6688, 6683, 6662, 6653, 6606 Support, 6720, 6755, 6802, 6827 Resistance

Good morning. Well the short from 6675 got a few points, but it was the bulls turn in the end yesterday, unfortunately not dipping as low as the 6620 or the 6600 level in the end. Initial resistance is at 6720 today, whilst we have the daily pivot lending support at 6688. Also the bottom of the Bianca 20 day at 6683 so another support around that area. We have pulled away from the bottom of the Raff channels so I wouldn’t be surprised to see a bit more bull to take the S&P to 2007, Dax to 9735 and FTSE to 6755 in the very near future, probably today. 6755 is the 10ema on the FTSE daily chart so thats where that figure comes from. Initially though the pressure is on the bulls to break 6720.

Asia Overnight from Bloomberg
Asian stocks outside Japan slipped and the dollar climbed to a four-year highas surging U.S. new-home sales signaled improvement in the world’s biggest economy. Gold retreated and New Zealand’s dollar plunged after the central bank said again that its strength is unjustified.

The MSCI Asia Pacific excluding Japan Index dropped 0.4 percent at 2:22 p.m. in Tokyo. Chinese shares in Hong Kongdropped with copper after the country’s foreign exchange watchdog said it uncovered $10 billion of trade fraud. Japan’s Topix index advanced 1.2 percent. Standard & Poor’s 500 Index futures declined 0.1 percent. The U.S. currency strengthened against most peers as the yen slid and the so-called kiwi plunged to a one-year low. Gold fell to $1,214.44 and silver dropped 0.6 percent.

Some banks had played roles in fake trade at the port of Qingdao, Wu Ruilin, deputy head of China’s State Administration of Foreign Exchange said, pledging to severely punish perpetrators. The U.S. reports durable-goods orders and initial jobless claims numbers today after new-home sales surged in August to the highest level in more than six years. Reserve Bank of AustraliaGovernor Glenn Stevens signaled he’s considering steps to limit home loans to investors.

“The dollar has gone near vertical,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “In the near term, the momentum is very strong. And the economic data has continued to surprise on the upside more often than not.”

The Bloomberg Dollar Spot Index is climbing for a fifth straight day after yesterday closing at the highest in more than four years. The measure is heading for its biggest quarterly gain since the period ended Sept. 30, 2011.

Relative Value
Six of 10 industry groups advanced on the Asia-Pacific gauge that includes Japanese shares today. The measure trades at 13.6 times estimated earnings compared with 15.5 times projected profit for the Stoxx Europe 600 index and 16.7 times for the S&P 500.

The Nikkei 225 Stock Average increased 1.1 percent, while Australia’s S&P/ASX 200 Index climbed 0.1 percent. South Korea’s Kospi index slipped 0.2 percent and Taiwan’s benchmark index dropped 1 percent.

Hong Kong’s Hang Seng Index was little changed. The Hang Seng China Enterprises Index of mainland firms listed in the city dropped 0.2 percent after rising as much as 0.7 percent.

The Shanghai Composite Index rose 0.6 percent after closing at the highest since March 2013.

Chinese President Xi Jinping is considering replacing People’s Bank of China Governor Zhou Xiaochuan, the Wall Street Journal said yesterday, citing unidentified officials. The China Times this month published an opinion piece on prospects for ex-securities regulator Guo Shuqing taking the job.

Six of 13 economists in a Bloomberg News survey this month cited Guo, 58, as the most likely successor when Zhou does leave. Five predicted it would be People’s Bank of China Deputy Governor Yi Gang, 56.

Data yesterday showed sales of new U.S. houses jumped 18 percent to a 504,000 annualized pace, the most since May 2008. The median forecast of 74 economists surveyed by Bloomberg called for the pace to accelerate to 430,000. The one-month increase was the biggest since January 1992.

“The U.S. economy continues to exhibit strength,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by e-mail. “U.S. data overnight was more constructive, with a strong surge in new home sales and upward revisions to the historic data also supportive for the U.S. economy.”

U.S. Shares
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX (VIX), decreased 11 percent to 13.27 yesterday for the largest decline since Aug. 4. The index had surged 24 percent over the prior three days.

A measure of health-care stocks had the biggest gains among 10 groups in the S&P 500 yesterday, jumping 1.7 percent, amid signs that cross-border deals may continue despite the government’s efforts to curtail inversions.

