6737, 6730 support; 6757, 6775 resistance

Good morning. That dip past 6715 smacks of being a fake with the way it bounced back with a steady rise to 6750. Having opened at 6755 (failed to break that resistance, let along reach the 6775 for a better short) it was a slow drift down to 6730 before that spike down as the US opened. It was a pretty good test of the Raff channel though which held – also as it coincided with a decent round number. Levels are going to be similar today really – 6755 resistance and support at the daily pivot at 6730, though 6737 where we are as I write this could hold.

Asia Overnight from Bloomberg
Asian stocks fell with the regional benchmark index paring its seventh straight weekly gain and slipping from a six-year high, as a Federal Reserve official said the U.S. may raise interest rates by March.

The MSCI Asia Pacific Index (MXAP) slid 0.5 percent to 144.78 as of 1:04 p.m. in Tokyo with nine of its 10 industry groups falling. The measure closed yesterday at its highest level since June 2008 and is heading for a 0.1 percent gain this week.

“It’s a timely warning that the time for the Fed to start raising interest rates is drawing nearer,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $160 billion. “I don’t think that risk is factored into the market sufficiently.”

Japan’s Topix (TPX) index slipped 1.4 percent as the yen surged 0.4 percent against the dollar. A report today showed inflation accelerated at the fastest pace in 32 years, swelled by a sales-tax increase and higher utility charges. Consumer prices excluding fresh food rose 3.4 percent in May from a year earlier, the statistics bureau said, matching the median forecast in a Bloomberg News survey of economists.

Higher Rates
Futures on the Standard & Poor’s 500 Index dropped 0.3 percent today. The measure slid 0.1 percent yesterday after James Bullard, president of the Federal Reserve Bank of St. Louis, suggested that higher interest rates may happen sooner than people thought.

Bullard, speaking in an interview on Fox Business Network, predicted the central bank’s first interest-rate rise will happen in the first quarter of next year.

Economic data showing that U.S. consumer spending rose less than forecast also led to losses in stocks. Purchases, which account for about 70 percent of the economy, climbed 0.2 percent last month after being little changed in April, the Commerce Department reported. The median forecast in a Bloomberg survey of economists called for a 0.4 percent increase. Incomes advanced 0.4 percent and the saving rate increased to an eight-month high.

FTSE Outlook

FTSE Prediction
FTSE Prediction

I was really hoping those longs were going to gain more and the bulls would break the 55 first thing yesterday but alas not. For today, we have the Friday feeling so keep your wits about you! We have the UK GDP out later today (0930) so that is likely to cause a bit of movement (YoY forecast 3.1%, QoQ Q1 0.8%) and could provide some further insight into interest rate hikes. BoE have started some measures to stop the housing bubble popping but stopped short of being too draconian (too many vested interests in housing to be too doctoral…).

For today if the pivot holds at 6730 then we should get some more upside, especially with the bottom of the daily channels holding yesterday (slightly overshot the Bianca’s which were at 6710, Raff 20 day at 6700). The key level will be for the bulls to break 6754, which having had 2 tests now (Wed and Thurs) should break and lead to 6775 and possibly 6804. At that point we are nearing the top of the daily Bianca channels around 6820 so upside might be contained if it got that high.

Being Friday I lower my stakes as it usually does weird things but a long at the pivot could work out today to test those upper resistance levels.

41 Comments

  7. FTSE/5 mins. — 08:00 straight-line trend slightly negative; ROC weak and likely to turn negative — producing ≤ 6735 — my guess.

    1. Slow, choppy and pre-US open, but broadly yes belly — general drift so far today certainly negative.

  9. IHS in hourly chart playing, MACD in hourly today trying to turn positive, since the big decline early week

    1. Well, short missed. I was paper trading today. Now I see all details stuck up again of my strategy (I am revising it today) and I should have entered short at 15.04 at 16825 really really promptly. However I was talking through a possible long entry at 16828.3 and I would have lost now 12 points if I place Stop loss accordingly. So until I start getting positive results on paper I will not place a real trade. Maybe later next week will try again.

  13. I went short earlier and took my eye off of the ball so now it’s in negative. I’m hoping for a drop to pivot before bounce

    1. FTSE is amazingly high. I was astonished by the drop on Dow yesterday. I still cannot work out how to identify if the fall would continue without a pull back. Normally we have some sort of pull back forming before further drops. But that was a furious drop. How to enter such drops? It’s like shorting bottom of the price. I cannot do it as in the past when I tried it turned back on me. Like it was on Tuesday it went to – 60 p. before it dropped to +30p. and fell further 80 points.
      But yesterday if I shorted the bottom of the price it would continue falling.
      Have anybody experienced such problem before and managed to overcome?

  16. Hourly, RSI turning positive now, we need MACD ( still negative but slopping positive) for a perfect sunshine day

  22. FTSE heading to 6800. THEN, we go back to a new low OR we resume the uptrend and break the downward channel. THAT’s the million dollar question. I will exit at 6784 or 6794, let’s see next week

  23. Out of Dow long. Closed my ftse long at a loss but still up on the week. Closed gold short at slight profit. Not a bad week considering the huge loss I was staring at on Wednesday! No position. Will wait to see how the summer goes

  24. Taking ϵ-channels from Jun 01 14 presents a problem; Dow/4 hrs. is on quite a robust, positive gradient, but FTSE/4 hrs. is falling fast. Both series seem to have bottomed on Jun 26; they are both pulling away from their respective local minima. At this point in time, I think I am correct in saying that J Yellen has soft-pedalled on US interest rate hikes, while in the UK, Carney is out of step with the Fed and ECB in flagging up the imminence of a rise in the UK bank rate. This despite the fact that UK inflation has fallen over the past year, reaching 1.5% yr.-on-yr. last month — hardly a valid signal for an interest rate rise. Carney seems intent on tackling a regional problem, viz, the London and South-East housing bubble, with a national sledgehammer, oblivious to the damage he might do elsewhere in the country and economy.
    Following Friday’s spurt, my best guess in the 4 hr. timeframe is that over the next 5-7 trading days the FTSE will struggle against the downtrend to a new high, probably below the last, say ≈ 6790, before falling to a new lower low.
    FTSE/4 hrs. —
    http://i1348.photobucket.com/albums/p736/jmca01/FTSE100DFB_zpsec3b55ff.png

  25. Jim
    The ascending triangle on the Dow daily would suggest that a break out to the upside is imminent and the rise we are seeing in the ftse might not necessarily fall when it hits top of channel but follow Dow up and break out to upside.

  26. and surprisingly FTSE has done nothing to growth sine JAN 1. It’s almost flat. I wonder how the stocks have performed in this market. 5 months to end of year. Will FTSE end negative this year, flat or positive ?

  31. Belly I set an order this morning to go long at 57 but just missed out by 1 point getting it executed on the open dip.

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