6700 to hold today, possibly 6686

Good morning. Well the bulls have had a smack in the teeth to start 2014, failing to break Mondays high at 6767 yesterday and now looking at an open just shy of 6700. I thought that yesterday would see a bit of a bounce after the initial dip, mainly as it was the start of the year and a new month and with all the bullish rhetoric there might be some inflows. Alas not and instead it turned into quite a bearish day, and looks set to continue. It is always a worry when everyone seems rather bullish as you probably want to start being a bit worried and take an opposing view. That said, looking at the 30 minute chart its only at the bottom of the 30 minute channel so not really uber bearish just yet. It’s also worth noting that the Dax had a shocker yesterday, shedding over 200 points, whilst the FTSE held up pretty well. Its China that’s dragging things down at the moment in terms of indices, but pushing up gold prices at the same time on increased demand. That has fuelled the biggest weekly gain in gold prices since October.

“There’s going to be a lot of uncertainty, a lot of volatility in gold prices,” Ed Moy, the chief strategist at Morgan Gold, an Irvine, California-based investor that offers bullion for retirement accounts, said in an interview on Bloomberg Television’s “First Up.” “Gold is part of the Asian mindset that it’s a way to store your wealth. Given the extremely strong demand from Asia, that should put some upward pressure on gold in the long term.” [Bloomberg]

Raff Channels
Raff Channels

Asia Overnight from Bloomberg

Asian stocks dropped, with a regional index headed for its biggest loss in three weeks, and credit risk increased after a gauge of China’s service industries fell. The yen rose with gold while emerging-market currencies slid.

The MSCI Asia Pacific Excluding Japan Index lost 1 percent at 1:26 p.m. in Hong Kong and the Hang Seng China Enterprises Index tumbled 2.5 percent. Standard & Poor’s 500 Index (SPX) futures were little changed after U.S. equity gauges sank from records yesterday. Indonesia’s rupiah slid 0.6 percent versus the dollar, trading near the lowest level since 2008, while the yen jumped 0.7 percent. The cost of insuring sovereign and corporate bonds in Asia outside Japan rose to a three-week high and gold added 0.6 percent.

China’s non-manufacturing gauge fell to a four-month low in December, after data earlier this week showed two measures of factory output in the world’s second-largest economy declined. Physical demand for gold is rising after the precious metal tumbled 28 percent in 2013, the worst annual retreat since 1981. Federal Reserve Chairman Ben S. Bernanke speaks today and euro region money supply figures are also due.

“You cannot count on China to contribute to global growth now as the economy is still under structural adjustment,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai. “There’s no excitement in the macro economy and in this case it’s difficult for the stock market to have good performance.”

China’s non-manufacturing purchasing managers’ index fell to 54.6, the lowest since August, from 56 in November. Data Jan. 1 showed the official gauge for factory output dropped more than economists projected, also to a four-month low. An HSBC Holdings Plc and Markit Economics Ltd. index of Chinese manufacturing published yesterday slipped to 50.5 from 50.8 in November, matching the median estimate in a Bloomberg survey.

US Fed speeches

Bernanke is scheduled to make remarks today at an economics conference in Philadelphia at 19:30. Fed officials said Dec. 18 they would trim monthly purchases of bonds to $75 billion from $85 billion starting this month. There are a few others talking too, from 17:45 onwards – full list here

ftse 100 prediction
ftse 100 prediction

FTSE Outlook

There is a chance that the 6700 level holds for the moment as that is the bottom of the 30 minute channel as you can see below. However, I have also put a trade plan for a long from the 6686 area, based on a dip to the fib retrace that you can see on the Bianca chart and the next level of support. As the Dax, FTSE  and S&P are all at the bottom of their Raff channels I do think we might see a bit of a bounce from these areas, and I don’t think the bulls are going to give up just yet. Yesterdays would have triggered quite a few stops and of course, we are still on a skeleton crew as most traders are off till Monday, so moves are amplified.

88 Comments

  2. Yesterday didn’t turn out as expected! Haha. However not too bad especially when compared to the US. Looking to hold till the close on Monday and then short throughout the remainder of the month.

    1. Nope – and if it does I am starting to slowly sell into it. To me all the momentum has come out of the FTSE for the time being…..

    2. FTSE/30 mins – might edge above 6730 again, but high on a negative slope operative since yesterday 13:00 hrs. Back to ≤6700 imo – subject to US.

  6. Have booked +50points on my long, not willing to let greed and hindsight to entice me to hold on when things look uncertain.