The S&P 500, which rallied 0.8 percent yesterday, had dropped 1.4 percent during a three-day losing streak after closing Sept. 18 at a record.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Initially I have resistance at 6722 which the bulls will need to break to then reach 6755 as the next level of note. I have put a little dip from that first resistance down to the pivot at 6688, and we also have the bottom of the 20 day Bianca there, along with the coral on the 30minute. Judging by the Dax I think we might push a little bit higher today before more bearishness. At least its bounced back well after all that doom and gloom earlier this week. Gold still looks like its on a path to 1200, which would tally with a bit more equity upside. If the pivot breaks then the next support is 6662, a break of which keep yesterday 6604 in play as support.

145 Comments

  1. MLawrence – Watching your trades. Quite cleaver.
    Even the CEO – has the arrows pointing up. So thats good news.
    Hugh … whats new today ?

      1. Ditto Hugh! Especially when you think how profitable you could have been this week! Some how i’m staring at losses. It could always be so different though couldn’t it! ‘If only i went short on Tuesday – if only went long yesterday’

  2. MLawrence
    Could you confirm this –
    1. Long 705
    2. Short 720 x 2
    Not taken profits yet – so you are net Short 715 ?
    or am I doing the Homer ?

    1. Long of 1 @05 short of 2 @20 – 1 to close for 15p – 1 to open new position.
      So short of 1@20 – closed back at 05 for another 15p.
      Now i need to decide to cut yesterdays shorts and take this mornings profit for break even or use this mornings profit to bring yesterdays shorts up to 6710.
      Either way same outcome really. Next target would be 6695-6745. So if i bought 2@95 = +15p x2 = 30p. I could also just buy back 1 though and leave the other one open.

      This morning was naughty though as chasing losses = you lose! Imagine being short of 3 and the rally continued! I got away with it though and will tell myself off later.

      1. RC – Keep an eye on the 200 period average on a 5 min chart.
        Seems to be some respect there at the moment..

  4. Dutch,

    I went short this morning at 75 and had a limit at 50. By the time, I reached work that move was over and I missed the long. Still 25 points profit.

    I have two plans here. I am watching 9711 (50% retrace) and 9754 (61.8%) – Looking for a short. Dow completed its 61.8% retrace at 17230 yesterday. I still think there is more downside to Dow 400-500 points.

    Good one on the long – Keep it going – lets see what happens.

      1. I will do RC.
        This new ideas is trend based.
        The other I follow is the oscillating RSI/MACD is still good but find it useless in trending markets…
        On the new Trend Based idea…
        I am checking for closes above 6706

  11. FTSE — The plan today is to get some feeling for the new system’s consistency and flexibility. The earliest data input is at 07:00 this morning. I might re-optimise at intervals, using the same starting point for data. One can always do that manually and deal with output. So far, from a standing start, just one trade; SELL @ 6715/09:50 ≫ +15 points at present. Not a lot wrong with that Jack 2? 😀 I’m using a 5 min. timeframe.

    2. FTSE 6690
      I’m soooooooo tempted to close my Short here on my trend based system.
      If I do – I’ve screwed it up ! It’s no longer a trend based system !

  14. So early bullishness has disippated……expect this to amble along till lunch now. Then the jobless data at 1:30 will determine direction foe the rest of the day. So good to be nimble around then.

  16. FTSE 6690
    I’m soooooooo tempted to close my Short here on my trend based system.
    If I do – I’ve screwed it up ! It’s no longer a trend based system !

  19. Hmmm he only seems to post at the end of the day. If i could post my trades at 5pm i’d win every day as well…

    1. Yep and then tells us he wins on every single trade…..not even Madoff did that…….or it’s moving into some mystical black box!

  20. Good one Jim. You use the Prorealtime charts. I only have the ones at end of the day. The real time we need to pay a fee or trade at least 4 times per month to have the money back (making some pressure on trading).
    Sometime ago I had a look at those indicators that you can build from scratch, but never had any depth on it.
    But from what you are doing, it seems promising. Keep posting. I may take another look at them and build one by myself and share here also

        1. You use the Break Out Intraday indicator from the backtesting and automatic trading ? Or a modified one or one of your own ?

