6660 support but its weakening, stay nimble!

Good morning. Once again the 6670 worked out well for some long action yesterday, however it got decidedly choppy later in the day with, no surprise, taper talk. Bottom line is that there will be tapering just no one knows when. Yesterday was just a warning shot across the bows saying that it would be coming in “coming months” according to the minutes released yesterday. Personally I am sticking to my original estimate of April 2014 to start, though that is of course just my opinion. Tapering talk spanked gold right down, and after a bounce in the next few sessions to 1295 I think it probably has further to fall, certainly sub 1200. The FTSE is in a bit of limbo at the moment, I was hoping the rise yesterday from the 6670 area was going to be more stable to 6720 rather than a spike to 6715 and then completely reverse. The third test of the 6670 area sure enough broke (the third test of a level usually does) and we have had overnight lows of 6650. It feels a little like it is treading water though as the daily Raff’s are heading down, whilst the Dax is heading up. Looking to Bianca, the channels line up with resistance at 6740 and support at 6630 – likely to be significant areas today if seen – and like the Raff’s are heading down.

Asia Overnight from Bloomberg

Asian stocks fell for a third day after minutes from the Federal Reserve’s last meeting signaled U.S. stimulus may be reduced in coming months and a gauge of China manufacturing fell more than expected.

The MSCI Asia Pacific Index dropped 0.6 percent to 141.29 as of 1:32 p.m. in Hong Kong with nine of the 10 industry groups on the gauge falling. Japan’s Topix (TPX) index rose 0.8 percent as the yen slid. The MSCI Asia Pacific excluding Japan Index declined 1.3 percent.

“There’s a feeling around that the Fed is starting to see the cost of ongoing quantitative easing mounting,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees $135 billion. “The market is still feeling very twitchy about it.”

U.S. Futures

Futures on the Standard & Poor’s 500 Index declined 0.2 percent today. The measure dropped 0.4 percent yesterday. Central bank policy makers “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor-market conditions and would thus warrant trimming the pace of purchases in coming months,” according to minutes of the Federal Open Market Committee’s Oct. 29-30 gathering released yesterday.

The European Central Bank is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative for the first time, according to two people with knowledge of the debate. Policy makers would reduce the rate for commercial lenders who park excess cash at the ECB to minus 0.1 percent from zero, said the people, who asked not to be named because the talks aren’t public.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

As has been the case recently any tapering outlook either spooks or reassures the market, yesterday it was the spooking side. The US indices reacted accordingly and dropped, with the S&P finding some support at 1677 before a bit of bull at the close to add 5 points. That low hasn’t been broken overnight, though if it goes then 1769 is next support. For the bulls, movement back above 1781 (close level) should see 1784 and 1791. Make or break today for the bulls, as if these support go then I think we will be having a few sessions of downside.

For today I can see a case for a rise to 6700 again, however its really all up to the bulls if this support at 6660 holds. They got a bit beaten up yesterday with so many test on the 6670 door so they might have their work cut out today. Breaking 6700 might be a big ask though as that is quite a significant channel on the 30 minute chart there, so there is every likelihood that the bears will come out there. They are keen to get that dip in before any Santa Rallies appear! I have put in pink arrows at that 6700 level as to be totally honest it could do anything there. The bulls really need to get through there and break 6730 if they are going to really push higher in the short term, the bears will want to break 6660 to get 6609 soon.

I have gone for an early bounce from this support level, mainly based on the bounce the S&P put in at the end of yesterday’s session, though it is risky as the EMAs are negative at the moment, and we have a red coral. It could just as easily start a wave of selling after the decent rises we have had over the past few weeks. If the bulls are weak then we may even struggle to break the daily pivot at 6684 on any initial rise. So, today I am very cautiously bullish but will be ready to go bearish if 6660 breaks.

202 Comments

        1. When is it? To be honest I am always confused, one day people say it’s 1.30 another I hear 2.30 and even 3.30

  4. Arrows playing out very nicely so far 🙂 .. Good work, Nick! Pity I haven’t took a position though lol 🙂

  5. Ok..so now 50% of my view is matching with Nick…I shorted last nite at 6686 took half off at 6656 and rest of it off at 6670. I am now small short at 6686 BUT do believe the market will move to 6705 before a bigger short. From my analysis I do not think the prices will even be able to stay above 6700+ (not even 30 minutes). If this is the case and markets drop then hallejua!

