6681, 6660, 6620 Support, 6728, 6736, 6748 Resistance

Good morning. Well, we got the dip but not the bounce yesterday. The fall paused slightly at the supports bounced a little then carried on. The US, especially the Dow wasn’t happy and shed 300 points – haven’t had a -300 day for a while, while the S&P shed 40. Looking at the Bianca chart then there is support around the 6660 to 6680 area if it dips below yesterdays low, though if that breaks the next level to watch is 6620. All things considered though the FTSE didn’t drop quite as far compared to the others (250 dax, 300 dow, 40 S&P), as when it opened it actually rose! If the bulls can get above 6735 today then all is not lost for them.

Asia Overnight from Bloomberg
Asian stocks dropped, extending the biggest global rout in six months that saw the Dow Jones Industrial Average wipe out this year’s gains in one session amid weaker earnings and credit-market concerns.

The MSCI Asia Pacific Index (MXAP) fell 0.8 percent to 147.63 as of 12:37 p.m. in Hong Kong as nine of its 10 industry groups declined. The gauge is heading for its first weekly loss in three weeks after climbing to the highest close since June 2008 earlier this week and yesterday capping a 2.1 percent gain for July. The MSCI All-Country World Index sank 1.5 percent yesterday, the most since February.

“The market looks fully valued and investors have been looking for an excuse to sell,” Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, said by phone. “We’ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.”

Regional Gauges
Japan’s Topix index declined 0.4 percent. Australia’s S&P/ASX 200 Index slumped 1.6 percent, heading for its biggest loss since Feb. 4. New Zealand’s NZX 50 Index dropped 1 percent.Singapore’s Straits Times Index sank 0.9 percent and Taiwan’s Taiex index retreated 0.6 percent. South Korea’s Kospi index lost 0.3 percent.

Hong Kong’s Hang Seng Index (HSI) slipped 0.5 percent after yesterday capping its biggest monthly advance since September 2012. The Hang Seng China Enterprises Index of mainland shares traded in the city dropped 0.9 percent after entering a bull market this week. China’s Shanghai Composite Index added 0.1 percent.

Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The U.S. benchmark index sank 2 percent yesterday, while the Dow fell 1.9 percent to erase the year’s gains as Exxon Mobil Corp. to Micron Technology Inc. tumbled amid weaker corporate results.

Volatility Increases
Market volatility increased, with the Chicago Board Options Exchange Volatility Index, known as the VIX (VIX), surging 27 percent yesterday to the highest level since April 11 as concern grew that the improving U.S. economy may force the Federal Reserve to raise interest rates sooner than expected.

Investors are also watching developments in Latin America as Argentina missed a deadline yesterday to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors. S&P declaring Argentina in default melded with concern over Europe’s debt position as Portugal’s Banco Espirito Santo SA was told to raise capital.

China’s manufacturing purchasing managers’ index increased to 51.7 in July from 51 the previous month, according to data released today by the National Bureau of Statistics and China Federation of Logistics. A private gauge of factory activity from HSBC Holdings Plc and Markit Economics rose to 51.7 last month from 50.7 in June. Levels of 50 or higher signal expansion.

Key Levels to Watch

Support so entry levels for a possible long

  • 6690
  • 6680
  • 6661
  • 6622
  • 6495

Resistance so entry levels for a possible short

  • 6728
  • 6736
  • 6748 daily pivot
  • 6831

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Todays pivot is 6748, with resistance slightly below that at 6728 and 6736. I imagine the negative sentiment will persist for a few more sessions yet before bouncing back as global fears persist over just how far out of the woods we are (answer, not that far, if we are even at the edge yet, imho). A debt wobble in Latin America, QE tapering, wars, disasters, ebola – if you let it get to you you’d be shaking like a leaf! Anyway, for the moment, not too much to be bullish about really so few more sessions for the bears then the tide will turn, as it always does. August is traditionally quite a quiet month anyway as lots of people take the month off so yesterday would also have been a lot of cashing in after the pretty decent rise.

