6578 and 6555 support today, dip and rise?

Good morning. The rise from Wednesday managed to continue for most of Thursday and there wasn’t even much of a dip, stopping at 6544. They are cutting it fine but only 200 points till the yearend target of 6800! Main news overnight is that the EU has been downgraded by S&P from AAA to AA+ based on the fact that cohesion has weakened and its financial profile has deteriorated. The outlook is stable, the company said in a statement today. “The downgrade reflects our view of the overall weaker creditworthiness of the EU’s 28 member states,” S&P said.

For the FTSE today, if prices can exceed 6600 then we should see 6640 as we are possibly about to break out of the daily channels. 6723 is also on the radar for early next week which is the top of the 50 day Bianca channel.

One thing to watch today is triple witching as options expire – so it will get a bit choppy at around 10:15-10:30am.

bianca trends
bianca trends

Asia Overnight from Bloomberg

Asian stocks fell for the first time in four days, led by Chinese shares amid concern funding costs for lenders will remain high even after the country’s central bank injected cash into the financial system.

The MSCI Asia Pacific Index fell 0.1 percent to 138.22 as of 2:20 p.m. in Hong Kong. The Hang Seng China Enterprises Index of mainland shares listed in the city retreated 1.7 percent, on course to lose 3.9 percent this week. The Chinese central bank said at the close of market trading yesterday that it added funding to selected lenders using short-term liquidity operations after money-market rates surged.

“Even though the People’s Bank of China yesterday injected little bit of funds to the market, it may not be enough and liquidity is bound to remain tight because it’s year-end,” said Ben Kwong, Hong Kong-based chief operating officer at brokerage KGI Asia Ltd. “Higher interbank rates will continue to depress the Hong Kong stock market.”

Fed Stimulus

The MSCI Asia Pacific Index gained 6.9 percent this year as central-bank stimulus shored up global economic growth. The gauge yesterday traded at 13.7 times estimated earnings, compared with 16.3 for the Standard & Poor’s 500 Index and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Federal Reserve will reduce bond purchases in $10 billion increments over the next seven meetings before ending its stimulus program in December 2014, according to the median forecast of 41 economists surveyed by Bloomberg.

Futures on the S&P 500 Index gained 0.2 percent today. The gauge yesterday lost 0.1 percent in New York after surging 1.7 percent to a record the previous day when the Fed decided to cut stimulus.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

While I have been writing this the IG chart just had a strange spike to 6655 then dropped back to 6600. Bit odd and the cynics often say these are stop killers before a bigger move (which would be down in this case) as the spike stopped out the shorts. However, putting that to one side, we are breaking out of the 20 day Raff channel now, so if the S&P and Dax can do the same its all looking good for a decent year end (6800 still on my radar). With the breakout, it is likely that prices will dip back to test the top of that channel before further upside. With that spike to 6655 I expect that we will see that level again soon, computers probably just showed their hand that was all it was. If we can close the week above 6593 then the bullishness should continue next week.

168 Comments

  1. Short 6598 – Booked for 10 points
    Long 6581 – Booked for 20 points.

    Shame after seeing the rise continue, and I’m thinking it probably will for the duration of today too. But hey, not going to get greedy. Will look for a short from a strong resistance area to pick up a few points.

  2. Up trend in play, no good shorting against the herd..
    Last week sellers couldn’t sell quick enough…

    1. Only ever really looking for 10 points usually…not un-heard of off resistance points after a strong rise. However I may just sit today out now, as want to put the christmas jumper on and start on the shandy soon 🙂

  3. not looking good for holders of shorts on dow me included….. if ftse is expected to go to 6800 means dow could add another 500 points…… either need to cash in……. hope for a drop to get out……or fill up resources and let run to new year that is of cource if i can get any ……..dilema…..GL

      1. Adam is a seasoned veteran in markets..5 years I think? Just like me 5 yrs October just gone, Nick I think 5.5 yrs .. 🙂 Anyone else? Forgot, NR169..longer at it than us all!!We should get a bloody medal for just hacking this crap out for this long!! 😉 OBE. ..MBE??