    1. Just one scaring part…one of my indicators is showing …be on sidelines as there still might be a BIG upside coming!

    3. Maybe a repeat of yesterday where it rose to 6713 then fell back… or a bullish change of direction in the offing…. you never can tell 🙂 It’s a gamble! 🙂 ..

      1. Yup i agree. but my main indicator is showing a small bullish signal.. meaning today again going to be volatile..i can pretty much say it will be like yesterday during the day.. most likely we close around 6680 level again lool with spikes up and down.

  7. i was long at 6650 but i closed it so early, whats causing this rise its looking like it wants to breach 6700

    1. Me too, closed it at 6670. I should have held it till 10.30AM or atleast I should have gone trailing limit after 6670.

  9. Tempted to go long now (good time to short lol 🙂 ) ……. but it did drop quite a bit below support 1. Nothing to stop it breaching both support 1 and resistance 1 though. You just can never tell… 🙂

  10. As I said yesterday, I wanted to see a visit to 6640-6650 with Markets open. FTSE gave me that, to reinforce that IHS I’m seeing.

  11. FTSE is hovering about at the top of downward 3 day downward channel at the moment, just waiting to see if it breaches it and moves towards resistance 1.

      4. Just make sure you put tight stops on.
        In the back of my mind I have the Christmas rally, which can kick in any time.
        Am short at the moment at 6686, tight stop at 6699

          1. It can bounce off 200EMA on one of the charts I see. But it’s been only 23.6% fib. retrace. Don’t think it’s big enough.

  13. FwitTrader – holding so far. US markets have a gap fill lower and poor data this morning. Short bias, may get short squeeze but favour downside from here

  14. ok this is messed up…even my only last (most reliable) indicator which was telling to be on sideline is giving a small bullish signal :S.
    I have closed my shorts at +1 point lol.
    Gonna wait now.

    1. Of course it is going to shoot up now… I’ve have just shorted the damned thing… you can’t get a better indicator than that lol 🙂 BUY! BUY! BUY!

      1. no i wudnt say buy buy lol.
        The thing is with this indicator its either STRONG buy or STRONG sell..
        when it shows small signals then you suppose to be on the sidelines (also its shit when markets sidesways).
        Hence why even though its saying small buy.. im still leaning towards a sell.
        BUT only at 6705 nothing less.

        2. Wow, like with 100% certainty?! Seriously?! I think you might be right, and I am going to re-short if we do see 6700!

  16. It can bounce off 200EMA on one of the charts I see. But it’s been only 23.6% fib. retrace. Don’t think it’s big enough.

      1. How I did it? I had another entry at 82.3. when it dropped to 77 I closed on 0 the first one and then closed at 78 the second trade.

        2. I would short at 6686 …but considering how much markets are moving.. id rather save my self 19points and just short at 6705 lol

  18. Still looking for a sharp rise before decline, been on the same trade for last 3 days now lol. I know Jack, would see like a miracle to someone trades trade umpteen times… hopefully 6700 will be tested before another decline, where I will be converted into a bear.

    1. Ahwab we will see def so chill :).. gon be a very quick one.. thats when i go BIG short (unless things change).
      Also whats ur view on the job numbers? FOMC minutes said tapering coming soon in coming months..depended on job numbers… today they expected better..if thats the case you think good news bad news ?

      1. I think they will come out positive, but either way, just like yesterday an initial rise then a sell off. Though DOW AND S&P, in the recent days have been volatile and show weakness,looks like for the short term perhaps giving away to some bearishness. My only regret is sticking with my targets this week, or else like you Hashmash, could have got some decent points up and down.

        All in all, i am looking for some decline before the Christmas rally. M

        1. I agree Ahwab, it should be a reason to reverse the trend – for example a spike or at least a double test of the top or strong rejection. If the price is pushing up so strongly what is the reason for it to go down on a spot? So that’s why I came out of that short because I saw it as a weak retrace before another conquest of the top.
          I would try to short the spikes though as sometimes the rejections could be quite strong but s/l should be quite tight.