    2. Dax is certainly a bit of an animal to trade, although can be very nice when it goes in your direction.

    1. I’ve got to say I’m not sure which way to call it. I’ve messed up all my trades today so far but have decided to hold my short position at an average of 6725. It could go either way IMHO but 1 month chart is telling me to sell but it depends how you read it I suppose.

  12. It’s so boring today, you would have thought there would be more action on a low volume day…like yesterday

  14. Just waiting to see what the US does now. Our traders are ridiculous. You get 3 hours of trading in the morning then static then sheep!

  22. Senu no I have not been shorting just in and out of longs. I re entered but at 25% of my usual stake

  23. Hi all…not quite FTSE but thought I might seek any advice from others who might have experienced this

    I have a Twitter Long and Short position opened on IG.
    I’m trying to close my Long however, I receive the message ‘This market may not be sold to open due to stock borrowing restrictions’. I’ve phone IG and they said I can’t sell my long as it will increase my short exposure, and twitter is completely unborrowable at the moment….

    So I can’t close my long and the only option is to arrange for them to close my longs against my shorts (which I have built up slowly at various levels). I currently hold a bigger short position than long, but not by much….which is why I was looking to cut down my long and take some profit, in the expectation that twitter was going to drop soon….

    What can I do? Hope twitter keeps climbing and people have to hand back their shorts? Or hope that I can partially close them during a fall at minimal loss?

    Your help would be much appreciated, although not a FTSE question

  24. Pauboy, obviously you should do what you feel is the right decision but if it were me I would have them close down both positions against each other. Illiquid markets terrify my to be honest and I stay away/get out of positions like that. In my view its better to have some level of control.

    1. See I want to sell my long by $70 and prepare to put my shorts on Twitter then (which isn’t going to happen now)….I’m not really exposed, and its not major amounts of money we’re talking about here, as I was half expecting stock to go back up higher…..

      Just find it funny that they said on the phone I could still open some longs if I wanted. But why would I do that, if I was looking to close my long?? And it would also mean I couldn’t sell that long…..so would be a guaranteed lose.

      I think it shows that Twitter is overbought and everyone is borrowing stock to short it….but at the moment I will let it run, and see if twitter gets even higher than $75 and see if people’s positions can’t handle that and they get stopped out.

  26. I am still short though small scale at moment – about 20%. My timescales are 1-2 weeks so not unduly concerned about today’s rise. If it pushes above 6800 may rethink but this still has the feel of the recent rally losing energy but what do I know !

  28. As expected not a great deal to speak of on the FTSE this week. Expect things to pick up volume wise on Monday as the big boys return. Time for the Ftse to go lower to at least 6650 by the end of the month.

  31. I timed that little drop from 6739 to 6728 perfectly but only had half my usual per point on :/

        1. There is a Below and a Below !!!
          until it breaks!
          as for a whole 100 drop from now …bullderdash

    2. I’m sure if I go short on the Dow, it will pick up, it always goes the opposite to my position 🙁

  35. Senu my trading strategy has been horrendous today. Fear of the fall then fear of kissing the rally. Buy high sell low yes??!!!

    1. this happens for me too.. then continuing with emotional trading and made more losses… thats because hesitating to come out with a stop because of emotionally sticking to the trade..

  37. There’s very little real downturn in the FTSE yet, but I think it will develop a bit next week. The central trend line of the linked graph and Javed’s marker of 6650 are not far away in the daily context. I am hoping for a soft landing not far below the latter trend, which will encourage a speedy return to 6800 (Oct 30th last) and beyond. In the wake of the US pair?

    http://img706.imageshack.us/img706/3446/k6wr.png

  42. I don’t believe bernanke had anything to do with the fall. He has one foot out of the door now and it was more a leaving ceremony. It gives me a bit of confidence that I am not about to miss the next leg up and hope for a good entry next week. I will long at 6680 although I have started to read a lot about a correction and some bearishness. I will probably use stops a lot more in the next few weeks in case we start getting a serious pull back sub 6,500.

    1. But FTSE is showing good strength inspite of fall in peers. Is that an indication to move up from here?

    1. Me neither, I’d like to to. I’m also looking at spreadbetting some shares too from Monday. 3D Systems is big in the 3D printing market. Sorry to go off topic.

        1. Yes also checkout Hewlett Packard, they are supposed to be bringing out consumer level 3d printers in 2014

      2. But also not a very trusty early morning price action. Now at 9:00 am we can began trusting more

  50. Many thanks for the tip Mickster. Incidentally, I use ProRealTime as provided by IG. I put ‘3D’ into the search box and got ‘3D Systems’ ok, but with a ticker of ‘UAL’. I believe the ticker should be ‘DDD’. Could cause confusion!

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