        1. Still remember my first shock when it happened…back in 2008 when I was trading shares with my own capital (all £15k) with those clowns Hoodless Brennan..not sure if they are still around..you learn from experience as you go in this game..seen a lot in 5 yrs..including live the ‘Flash Crash’..dow dropped 1000 points only to recover ALL of it half an hour later.. 🙂

          2. Only thing I have NOT come across is insider trading 🙂 Probably because I am the only bloody one in my office at home..a very lonely pursuit!! 🙂

  9. Got one ‘flag’ (two indicators) on the daily to go LONG on the S&P 500 🙂 … must still be recovering from Wednesday lol 🙂 But as always you can never tell with these things… it’s almost as if there is a complex algorithm at work to part you from your ££ 🙂 Just look at the FTSE suddenly dropping 20 points… and sudden ‘spikes’ in the IG Index… it is hard to contain the cynicism at times 🙂

    1. S&P 500 could be used as a gauge on the DOW… depending on how in tandem/representative/in synch with each other you think they are…. 🙂

    2. The 5 day SMA on the S&P 500 has crossed the 30 day SMA in an upward trend. The change of direction occurred on the 17/12… hmm And the 5 day SMA has been moving away from the 30 day SMA in a downward trend since 10/12… hmm 🙂

      1. worst position management ever, closed previous positions too quick, opened up longs at different places…
        now my fking average position is 6600.5…and ive got that as a strong resistance…and my strategy is bearish. I dont like holding on to losses (unless its eating unrealized profits).
        If markets close and im on a small loss, i guess ill have to take it 🙁
        soo fking stupid seriously.

        1. im still in profit from my announcement but its realized profit now..this is a new position i have open EATING MY REALIZED PROFITS!

          2. yes pms im long…its very bad because my strategy is strong bearish, reason im long is because im thinking with enough up days my strategy will reverse.
            Im playing a very risky game here, close below 6583 today im out, dont care what loss (hopefully minimal).
            Close above 6600 im holding (will ahve more confidence if bearish signal drops abit on close today).

  11. Hi Ray, thought you might be interested. That spike last night up to 6658 has been changed on the IG platform. Now it is just showing a spike up to 6609. Huge difference…

    1. Its changes with me too now (IG). How does that work then? Did anyone trade either way above 6658 ? It wasn’t the smartest of moves in in index but i would have an even bigger issue if people traded above these levels at that time – as this is effectively trying to rewrite history.

      2. u nkow i woke up happy seeing high of 6658 on the chart…then i look again on the watchlist saying 6619..

  20. 6605 could be a good short ( on the 5 min, completion of wave 2) with wave 3 taking out the low of the day… This is against the daily uptrend thou…

    1. Not that I have any weight in the market haha, but I came back in long earlier also. Should be good for the hold.

    2. I’m long at 6519 and added at 6586 earlier…holding onto 6519 for a while….6586, might close if we hit resistance at 6630

  22. Rol i feel like I’ve been long forever even when cut out at 6400. Been back in pre fed and added after. Just added on the leg down earlier. 6531 average. Holding for 300 points but will be tempted to offload some after 6750.

    1. what 5 people here saying that they will be selling at 6630 will increase the move?
      or u using stats from a larger set of people?

  24. Just getting up…just looked at mkts on phone..interesting..time to short dow again..hopefully book profits last hr tonight…looking forward to reading comments..:-) How was QW day?? Told u lot volatile..:-)

    1. ray what are your thoughts on dow now do you think a big red spike is posible at close …….. wish i had closed yesterday and took loss of 150 pounds downalmost 10 times that now …… GL

      1. Sorry to hear that John 🙁 Dow is currently on a strong uptrend regards intraday..but because it is Friday the ‘SMART MONEY’ will book some of the recent stellar gains in the DOW in the last hr..when the professionals trade/fade the move..anything can happen over the weekend..remember sadly the earthquake in Japan?? Markets tanked next day..weekend is too long regards risk exposure..especially if you have HUGE paper profits in the DOW..so hopefully a move back down to 16200/or lower..16150? Then back up.. Hedge at lower levels and re-enter at higher levels to short..or just sit tight..next week before Xmas 16100…partial fib retracement of recent gain..GL John 🙂

        1. Did fall back down from 16288 by 60 points to 15228..but that’s it…30 short of my intended 16200…would have been best for you to HEDGE your loss on these drops when you see a reversal up, them short again, re-hedge, until you get rid of your losses, takes patience and hard work, more for hard core day traders! 😉 So here, would have been a 50 point gain for you as we are now near back up to 16275 level..

