6640 support 6709, 6730 resistance

Good morning, the gamble for the short at 6708 paid off yesterday in the end though it looked like a very risky one at the time – every man and his dog was/is bullish and we had a decent climb getting to that level. As it turns out its looking like that might be it, especially as we haven’t had the retest and overnight has been pretty weak. We are now around 6653 as I write this. I mentioned earlier this week that I was a expecting a bearish end to the week, most likely on Friday 14th, I still think that’s the case though maybe it will start today? Asia has just ended a 6 day bull run.

Asia Overnight from Bloomberg

Asian stocks dropped after the regional benchmark index climbed for a sixth day yesterday to cap its longest run of advances this year.

The MSCI Asia Pacific Index slipped 0.6 percent to 135.64 as of 11:25 a.m. in Tokyo after rising as much as 0.1 percent. The measure rebounded 4.8 percent through yesterday from a five-month low on Feb. 4. The Standard & Poor’s 500 Index slid less than 0.1 percent yesterday as Procter & Gamble Co., the world’s largest consumer-products maker, cut its forecasts and Amazon.com Inc. was downgraded at UBS AG. Futures on the U.S. equity gauge declined 0.2 percent today.

“The softness that we’re seeing in January and February should be expected,” Mark Matthews, Singapore-based head of Asia research for Julius Baer, which oversees about $377 billion, said on Bloomberg TV. “Markets can’t go up in a straight line. We got so much money after the global financial crisis here in Asia and now we’re seeing a lot of outflows.”

The Asia-Pacific equity benchmark climbed back after losing 4.6 percent in January, its worst start since 2009, amid concern about the Federal Reserve’s stimulus cuts, a slowdown in China and volatility in developing markets.

Global Rebound

Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to less than $1 trillion, data compiled by Bloomberg show. Foreign investors pulled a net $9.6 billion out of Japanese equities last month, according to the data.

Japan’s Topix index dropped 0.8 percent. South Korea’s Kospi index swung between gains and losses. Taiwan’s Taiex index and Hong Kong’s Hang Seng Index both lost 0.4 percent. China’s Shanghai Composite Index slid 0.3 percent.

Australia’s S&P/ASX 200 Index slipped 0.1 percent, erasing gains of as much as 0.4 percent. A government report showed that the nation’s unemployment rate rose to 6 percent, the highest in more than a decade. New Zealand’s NZX 50 Index fell 0.2 percent. Singapore’s Straits Times Index added 0.2 percent.

“It does look like this rally is coming to a halt,” Evan Lucas, a markets strategist in Melbourne at brokerage IG Ltd. “We have to watch earnings, particularly in Japan. The earnings so far have been OK but they’re not fantastic.”

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Today’s pivot is 6686, and with yesterdays close at 6675, I think the bears are going to be gaining some strength,. As such shorts around this area (I am thinking maybe that 6708 was a the money shot for the next few days now and maybe should have been so hasty to close!). However, should that level break then the 6727 area mentioned yesterday is still valid resistance, closely followed by 6752, the top of the 10 day Bianca channel.

We are bang on support at 6653 as I write this with the next support not far away at 6640. As mentioned I think we are going to see some bearish action, possibly starting today but mainly I am expecting it tomorrow and Monday. I’ll put my neck on the line and commit to that – it may or may not come to pass.

The bulls (as with the German bulls) will  need to get prices above that pivot area asap today for any hope of reaching 6710, or higher. I am thinking a dip to 6640 (if this 6653 breaks) then a rise to the pivot at 6685 then more downside leading into tomorrow.

79 Comments

  5. Nick : I feel ur initial theory of end of the week drop will play out this will push high wen US opens ..

  6. Nick,

    Have you any thought where the ftse will hit with the bearish action over the next few days…..do you think it will be a small pullback or the start of the reverse to 6,200 you mentioned?

    Nick, I’m looking to sign upto membership, at what time do you send out your daily views? and on average at anyone time how many members use the live char room?

    Thanks

    1. 6600 will be very supportive area, which for most would be seen as a buying entry….It’s not until you break 6400 area that a true bearish trend would start.
      so for short term/daytraders a pullback is what we are seeing…
      when the us opens they may push us a little past 6600 but with enough buyers we would be on the up again.

    2. Had tomorrow for the more significant downside. Just started a bit early today!

      Members email goes out about 07:15; 70 odd in the trading room.

  7. All this construction (price chart) doesn’t look bullish atm. I think it will dip lower for some kind of bounce. Hope for US.

  8. I have averaged down with a stop at 6595. I’m not sure US will help my long today as their rally seems to have lost momo

    1. I still hope it will resume, I’d like a wider channel developing so we need a spike up today. Nick predicted up move, there’s always a chance. The question is when this bounce will begin.
      I will enter only on signs of long if I see them.