    2. I use the ‘free’ version of ProRealTime available via IG — I also get the free end of day version from IT Finance. The programming language is really nice; very user friendly!

      1. How come is free version ? You need to trade at least 4x a month so it can be free. It’s from IG markets.
        Yours are free even if you do not trade ?

        2. You use a demo account ? I just talk with IG and they do not have a free version. Only the demo for 2 weeks.

        3. My Account/Settings/Preferences/ProRealTime/Select ‘Activate ProRealTime …’
          IG will dock £30 from your account but refund at the end of the month provided you make 4 trades. They do this every month. GL!

          1. Yes. For a while I thought that UK had some privilege 😀
            That’s exactly what I was talking about.
            Thanks Jim.

            And that signal ? Any exit signal yet ?

    1. Dutchy …it’s the way ya tell ’em….Ha ha
      On my Trend Based System – first port of call would be to get a close below 9700

      1. well if it closes below 9700 it will most certainly go down to that level or very near to it. It is basically down to the US data, if good, rally extends and DAX can go up to lord knows 9800? If data is not great we go back to bear land but I think not as bear as before as that was perhaps a tad overdone.

  22. When a guy looks at a monthly chart on FTSE and see the stall on those tops, start to wondering if this is a top and FTSE will crash to 4000, as one guy I read saids it will

    1. The only positive sign, comparing with the other tops, is that this time, it has been stalling for at least 9 months and one spike more than 1 year ago

      1. Yep – I’ve read this stuff ..you do wonder how much that Scots devolution kicked things around…I had an email from one of fund managers I use that they had lightened up considerably of UK stocks and rebased them in the US as it “seemed sensible”. I guess they may repatriate these funds at the right level..
        Also don’t think it’s likely in consideration – yields/cover/P/Es of the big co.s . We’ll probably just continue to range trade…

  23. Just out of interest who uses a CFD account and who a spread betting account? What size does everyone trade on average?

    Me I use both, although these days I pretty much only trade indexes so should use spread betting I guess.

    My sizes are mainly £10-£20 per point (varies a bit by market)

    1. Saxo – CFD’s / Equities – Good platform – Not too many distractions.
      IG – Spreads – Good to see their doing broking.
      Selftrade – Equities – rubbish.

    2. Dutch,
      Did you come out of that Dax long ?

      managed to get 40 points today. No trades. Looking to short after US Open.

      1. was in and out with 15 point spread all morning. Went away and now see the market has tanked. Tempted to go long DAX around 9555?

  25. October is the month I predicted some time ago, that markets will have some kind of turmoil. The taper will end… ECB will start the QE ?? A lot of question marks.

      1. Be a bit careful Hugh, No point in taking longs at this stage..the market is retraced and will continue downwards.

  27. Good that we are again at these levels and I’m in the sidelines.
    Jim what about those signals ? No exit yet ? still in that short on 6715 ?

  28. ES going again to 1982/1983 after stalling at 1991/1992. Never reached that 1994/1995. Maybe a dead cat bounce

  29. Used my profit this morning to raise my bear to 2@6710
    Closed 1 for 15p @95 and just closed the other @80 +30.
    So 2 very hard days work for 45p..
    Still getting cross and feeling like it’s constantly going the wrong way though. What will Wall Street do this afternoon after the jobless claims? Down then stay down or down and then rally?

  31. i am so unlucky
    lost on short today, and now losing on long. got it all so wrong. i think i will lose everything. oh year, i am sure it will be bullish afternoon. just listen to you

  35. Update PMS —
    Three trades, using system and data from 07:00 this morning. Test exercise, have been looking at Forex as well.
    1st — SELL @ 6715 – 09:50. OK, suffered some erosion.
    2nd — BUY @ 6699 – 12.25 Trade didn’t develop; market flat and undulating. (1st trade closed.)
    3rd — SELL @ 6697 – 13:35. Excellent run secured. (2nd trade closed.)
    Total gain — 50+ points
    This might cure me of my dithering! 😀
    http://i1348.photobucket.com/albums/p736/jmca01/FTSE100DFB_zps51c3887a.png

        1. it’s because i closed at 17184 or something when it came back and look long, at these levels thinking it will go up

          2. i had to withdraw 1000 pounds back to my bank right now, which i deposited yesterday as back up. i cannot lose it too otherwise i will have nothing to eat. i am left with 730.36 pounds which is much less than i started at the beginning of the year. i am ruined. i should have held that short, why i didn’t i come out. i’m just useless

          4. my log shows I had 615 on 17 march 14 to which I added 500 which was 1115 to start with on 26 march 14. so now of these money it’s left 730 it means i actually lost further 385 pounds. i actually lost 150 pounds of those 500 which i deposited. so i am really f. up now. not sure if i will ever recover of this loss.