          1. Maybe u can..i was thinking of doing it. then i thought if my game plan is to go short..why risk going long now?

    1. Ikr, its only in hindsight where you can see the spike, better to be long, as with many cases there is a spike followed by further upside. Seen that one to many times.

    2. Maybe u can..i was thinking of doing it. then i thought if my game plan is to go short..why risk going long now?
      Yes i did say in my view im certain the markets will hit 6700+..but what if im wrong ? lol

  22. FTSE moving now.. before job data. 6705 coming soon.. lol. my special indicator now saying tiny bearish signal coming up. ARG at this rate ftse might even hit around 6730 before it signals strong sell!

    1. Yes, though I don`t understand why people are ready to short a single tick notice. Not even considering shorting myself until there are obvious signs of resistance at 6700, as it makes a strange coincidence that the report is soo close to resistance, who knows we might see a breakthrough to higher levels.
      This is all speculation ofcourse lol.

      1. yea ahwab.. im sitting tight..lets see how report acts. btw my rule usually is if price stays for X amount of time at a specific level i get out the trade.. so today if 6705+ holds for atleast 30minutes im getting the FK out!

  24. 6695 short order filled… 6705 next. Pretty please. Then will sit on them until we get at least a retest of 6650 level.

      1. Yes 🙂 I do accept! If it wasn’t for HIM I would not be able to realize that I was silly yesterday and actually the outcome was ok in the end, only -13 points of loss. After all sometimes we lose.
        But honestly at some point I was addressing directly to HIM yesterday.

    1. Was not risking funds especially as we are close to the weekend. You win some you lose some. Out till Monday, gl all.

    2. yup short time is coming! my “special” indicator now showing more stronger bears (still might be able to hit 6700+ though)..if that happens then my indicator will go back to being on side lines meaning 6700+ is bad bad!

  32. Don’t think we’re going to be seeing a spike up. 3pm is last chance. Got FTSE & CAC shorts, but only light, could do with the spike to be fully loaded lol.

    2. From exp in industry..big positions usually come in 30mins-60mins after markets open.
      But yes chance of a 6705 is quiet slim.

  36. Btw just a question, would any of u guys be interested if i opened up a site with a live chat room (for free)?

  41. Maybe I do not like trading in uncharted territories. If not I would be in DOW/SPX/DAX.
    Maybe I prefer to know where I put my feet

      1. Stop at 6730, will build more at 6705 (and move stop to 6750).
        Looks like today might have been the high for this week.

  44. I don’t know at what time Ben made it to the controls this morning (their time, rather late for everyone else), but the return on 4.25-5.25 billion of freshly printed greenbacks is paltry, in terms of market buoyancy. Deeply worrying for a few! 🙂

  45. Me thinks it is time to start scraping to put the old four legged friend on the table……….namely turkey ….most of yous high flying bouys have turkey everyday so no novelty so any left over coppers send on greatly apprecited GLA

  46. DOW / SPX are stuttering around key levels. In addition FTSE has not moved up at all with them, FTSE looking good for downside this evening into tomorrow. US Markets will be interesting few hours ahead, im hoping for another sell of there.

      1. Oh. You still holding that. couple of times went to 6675 after you took that call.. thought you closed. anything possible today?

  49. Yo.andy..i managed to.get a short.in at 6690…looks like a nice level (my original level was 6705 but that didnt hit).
    Im not gon close mine unless something happens in the market.
    My view is bearish
    . But def will be a choppy one so paitience is my friend.

    1. Exactly, i’ve also got shorts on CAC which had poor PMI data today. My thoughts are no negative rate cut means a higher Euro… Which therefore means negative for exports. Draghi rejected negative deposit rate idea so that is very bearish for European equities at this juncture. The chart has a firm short term top at 6700 which has been tested numerous time and failed to hold, im certainly holding overnight and it could be a nice 2-3 days trade down to 6600 or gap fill 6575… Time will tell.

