6695 resistance, then 6708 then 6730, support 6645

Good morning, well didn’t the FTSE have a stonking day yesterday in the end. Kept wishing I had held that long even longer! The resistances at 6650 even got broken while the FTSE marched higher and I thought we might see that 6730 in one day! Yellen delivered her first speech yesterday and basically its business as usual for the Fed then. She was pretty dovish so fiscal policy is likely to remain loose, with tapering still taking place as and when. News out of China last night that exports jumped is seen as good and maybe the drop last week on emerging market fears was overdone. Its almost as if yesterday’s rise was leading up to that data being good…..

The media is starting to get a bit bullish again and I mentioned yesterday that I can see some bearishness creeping in towards the end of this week. that was just a hunch really, based on (a) the bullish overtones getting stronger and (b) the fact that we are testing the top of the longer term daily channels on FTSE, Dax, and S&P.

We have the BoE inflation report at 10:30 so a bit of chop then.

Asia Overnight from Bloomberg

Asian stocks climbed for a sixth day, Australia’s dollar strengthened to its highest in a month and copper led gains in base metals after Chinese trade data exceeded estimates. The currencies of South Korea and Indonesia advanced, while gold halted a five-day gain.

Chinese exports jumped 10.6 percent in January from a year earlier, eclipsing an estimate for a 0.1 percent gain, while imports accelerated 10 percent and the trade surplus widened. U.S. economic growth has picked up and the Federal Reserve will continue to scale back stimulus in “measured steps,” Fed Chairman Janet Yellen said yesterday. The U.S. House of Representatives voted to suspend the country’s debt limit until March 2015. The euro zone reports factory output figures while European Central Bank President Mario Draghi speaks in Brussels.

“Chinese trade data came in much better than expected,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a note today. “The data suggests that growth slowdown was not as bad as feared. The numbers are positive for risk globally.”

About three stocks rose for each that fell on the Asia-Pacific gauge, with all 10 industry groups advancing. The Asian equity benchmark is rebounding after dropping 4.6 percent in January, its worst start to a year since 2009.

USA

Federal Open Market Committee officials have twice reduced the size of the monthly asset-purchase program, lowering bond buying to $65 billion from $85 billion last year. Also in the U.S., the House of Representatives voted to suspend the U.S. debt limit until March 2015, giving a win to President Barack Obama and Democrats in Congress who insisted that the ceiling be lifted without conditions.

“Markets have been oversold recently as concerns about emerging markets were a bit overblown,” Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors, which manages $131 billion, said by phone. “Yellen sounded quite dovish, which is what investors wanted to hear. While things are improving, she acknowledged that that the U.S. recovery is still not strong enough, suggesting monetary policy will remain easy. It’s good news that the U.S. debt ceiling debate is out of the way.”

Eurozone

European Central Bank President Mario Draghi will deliver the keynote address at a conference in Brussels today. Euro-zone industrial output fell a seasonally adjusted 0.3 percent in December compared with a gain of 1.8 percent in the previous month, a Bloomberg survey shows before data later today. Bank of England releases inflation report as well.

FTSE 100 prediction
FTSE 100 prediction

FTSE Outlook

I am watching 2 levels today 6695 (we virtually hit this last night) as it’s the 61.8% fib retrace area you can see in the chart below and 6730, the latter likely to be hit if 6695 is broken. Today’s pivot is 6645 so any dip might find support there. I have put the trades below, with a slight bearish bias, as there are 3 shorts, one long. As with the others its testing the top of the 20 day Raff channel again/still, whilst the 10 day has resistance at 6774. I think the Bianca 10 day at 6708 is more likely to thwart the bulls initially, though a close today above the 10 day at 6708 could be pretty bullish….. what I am trying to say is that there are some decent resistance levels coming up that will be good for shorting, however if they get broken then we will get a bit more bull and my bearish end of week scenario will probably not come to pass.

33 Comments

  2. Nick I have to say that having quietly followed you for a number of months I love you straight forward and frightening accurate analyses. Your one of the few who walk their talk…. Keep up the great work and thank you!

  4. Its very interesting, industrial production in Europe was twice as bad as they anticipated and no media is even motioning this….all the economic indicators from US haven’t been to good of a late but Janet went in a front of cameras and said the economy is growing and everybody went bonkers. Last night numbers out of China were like phhhhhhh so market goes up, just to remind everybody its the same numbers we were told not to trust because they are fake…. lol…its all one big circus

  5. Hi Nick. I’m fairly new to this. Do u provide an SMS service for FTSE indications? If so, how much? Or where can I find details of yr services? Thanks.

    1. Keep seeing this image popping up more and more. Going to be a self fulfilling prophecy soon!

      I am bearish for the end of the week though it looks like it might be starting today!

    2. That’s right guys, pile on the shorts….lol
      Total nonsense IMO.

      Nevertheless, people get scared, sell off and then the market buckles and the sell off continues. like Nick said, it will become a self fulfilling theory…

      Such BS

      1. Its all just one big game. Last week was panic stations, emerging economies screwed, China tanking etc etc. This week – good times everyone, all is well. Get those shares bought, will never be this low again!!!

  9. Just the one touch of 6708 bulls…. very disappointing, haven’t they read the papers – its supposed to be bullish indefinitely!!

    Its not supposed to be bearish till tomorrow PM/Friday, did they not read my post!?!

  11. Nick. .do you think its the end of the bulls for the week now? Or maybe a revisit to 6703 and then bears come out and put bulls in their place???? Whays your thoughts?

    1. 6708 worked a treat today. That said I have banked the shorts at 6680. Will probably still see that 6730….

  12. You people never heard the word “consolidation” ?
    It works to downside as well as to the upside.

  15. I’m still long from 6580 and added on today’s pullback. Was less sure this was the right thing to do running into normal market close, but reasonably relaxed about it as this is just as likely to break up again. Will review tomorrow and let run overnight in the meantime

  16. Bagged 23 points today on Dow short. Some result.
    It was wrong to short the top like this. But I did. Complete madness. Had 2 shorts 16016 and 16030. Should have held as usual, but today didn’t care. It wasn’t my strategy at all.

  17. Ahh so much better today with so fewer posts. Too much dribble recently.

    Nick – a few people have spoke to me about trading indices. I always say do not. When then insist I say to try you, as even though you seem to get it wrong 50% of the time, that is a bloody good profit when you use stops. WD and keep making money. I have a lot of respect for you though I only take your predictions as a guide as every one should!!

    1. Thanks for the recommends Flash…

      I agree that my thoughts should just be used in conjunction with your own, and others analysis.

  18. Its started early, I did say the end of the week would be bearish. Expecting the big down tomorrow….

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