverse.

          1. Sorry c59 from experience 2:30 when DOW opens sht happens so I pulled out. Don`t think it will get to the 200ema today, I agree with Jasper we will see some decline towards the close.

          2. could’ve got out just before 2.30 with a profit but i was away from my pc. i’ll average down & hope for the dip !

  24. Following yesterday’s early buy signal for FTSE/Daily, now getting same for Dow/Daily. Weird! S&P 500 slightly lagging. Obviously one needs to see a resolution of the US fiasco, which has the potential to wreak havoc.

      1. Should a prominent Republican make conciliatory noises about Obama’s health care programme, I’d expect the Dow to surge. But perhaps that’s unlikely. Possibly the degree of worry surrounding the ‘debt ceiling’ could intensify next week. That could create spectacular shorting opportunities. 😉

    2. Looking at the Macro picture for what it is worth……you are right the debt ceiling has to be and will be eventually resolved. That has to be a positive for the market. On the down side – tapering should begin in either October or November – too much illiquidity in the bond market during December to even try. With the current impasse on the debt ceiling then I think tapering has been pushed out to November at the earliest. What does that mean in terms of trading?…… Probably that its worth dipping your toes at these levels…..holding till around the end of October when the debt ceiling has been raised and talk of tapering may not have re-surfaced. Then short till after the FOMC meeting in November.

      Of course only my opinion. GLA.

  25. Have added DAX to my watch list. About the same as S&P 500 in terms of emerging buy signals, i.e., waiting. Flatlining since mid-September.

  26. c59 only if they can sort out the political messs over the weekend can cause a spike on moday to 6525 level.
    However as its weekend now i don’t see it being sorted till sunday .. whcih means index’s going down ??? wht say ??

    1. i was wondering whether those is the know were buying in early?! i’m out of the market till next week-unless i get the urge !

  27. Ahwab, you still holding shorts ? i missed that entry, looking to go long when you book your shorts..

  28. …. the really bizzare thing here is that the market has barely reacted to the deficit issue …. but hold on if there are concillatory noises then we will get a bounce … why? of course ill be going long to get in on it, but its cobblers nontheless and then the debt ceiling thats a short, then long, then short then long to xmas 🙂

  32. Lost about 25 pips today:(((…went short at 6450 should have closed it when i noticed all those fluctuations around 6455-6460- ah well i live and learn. Anybody got any good links for me to read up on trading strategies and also to brush up on basic knowledge of key economic terms and stuff thankss.

    1. Deez, Today’s pivot is 6452 and 200ema in 30min chart is @ 6455, based on Nicks chart today. You should have closed your shorts when it went above 6455 and stayed for 30 mins. Atleast check with the levels given in this page.
      Good Luck next time. Cheers.

  33. Still looking to find a good short, at this rate we might see 6500 on monday, i’m out till then looking for a short at that point.

  36. I said it was going to stay around the pivot and even maybe go long. Now I see it was like I said: turned out to be a long channel and it was bouncing to the low of the channel time to time. Now I think I should have gone long at that 6424 at 6.30 in the morning (I got up too early today, but not because of markets) which I was thinking of with Stop Loss 6418-6411. Oh well, don’t like Fridays. I prefer shorts on Fridays rather than longs.

      1. i take it you’ve finished for the day as your previous posts suggest…you’ve been spot on & i wouldve loved to hear your thoughts on todays finish:)

  42. Lol…dow rallies…yesterday we were down some 175 today nearly up some 90 points despite Obama and Boehhner reiterating their position that they are not making any concessions!!

    So the natural course of things dictates that we should not have had a rally…technically speaking it is not a rally but simply short covering from yesterday…i.e. shorts booking profits from 14940 to 15085…

    Why would rational traders and investors go long into the weekend in this uncertainty???..lol..

    Now that big hedge funds have booked profits from this leg up expect them to sell forcefully because they have bulked up on huge profits from the recent short!!

    Cnbc idiots were clueless as usual and talking nonsense! Bob Pisani said the rally was due to optimism that a political deal will be done…lol
    ..where was this optimism yesterday when dow was down 175??? Where did it come from today despite Obama and Boehner indicating that the political stalemate is getting worse?? Lol…smokes and mirrors newbies…that’s what markets are all about.