  37. Wow, just scalped 70 pips in 10mins…the feels. Well done to those who in the face of yesterday bullishness still had the balls Togo for the shorts.

    Looking to long at 9600

  41. I was predicting it from this morning it was going to go downwards and it did happen. Next stop for Dax 9400. I had a short from 9670 went into a meeting couldn’t post it.

  45. Closed for 2k, up 500 aftermorning and yesterday’s loss. But yeah yesterday was a complete bs rise just shows sometimes analysis goes out the window.

    Done for the day.

  46. RJ, I closed all trades at 15.28 or something and I haven’t seen then since cos I wasn’t going to trade today anymore. If I ever bounce it will be a slow one. Back to £1 pp for any update. Not sure how to make these markets anymore. I had an emotional breakdown when I thought it was going to 17350 so I closed my short as soon as it eased off (I was av. 17174) but how would I know it would continue dropping? As far as Nick’s chart showed and some of the comments it was going to bounce off pivot. I got carried away with stakes chasing that f.. loss of 140 pounds.

    1. Oh, I just looked at chart of Dow and great that I came out actually, I would have lost my extra thousand which is my grandma’s inheritance. I couldn’t afford to lose that. so I did pull out thinking of saving whatever is left. lose only as much as you can afford to lose – i heard the saying. it shredded through my stupid mind in an important moment of truth. I pulled out with loss.

          1. Yes jack I did mention it in my morning post with the levels and it reversed from those levels. This happens to most of us and recovery takes time..take a break, clear your mind and come back strongly..

  48. Well done RJ, you have been spot on with this. Got myself into trouble but ended up trading my way out. Going to go short again are you? For 9400 level? Will have a bounce this I recon to 9550 if US does not collapse entirely

        1. hmm got out of that at 9518 – just going to watch what the US does I recon as obviously I have no clue…:-)

    1. From what I can tell this selling is done on low volume, looks like will end up under 3 month average. that tells me there could easily be a bounce off that level. But I’m with you on paper for now!

  51. Next level is 1963 and 1952. This could be the real thing, with a real buy for a bounce of 10-12 points

  54. Interesting day. Will be winners and losers but of course that is part of this zero sum game.

    The indices certainly look weak……did mention that we are in sell the rally mode but would have taken a brave person to short yesterday’s rally.

    I will be switching to a long at the end of the month……but I suspect this bearishness will remain for at least another couple of weeks until the US finds a floor. October could well be negative too. For the FTSE that could be 6535 this month and even 6450 in October.

  55. Yes Javed, October will be quite interesting month. am still holding my shorts probably won’t close until FED meeting next month.

    1. From what level ? I’m looking to buy in the 100 ma SPX. It’s an area where it floated every time since 2012. Will be reached tomorrow, I think.

  57. That’s my fear. But will use stops on my longs at b/e after the early bounce, until the end of October

  58. October is for me the bad month as I have been saying since start of the year. I’m very cautious from now on. End of taper, less liquidity. A huge turnaround in the economic stimulus…it could trigger a sell off excuse. Like the ones in start/end of the other QE’s

  62. Looks like DOW will try finish above that 17000 mark.
    Interesting to see what happens tomorrow is Friday as we are nearing the end of month, possibly another sell off before some decent retracement as always with Friday, it never stays down.

    1. Trade-1 – I will keep log of my trades today.
      If anybody can find reasons to why it may be incorrect – please advise.
      Thank you all

      1. Hi PMS — SELL @ 6638 – 07:25
        Re daily data, were you asking about indicators or the trading system? I haven’t tried the latter using daily data yet.

  66. Javed, you may be right but I think now the futures are being pushed down we could be set for a Classic Friday afternoon bull run to end the week higher. My plan is to watch the markets come down and go long Dax at 9420 ish. Feel any more shorts are potentially a bit more dangerous than getting a long level wrong by 40 points or so.

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