    1. What about Intertrader anyone? Did they refund this erroneous trade? I am trading CFD’..on everything…never spread betting..my religion does not allow it, but little/no difference to CFD’s.. 🙂

  27. Just shorted Dow at 16258 £3pp.. i.e. $5pp..waiting for fun and games in last hour, if not today then next week to book small gain …

      1. Agreed Jim , but even on BULL days, 90% of the time, if you catch the top/near the top, there will be some ‘skimming off’..as today..dropped back 60 points..back to 16230..then back up to close at 16275 or so..

  28. Evening all, I’d say that was a pretty good day! FTSE closed above 6600 after rising slowly and steadily throughout the day. Expecting the bulls to come out next week and get it above 6650 before Xmas day followed by 6700-750 by the New Year.

    1. Have a look at the Dow and S&P 500 – they are showing real direction, which is up. FTSE is a waste of time – it all goes back to our slobbering, cretinous bankers.

  29. Just saw the Bollinger Bands on the longer timeframes on the Dow…they exhibited a very very tight narrow band…meaning a BIG breakout was clearly imminent..either up or down..those who were awake (I was in bed) could have traded this breakout/pop from the 16200 level to 16280..so a pop of 80 points or so..only because of a BIG short squeeze..short stops hit in 16200-225 area….driving it higher..

    I am only trading £3pp and at 16258..the probability of a move lower is far greater than a move up….say 80:20..may hit 16300..but then back to 16200 easily..small fib retracement of recent gain..but more like 16100 next week or week after…

    Some guy on CNBC came on ..and for once I agreed with him..he said the crazy Fed tapering rally of 300+ points is just SHORT COVERING…i.e..the big institutions/HF and Hashmash closing out their positions from anticipating Fed tapering in December..they second guessed BEFORE the December Fed meeting that there ‘WILL’ be tapering..so shorted big from 16150 area to 15650 area..a 500 move down..and are now closing positions/booking profits.so shorts have to BUY to close positions/book profits….thereby propelling the Dow to the moon !!!

    Makes perfect sense to me and is totally congruent with what I believed..:-)

    The bad part of this is that if we are expecting a bit of a pullback in the clearly overbought Dow (RSI screaming overbought)..then what for the FTSE??..it seems to follow the Dow in tandem for the leg down obediently…but is always lacklustre in following it up..who needs friends like that??

    I for one believe that the umbilical cord between the FTSE and Dow should be cut off…permanently..had enough of the yanks always interrupting our markets!

    But we always hear it..blah..blah..ftse is comprised of multinational companies etc etc…zzzz..but Dow seems to even influence the index of bloody Ghana!!! HfT and Hedge Funds..any excuse to make money..

    End of rant!! 🙂

    1. i do kind of agree with that but not totally.
      Right now i am long (its a risky long as its against my current strategy view), the reason ive gone long now is because i really believe my strategy will flip around (and as i thought in the start – it will do so on a big rally, so im kind of trading ahead of my strategy which i know is stupidity – but im not risking alot).
      Currently i think what fed did was perfect, tapering a small amount…because of this the fear of removing QE from the economy has died down ALOT when it comes to next round..prob will be much less vol, as the plaster has already been removed from the wound :).
      Also u can see from todays data that UK as well as US beat their GDP and has been a massive increase…with money still being pumped in and economy recovering, why would markets fall ? only if its a small equity bubble which i do think that is the case and hence why i agree with nicks prediction about equities falling next year.
      This is the reason to why i am long currently as i can see reaching 6800 a very nice target which ALOT of people will short feeding buyers and see ftse at 6900-7000ish within Q1.
      Thats why i kinda got greedy n fked up my position management but its all good..for now haha.
      I am very itchy on this long i have, i am monitoring my strategy non stop to see if its losing bearishness, if i see a sudden drop then most likely i will close my longs.
      Today on my indicator bearishness has died by roughly 6.5% which is a good sign. need another 50% drop in the indicator for a strong bull signal, so lets see how it goes 🙂