      1. With this got to play it by ear depending on surrounding markets. But 6630 is a key level for the bulls to hold, if that goes i see 6600 and 6575 gap fill target. We could of course end up range bounce and bounce of the 6640/50 area again… BORING lol

  50. still have faith in my 6680 short from this morning. wish i had of waited an extra 30 minutes though and got in at the 90’s…but thats why i am the best hindsight trader out there!

  56. Ahwab im surprised you didn’t wait .. .I still think here the ftse is buy 6695 . we going through 6700 and snp looks relatively strong .

  58. All i can say is if u shorting ftse long down or snp.. thats what im looking to do now.
    Snp showing a massive bull signal.
    this the confusing this.. snp down n dax all showing bulls but ftse showing .. nothing tbh (bear if anything).
    But the way its going.. a correction wud be ftse falls alot while dax dow n snp fall slighty/maintain what they have..

    Wen this happens i believe thats when santa rally will kick in!

    1. Fingers crossed, im all for the Santa Rally… But not when im holding short lol. Just don’t feel like we’ve had a decent correction yet.

      1. andy we havent.
        Next short at 6708 (tomorrows R1)!
        Im pretty sure we cannot be breaking R1 tomorrow so sit tight.
        Pivot 2omorrow is 6675 most likely hit that.
        So yes im going 2x more the short i have now wen we hit 6708 and sit tight with a SL at 6750.

        1. today im actually very confident (more than last 3 days).. feels good again to be confident wen risky money.

      2. can expect ftse to drop to 6600 at least by end of next week…nice 5k there 🙂 if 6708 hits (most likely it will)

  61. SPX closing above 1793, then again 1800+ and this will drag everything else, ones more than the others

  64. Hi Nick, what is your view on major market cycles i have read most common cycle is 17.5 years . I believe ftse cycle we are in now begun on :

    March 1996 + 4.6 years = September 2000
    Downtrend 30 months = march 2003

    March 2003 + 4.4 years = July 2007
    Downtrend 20 months = march 2009

    March 2009 + 4.2 years = may 2013
    Downtrend 10 months = march 2014

    That would be 17.5 year cycle if I am correct something big could be coming , looks even more suss with all these estimates for ftse to reach over 7000 from experience when that happens be very wary just means all the big guys are unloading at levels way below the ones they are saying! Also Ben bernankes term ends January 2014 don’t know what effect that will have on markets

  66. well, no one says, so I will say it : DOW accomplished a landmark today. First close above 16000 in history

  67. Dow j very strong. Yesterday all know that tapering coming soon probably next month this should be massive drop all know this will be happen. But in the sense Dow j shot up. Why???
    Any clue?
    Any one is starting to short Dow j from 16000?

    1. And if all know, why is not dropping ?
      The markets anticipate everything many months earlier. If had to drop, it already had done it massively

  70. I think this is santa rally..got small short running stop at 6715….
    looking to be on sidelines to turn bullish if 6715 takes out my short
    last bit to confirm this santa rally is if retail trader 55-60% short on ftse..

    1. Don’t think so,

      The FTSE is very weak and it’s only the DOW dragging it up.
      If the DOW has a flat day or a negative day the bears will eat the FTSE alive before the SAnta rally kicks in. Look how much the FTSE dropped after market.
      I have a short on too ATM.

      1. It didn’t drop at all, where you’ve seen FTSE dropped? 15 points from 705? Ridiculous. Once again, bad luck, will have to get out of this short. Looks like this is your Santa rally.

        1. Hold on to your short until the gap fill. Buy the dip.
          Watch the DOW in the run up to opening time.
          You can’t see after market data?

          2. Havies, I am glad where I got out, the pattern didn’t suggest me to hold on to it, closed at 86. Now I noticed that they didn’t charge me for holding overnight, curious about it. I opened the position at 20.00is in the evening and no charges today, just a win.

  71. compare IHS in my chart with Bulkowski’s Head-and-Shoulders Bottom example also displayed in twitter. Even the amplitude of movement in LS larger than of the RS

  72. PMSTrader – Valid point about IHS, but on various time frames you get H&S, mixed signals. I had my short order triggered last night so now 2 positions 6695 & 6703. We may see higher in US markets later but think we’ll fill gap at circa 6680ish first

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