Yesterdays low of 6690 is initial support, and we have the Raffs there too, then the bottom of the Bianca channels calculating at 6660 and 6680 today. Worst case for the bulls would be a dip to 6622. Would be a brave long of those supports but probably worth a small go with a tight stop if you fancied a gamble. Be fearful when others are greedy, greedy when others are fearful as Buffet says! It will bounce at some point as it always does! For the moment the trend is down and the market is fearful, but its Friday and 1st of the month so likely to be weird anyway. Start of the month can be positive as new money flows in.

Im going for a risky long at 6680 today – lets see if the 20 day channel holds! And a short off the pivot at 6747….

103 Comments

  6. No point going long till Dow has. Bottomed at 16350/400 later today. Then I will go in big long till then shorting 1 hour chart on Dow sais if all 200ma needs to be hit AIMHO

  12. I suspect FTSE found a support for the longer term. It will be retested during the next sessions. Need to see the 20 dma slope next days.

    1. no. Need to wait as we may test several times in next days. With sell pressure in US, it could break. SPX needs 1910-1900 before anything else

  17. Dax has been slaughtered 850 points in 4 weeks with a big chunk being taken in the last 7 days… This is a panick sell off so support are a waste of time.

  18. It’s so clear now that the Dow drop yesterday was orchestrated to get us as close to 16350/450 as possible with last drop this morning so when NFP results come out we rocket up. Am short FTSE at the moment but looking to go long Dow and FTSE when we hit 16350 ish probably at lunchtime…. Good luck

  19. Must amit Marco was thinking the same, is this just the big boys playing games before the start of another rally or are we know going into a correction stage before autum

  36. More bade news…No rate hike for quite sometime 😀
    I suspected that yesterday… with ADP few days ago

    1. Rate hike fears out of the way…now let’s see if the sentiment reverses again for the bulls.
      Did not enter long for now

  39. The only question I have and no one has answer yet… is when FTSE will break 6950.
    It almost make me thinking that FTSE is rigged.

  44. When I’m referring to sentiment is for the other markets, not FTSE, because this one almost has no shift sentiment nowadays

  47. As I recall, that sentiment signal stopped working in FTSE, when you agreed that FTSE was rangebound. And that was log time ago, just to remind how boring range FTSE has become in almost a year 😀

    1. I am just very busy to be posting here…got many things going on trading/phd/managing company.
      plus i trade longer time frames now (due to time limitation).
      I do see a big sentiment change today – very big one.

  61. Looking at the shape of the US candles, I would say that this correction was a “fiasco”. Monday will tell

  63. European indice have been proper spank this week… Will Draghi save them next week when the ecb meet ftse has held well and if we get a rally in Europe and States then this will natural push the ftse up which could possibly take out the all time high.

  65. Same here x2 have taken a battering in the last 2 days on dax… With small profit taken ftse short and aus200 short but larger buy on dax running loss close gold buy small loss probably my worst 2 days of trading ever but next weeks a new start and believe until such times as zirp is finish then the only real place for any kind of profit on savings is shares.

    1. PMS — I don’t do Twitter (not seeing the point 😀 ). In what timeframe are you seeing bullish patterns?

  67. Javed where are you ? Wonder where you are placed in the market right now. Taking out half of position or waiting for further drop ?

    Hash, where is your stop for this last trade ? Last time you appeared with other strong sell signal, the market bounced up and you did not post any comment after.

  68. Ftse has held well would not say that it’s bullish and if the European & America index keep sliding then this will just drag the ftse down with it.

  69. To define a market correction there needs to be a 10% correction to define a bear market there needs to be a 20% correction…so if this is to be a correction them Dow & SP have a lot bigger drops too come.

  70. Will the weekend have brought more calm too the now very weakened indices or will the slaughter continue further into next week?… I think we will still see further selling pressure maybe not the same as last week but all the same until the big boys decided they have slaughter enough small retail investor.

  71. Hopefully this is not a temporary relief move up but the restart of the grind higher like last month. Low volume now though so could be choppy

  72. Morning all, I hope everyone has been well these last couple of weeks. Looks like I’ve missed alot. How’s things going? Are we headed up or down at the moment? Any one trading?

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