    1. thanks Ray will hold over weekend to see what happens looking at the daily charts i can see another possible 100 points in the next channel up GL

  36. A profit is a profit..£24..8 pts..at £3pp..am rich!! Will have to wait next week to short at higher levels..possibly 16300 plus…still a little momentum left in this dog Dow…but not a lot more..certainly top maximum is 16500

    Too many fake reversals on shorter timeframe which makes people close early!!! Now just looked..still going down..

  38. I have to STOP looking at the charts completely when I am in a trade…get distracted by the false reverse signals on short term scalping timeframes..now looked Dow gave back some 60 pts from 16288 to 16230..

    Looks like they are not booking profits today…just have to sit tight…anyway..I am flat..which is good.

    So since Monday from 15700 to 16300.. up 600 pts..where is resistance level for Dow?

    Nice weekend all..:-)

  39. I reckon 16750 on Dow around mid jan before a pull back begins to 16000 or below. I think a lot hinges on jan FOMC meeting as if they do not increase the taper Dow would push to 17000 which would be a great shorting opportunity. I agree with Nick on a large correction next year but I would say that will start around when QE has halved.

  40. done some rectangular calculations on dow today if they are acurate then it is showing 16303 as top for this time arching down before another leg up could be wrong GL,,,,,,,,,,,,

  41. Dow just hit 16301…was a bit of a spike at the 15275 level…now stops got hit at 16300..I am expecting a retrace back today of about 80 points minimum to 15220…Have just shorted again..bigger size £7pp at 16290…from then will see..tight stops to lock in profits…hopefully lower…16180??

  43. When they are crying..you should be buying…when they are yelling..you should be selling…At the moment in the DOW (DJA index)…the latter applies? 🙂 Time will tell…a healthy pullback to 16050 before any (if) further gain??

    Note what Nobel winning economist, Robert J Shiller, said on 1st December of this year..U.S. stock market is showing bubble like characteristics…Bernanke said same thing back in May…and DELIBERATELY scared the mkts to deflate this bubble…here we come 2014!!!

  47. No trades in FTSE unless shows it’s hands..i.e. if a trade set up is clearly evident…in the meantime kicking down Dow..looking for 50-70 pts today from 16290 entry…later on Twitter short possible..again hit resistance level of $60…hope it does not gap down…hoping for a gap up…makes short entry easier..:-)

  48. Got 4 tea-leaf ‘flags’ on the daily to go LONG on the FTSE, S&P 500, DAX (3 indicators) and CAC lol 🙂 The eagle-eyed amongst us will have spotted that the MACD on the daily has moved into bull territory on the FTSE, S&P 500, DAX and the CAC. Also, the 5 day SMA crossed the 10 day SMA on the DAX in upward trend on the 19/12, similarly the 5 day crossed the 30 day on 20/12 hmm….. 🙂

    1. No numbers to crunch for the DOW lol 🙂 … so it is anyone’s guess lol Anyway, wouldn’t read too much into since it is obviously just catching the tail-wind of the recent bull charge lol 🙂 ‘Technically’ it probably is sort of correct-ish but that doesn’t take into account the vagaries, manipulation of and shenanigans that go on in the market lol 🙂 I wouldn’t put any money on the tea-leaves lol ….. 🙂 Anything can happen…… and it probably will lol 🙂

      1. I agree…am a little scared got a short at 16290 £7pp..may reduce it to £4pp when it comes back down to my entry level.. 🙂

  60. FTSE 100/daily now on course to hit 6800 by 31 Dec-2 Jan – straight line projection. Wouldn’t be surprised though if it flags a bit. 🙂

  61. You can tell the machines are on in the Dow…lol..completely erratic movements in the index on the smaller timeframes…looks like just a skeleton crew left at the desks…cut down my short to just £3pp earlier when it dropped back to my entry level…because too unpredictable in Xmas period..you may get some weird ghost spike like in the ftse the other day…am comfortable with £3pp…if need be ..will use other £4pp to average down…hopefully not…Dow is way overbought on technical basis..and common sense basis…

    1. The market traders forgot what common sense is long time ago, well about 12months ago to be precise…lol…..we have a huge movement just because Lagarde said how fabulous US economy is!!! and that comes from a women which completely rubbish the UK only few months ago!!…. she did that to the US too not that long ago but over there they have short memory….she seams to change her mind more often then I manage to clean my fish tank !!!….lol….