  11. bounce seems to be happening good for a short at 6630 still believe this will tank a few hours after the US open as per Nicks chart

  12. PMS seems to have gone quiet…and now those who crying bulls will say they are bears now. Luke guess we got our shorts =]

    1. Quiet ? I’m only waiting. Nothing goes in straight line. Never heard the word “consolidation”

  13. Personally looking for further drops into tomorrow if it pulls above 6600 I’ll be out and more inclined to go bullish. Average open @ 6774,

  14. Ahwab start shorting dax from yesterday had was a little but added big at 9580 which I closed at 80 % this morning then took another short later in morning at 9535 which i will leave now my target is 9200 within 6 weeks hopefully with taking good profit this morning I have scope to add at 9700+ if it reaches that high but feel we will drop again before we see this level.

  15. Got positions on all three atm, but DAX always seems to act funny ftse down 60 points whilst DAX down 20 lol. Gl mate

  16. … surely the advance retail sales in the US must be because of weather? if so surely its a dip down prior to opening? then a rise when they say they were expecting it and its all good, QE 4 on the way surely? … right now expect the opposite 🙂 .. buy the rallies sell the dips 🙂

      1. Personally wouldn’t be longing. Im monitoring SPX closely and it looks like it could be a creating a wedge with lower highs & higher lows. Thinking it will likely drop towards 1770 area which would see FTSE likely back down towards 6500 imho.

          2. Yes, I was long. Is it against the trend? I don’t understand, everybody was going on about the bounce when US opens? If I just didn’t put b/e I would be still in a trade.

      1. Then you must be very rich man!!..lol…not sure what you still doing on here??if its easy you should be on the Bahamas now…lol

  29. … its going to be difficult to see the drop on the ftse with the USA markets so strong, theres no fear over there 🙂

  30. closed short…looking to reshort at 6660 (hopefully).
    strategy showing bears emerging..only short term stoc and rsi putting me off 🙁

  33. Well I held my long all day (6585 now two days old) and at 2:30 was starting to feel a little foolish. What a bizarre day and its left a nice pin bar on the daily chart. Who knows where its going tomorrow now

    1. Hash you got any targets… Im also short at 6661 & 6663. Want to hold into next week as i see 6500 as stated earlier.

        1. increased stop loss, closed half..
          dam my trades are getting worse and worse (ive made my indicator less strict)….i guess i should go back to what i was doing before!

  35. Ahwab mate, you post some good trades sometimes, but I wouldn’t be getting too confident on this forum until you have booked profits lol. As you see it can bounce 50 points in the opposite direction in less than 2 hours. Instead of competing, we should all be helping each other lol. We are all the small fish in this trading pond in reality.

  36. The markets always seem to be a few weeks ahead. Looks like they have already sold off the bad data we are getting now, and buying the Fed’s reaction. More qe and forward guidance

    1. we will not get more QE@!! the Fed would lose all credibility!…the market is bonkers again thanks to the morons over the pond…earning on FTSE are coming shit and over the weather too, economic data is crab but who cares , its just buy buy buy….they have explanation for everything, now is the weather!!

  37. Nick..you still putting you neck on the line for the bears to come out? Or is the drop and lift today the end of that theory?

  38. Amazed and relieved by the turnaround today. I think the big dip has happened. Today was volatile
    But dips on the way up. I have sold some of my long which I added at lunchtime to de risk though. Many shorters now to fuel the rise.

  41. … Marco I think your right but this dip before another gain us getting worn the fundamental issue remains profits are lacklustre as are earnings and the valuations should be the same but there not, only god knows why! The markets are totally disconnected from what we all perceive as reality, but reality has changed it’s anything but real, it’s up, up, up whatever pullbacks occur and it’s fast up, up ,up and worse there’s not going to be an end to it anytime soon, and if there is then it’s the Great Depression all over again, we are ruled by the USA simple whatever anyone thinks, and the chosen of 7000 on the ftse needs 2000 plus on the SPX and 18000 of the Dow is that likely … Of course it is 🙂

  42. …. Oh and sorry but when the snow melts and the sun comes out the markets will rank … Maybe a whole half percent 🙂

  43. Well I must say today has really surprised me, China data bad American data bad European data bad… Even Australian data bad and the market rallies… Big boys must have there computer & machines On buy mode!! This is a bullshit market no bull market and like with every boom there is a bust…. My short on the Dax is my longer term view and I still believe that within my 6 week timeframe we will see 9200 on the Dax this is only my thoughts.

  44. … Agreed, who would have thought that a cold wind and snow could have propelled these markets to the stars, but come to think about it it’s normally hot air and piss that does it … So ring in the change 🙂 SPX and Dow up 10% by tomorrow evening as long as it snows !!

  46. Hubris
    I am very interested to see if that 1929 scenario plays out as if it does we won’t get bounce back up next week i an expecting it will be diving down…

  47. Hoping that snow melted in America so they can go out shopping instead of sitting indoors and hitting that buy button on there computer lol

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