    Have a nice weekend all. I am glad I have shifted my focus to trading equities more than indices in last few weeks. Regards FTSE we are just in a consolidation phase between 6350 to 6550.

    ‘

  43. Now that resistance of 6450 was breached in FTSE I think on the balance of probabilities a short from 6480 to 6440-6450 should be fruitful for Monday.

    Nothing big…need money for equities…just £5 a point.

  44. Ray .. I agree about trading Indices . Only been doing it for a few months and don’t like it . Most of my spare cash is in equities a few AIM but mostly Blue chips. I respect what Nick puts on here and interesting reading. IMVHO it’s a total gamble no logic whatsoever. I only do minimum punts and the only one that seems to have any logic is the DAX . DOW is a joke put a short on near last knockings expecting a sell off (Logical thinking with all the mess ) Goes up . All a big scam fiddle IMVHO . Debt ceiling and Obama care sorted over Sunday tea and cakes and back to 15300 next week .

    I think I will load up on the Royal Mail IPO . Much more risk free !! Have a nice week end . GL Mark

      1. I hope definitely pull back to maybe 6450 area and then breaking up to 6550. Let’s see what Nick will say, OK?

  46. Currently, all views re major indices and equities need to be qualified with reference to the DCB (debt-ceiling bluff 🙂 ) and its potentially catastrophic repercussions. That being said –

    I’m looking at 4hr charts, with a view to identifying general directions for 2-4 weeks ahead. Of course, on a day-to-day basis, one still expects volatility driven by events, randomness and movement through short-period cycles.

    The 4hr view shows the FTSE in the early stages of recovery from its fall of 246 pts. (3.7%) between 19 Sep and 2 Oct. At least that’s how I see things at present. I’m expecting some pullback next week but not enough to seriously undermine the emerging upswing. That’s Plan A. If, however, the index were to fall much below 6410, I think the outlook immediately would turn distinctly bearish. That’s Plan B!

    The Dow and S&P 500 are broadly following the same course; one of recovery with corresponding provisions. I see the DAX as a case apart – the drift of the series has been slightly negative since 19 Sep, but it has sidestepped the downturn experienced by the other three.

    Here’s a FTSE chart (Right click – Open in new window)
    http://img593.imageshack.us/img593/1037/dr1g.png

    GLA

  47. 4367 looks about right to me jim on ftse …….. depends a lot on what hapens in america if they give any indication of getting things sorted keep stops on GLA

      1. Maybe i am wrong i think it will go down to 4367 level best to wait till 11 o clock to see which way it goes it may be tomorow evening before it gets there gl

  48. Just a lil thing i wanted to say, dont u think u guys trading a bit too fast, it seems more of a gamble than actually picking out profitable trades. I mean from my point of view only 1 decent trade worth puting on last week (netted roughly 50 points). Then again each trader thinks hes a guru and turns out to be a loser (prob me lol)

    My view for monday is a drop down on ftse (Dow being cause of the drag)..I really dont think people should go in overnight today as I believe there will be a small rebound (short at 6475 is what im looking at with SL at 6490 MAX!)
    hey if u miss it then dont lose sleep over it, one thing ive learnt from all my mistakes is

    “1 bad trade can lose you all your money, but there are infinite number of trades to make you money”. So dont lose sleep if you miss an opportunity, never try to chase the market!

  51. Ha ha ha! Dow futures down 140 or so…Fri close dow rallied on ‘OPTIMISM’ (out of thin air) of a deal…as I said above big hedge funds have booked profits from their Fri rally (long) and will short again after reloading for the next leg!

  55. This pantomime is going to go to the wire-i.e. right up to the 0ctober 17th deadline and the big HF’s will use every ‘insignificant’ news story to ensure that the market remains volatile so as to to make £££££. 🙂

  56. Many thanks for your e mail Javed. Nice to hear from you. I will e mail you as soon as I am free. Promise it won’t be long this time. Lol.

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