  62. Twitter hit $62…good..hope it goes a bit more higher…more profits when I short it..not done it yet..but got my eyes on it like a hawk..hope it does not go down today at closing as going gym in evening..last week or so hit $60…then in 2 or 3 sessions came down to $54..now back up…as I mentioned last time all brokers median target price is around $55..and all the experts last week could not explain it’s recent meteoric rise from $38 to $60..:-)

    1. Hi all. In hospital today so no update I’m afraid. Just about to go to surgery to have the appendix whipped out. Good timing eh! Year end 6800 not that far away now!!

  65. Goodbye shorters said ftse 100…i only wish i was long from that dip to 6400 last week 🙁 would have been a great christmas

      1. yeah long from 6543 and 6648 so we’ll see…. the 6800 level nick mentioned is looking increasingly likely

  67. Hope you make a speedy recovery Nick…thanks for posting…amazing!! From your hospital bed..talk about commitment…lol..;-) Have a happy Xmas and New Year if I don’t here from you..don’t worry Dola is standing in for you until you get better..and you know what..he is bang on with the money..his predictions are great..it’s a shame it’s not for the FTSE but for the Indian stock exchange…:-)

  68. Thanks Jim…appreciate it…it’s all about trying to rally in last week or so to get a headline figure for the pundits next year..to suck them in..lol..so that the fund manager’s can boast of the FTSE returns this year…hence why they put caveat at bottom…past performance etc etc..lol..strange why ftse is rallying on no news..some 80 points today on nothing? 🙂

  69. Still long here and tempted to close but that probably means it’s still got legs. Just broke even from my loss on the big 6400 drop last week. Holding for another 100 points and will add on any pullback.

  70. I can’t be asked to watch the reversal in Twitter..as leaving desk in half hr..so just shorted it at $63.30 for $4pp..so small sensible stake..hopefully will come back to earth soon..$60- $61 range soon..went up from $54 to $63 in 3 or so sessions…that’s a 17% return in a few days..why bother investing whole year in FTSE for some 10% ?? Lol..makes you think…

  71. Sorry Jim..lol..just realised by your chart that you are referring to Twitter…not the FTSE..a $ sign would have helped and also a decimal point..lol

    $67.50..lol..hope not…problem with indicators is that they give you the correct direction overall..but they do not indicate the shallow pullbacks that inevitably occur even in a strong bull run for a stock…The experts ..brokers etc will be red faced if they have to explain why Twitter has just hit $67 on no economic fundamentals..cimpany has yet to make a profit!!!..Especially when all the brokers median target price is $55 or so..and also the virtual parabolic move in 3 or so sessions..$54 to $64 nearly…if it does hit $67…no worries.. am only shorting it at $4pp..won’t break the bank…but one thing I know for sure with these tech stocks..when they overshoot big..th0ey fall fast..Facebook lost $10 from $54 to $44 when it similarly went parabolic..so did Twitter last week or so..but in less magnitude..shed $6..when it hit $60..expecting same..if not at $63 level..will do so at $67 level…and if so will open another short there to average down…

  73. FTSE 100/4hrs has broken out at long last from down ϵ-channel from last Oct 30. Nick’s 6800 by year end looking feasible.

  74. Not that they are always right..but nearly all brokers are underweight or neutral on Twitter…so who is saying buy?? price target $67.50..lol..it’s not an attractive proposition at $63.34 today when they missed the rally..was $54 a few sessions ago…rational investors would not buy for fear of a pullback…technical correction imminent..Twitter is a big time bubble..watch it retrace back to $45 early next year…

    1. I’ll keep an eye on it Ray. Not much data available via IG on the daily and weekly timeframes. Present wrapping duties call!!

  76. Who is long or short? I feel we are right in the middle on the ftse here but this momentum feels strong so reluctant to offload as yet

  77. Closed my longs on the FTSE from 6400 and on the DOW from 15700 for nice little profit of £5k. I was tempted to leave them open, but the risk of losing £5k in an attemp to make an extra £2-3k was too great. although we are not the heights of the FTSE, we are at the heights of the DOW and the talk of equity bubbles was scary the horses. Best to buy the dips than buy at the highs. For this trader Santa has come early… ho, ho, ho!

  78. Divi I’m in almost exactly the same position and have been tempted but so often I cut the winners too soon and let the losers ride. Not this time. If we dip to 6650 tomorrow I will add.

    1. I’m not totally convinced about the January effect and certainly not for the FTSE100. I would look to be long the first trading week upto 7th Jan and short thereafter for the remainder of the month.

      BTW – The first trading day of the new year is almost always positive. So yes I believe we will surpass 6800 either this year or very early in January and then look to book some profits.

      Merry Christmas Everyone

      1. This is true, it is a US barometer, but looking at the last 3 years worth of data the FTSE has gone up considerably between the start and end of January. But I would probably pull out sometime after mid January too.

  84. Still holding my long at 6610 which I held onto during the scary drop to 6400. Will be out at 6800ish. If I can hold onto a 200 point drop I should hold on to a 200 point gain! Hope you get well soon Nick…and that your year end ftse target comes good 🙂

  86. Think we,ve now levelled off and will stay around this mark till close today ..Let,s see what Friday brings ..

  88. Well DJ is showing top of the trend line on a monthly, weekly, daily and 4 hour.

    Have a good Christmas everyone.

    P.S.
    Nick, hope you recover quickly and still manage to have a great Christmas, I’ll have a drink for you.

  89. A bit late in the day lol 🙂 but there is one tea-leaf flag (one indicator) saying to go LONG 🙂 on the FTSE. Must be something to do with yesterday’s great big candlestick and the fact that the 60 day SMA has now crossed the 30day SMA hmm… 🙂

  92. I think we are for a small pullback to the 6630-6650 level. Indicators a little overbought. Then a new fresh bounce for all time highs

    1. and if no pullback ? not the smart thing if you are in. Maybe a pullback after another 100 points. Who knows?

  94. Hi Ray – $67.50 seems to have been left well and truly behind; a bit faster than I thought would happen. Not a disaster I hope. The TWTR recent price history is turning out to be quite a phenomenon, unhampered by the lack of profits, as you mention.

  95. The market will always be there pms so if it doesn’t pull back then no worries. Booked a tidy profit today

  97. looked up my acc this evening only to find that the dow went up 40 points cleaning out my acc to 300 pounds things can only get better in 2014……… I wish everyone a happy xmas and new year………and speedy recovery to nick…….

  98. For anyone who cares im HEAVILY long on ftse now..kinda did initially fk up my position management (cost me like 70 points).. been longing since 6480 (bounce from fed meeting)..
    i can see this marketing hitting 7000 in jan. and am holding until i see a reversal.

  99. Hash I sold earlier at 6707 and have been regretting it since! Hoping to get in on even a small pullback to jump back in. Merry Christmas all, all the best for 2014

  100. Ravi I’m on £2 a point so very small. Nearly made it £4 when ftse hit 6400. Had too many bad experiences to use bigger stakes for now. Worst one was my ftse short at 6000 in jan this year. Went to 6400 so I shorted again. Went to 6600 so closed second short for 200 point loss. Went to 6800 so closed first short…total loss 1000 points! One month later ftse back down to 6000.

  101. Hope everyone has had a good Christmas. What do people expect tomorrow? Gap up to where the future is trading now or a cash market open of roughly where it closed on the 24th?

    Do we think we will trace back a bit and then head for 6800?

    1. Seem to kind of agree with u,
      i have cut my long by 50%…pullback should be soon.
      Will be a significant one,
      ill then build my long (HOPEFULLY not fk up my position like last time)

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