6739 support 6808 resistance

Good morning, yesterday played out nicely in the end though the second leg up stalled at 6808 again, with the FOMOC report revealing that weaker data will not interrupt tapering. Or so they say at the moment anyway. It feel like the worm of turning and we are about to start another down leg, today and tomorrow I think. talk of deflation is growing a bit stronger, possibly across the whole euro zone which obviously isn’t ideal, while concerns above China economic state continue, as you can see from the general gist of the Bloomberg news below.  there was an interesting program on the other day on BBC2 about China which is worth a watch on iPlayer if you can. It was called “This World – how China fooled the World”.

Yesterday’s support level of 6752 is looking weaker now, with overnight testing and a dip below, the 200ema at 6739 could offer support (6703 after that) and the bulls will need to get prices above 6810 to target 6835 and 6860.

Asia Overnight from Bloomberg

Asian stocks fell with commodities and Australia’s dollar weakened as a private index on China’s manufacturing dropped to a seven-month low. South Korea’s won led emerging-market currencies lower and Japanese bonds rallied.

The MSCI Asia Pacific Index slid 1.2 percent by 2:14 p.m. in Tokyo. Standard & Poor’s 500 Index (SPX) futures lost 0.3 percent and FTSE 100 Index contracts slipped 0.7 percent. A measure of Chinese shares in Hong Kong decreased 0.7 percent and the S&P GSCI Index of 24 commodities declined 0.4 percent. Treasuries rebounded from the biggest drop in a week and Japan’s five-year yield sank to a 10-month low. The Aussie retreated 0.6 percent and the won weakened the most in three weeks.

A preliminary February purchasing managers’ gauge from HSBC Holdings Plc and Markit Economics fell to 48.3, signaling a second month of contraction for Chinese manufacturing and missing an economists’ estimate for 49.5. The yen gained after Japan’s trade deficit widened to a record in January, as surging import costs weigh on Prime Minister Shinzo Abe’s efforts to renew growth. The International Monetary Fund warned of risks to world growth before data today that may show U.S. jobless claims fell and a gauge of leading indicators rose.

“People globally underestimate the downside risk to the Chinese economy,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a Bloomberg Television interview. “The economy is not just slowing but there’s a lot of financial risks here. The chance of a crisis is rising and very real.”

Yuan Weakens

China’s offshore yuan weakened 0.2 percent to 6.0557 per dollar, the biggest drop since May, data compiled by Bloomberg show. The onshore rate in Shanghai slid 0.1 percent to 6.0831, set for a two-day loss of 0.25 percent that would be the biggest loss since June, according to China Foreign Exchange Trade System prices.

The declines were “triggering a lot of stop losses,” according to Andy Ji, Singapore-based FX strategist and China economist at Commonwealth Bank of Australia.

“Today’s data shows smaller enterprises continue to struggle and China’s recovery is very fragile,” said Ji. “The CNH reacted in a more pronounced move than the onshore yuan because it is not confined to any trading band. The onshore yuan is anchored by PBOC intervention.”

Emerging Turmoil

Risks of prolonged market turmoil in emerging markets and of deflation in the euro area are threatening the world’s improved economic prospects, IMF staff wrote in a note prepared for central bankers and finance ministers from the Group of 20. Ministers meet this weekend in Sydney.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

The daily pivot is 6789 so with prices back below that the short term outlook is bearish. I mentioned above that I expect the next 2 sessions to be bearish as I think we are currently in a small wave down (15780/15800 Dow is looking good) so a bearish stance at the moment for me. With today’s pivot looking like a good shorting spot. Should the reverse be true and the bulls can break that and the 6808 level that acted as resistance yesterday then 6835 and 6860 are possible upside targets.

The 30 minute EMAs are currently bearish (10 below the 25) which is why I am expecting that little dip, but with the 10 day Bianca channel bottom at 6752 it might be short lived, at least initially. I think the FTSE will try to be bullish this morning then be dragged down by the US this afternoon.

85 Comments

  2. So far so good Nick, look like FTSE is in a land of it own (the looloo land)….with all the bed data out of China, France, Germany and Europe as a whole the market is so arrogant that is beyond believes…lol ….not mentioning the political unrests in all over the places……this is creating the perfect condition for the fat finger to come out and play…

    1. Would be interesting if someone could find some historical events like this…

      I have tried, but to no avail. (Not very hard though I must admit)

          1. Surely the greatest example was the RBS, Santander & Fortis’s takeover of ABN. I wonder what happened afterwards………
            Barclays had a lucky escape…

  27. Well I’m sticking to strategy. Next short target 6808 if it hits 6815 I’m out. Got to stick I strategy. I took a bit of profit on 6788 trade in the low 70’s to cover some stops if hit.

  30. i thought to myself i bet dow will rally because thats the last thing anyone would expect-pitty i dont trade it lool

  31. Deez your right there market should be well down but instead they rally big pushing up market could just be a pump and after all some of the big names have brought in high… Will have too see but markets never do what we expect

  34. Andy you still in, Dow had a massive shooting star yesterday this was a retracement today before big fall aimho

  35. Marco – yes moved stop to 6825 and plan to hold into tomorrow. Have 2 positions open. 6800 & 6810, made a few tweaks as looked a bit spikey. If S&P closes above 1838 we are in trouble. Want to see some downside. Options expiry tomorrow may keep this fueled till next week?

  38. “Stocks are gaining Thursday after word that U.S. manufacturing expanded at the fastest pace in almost four years.” … How come the snow didn’t affect this one then 🙂

    1. You don’t know that the weather in US is very picky?!…lol…and so are those morons at Bloomberg and CNBC…. they are paid by the market makers so they forgot what it means to be objective

  39. Ftse5yeartwader do you thing that one bit of news is worthy of a rally after all the bad news from today??? If you ever stop trading you could get a job at cnbc as there always looking for good spin doctors

  41. Build your shorts people. We are getting ever closer to that 6900. It’s still some time to go, but I do think we will still see 6250 before or on 17 March…

    Go all

      1. Where do you start really, the most important one is probably the FED meeting, but with my prediction for FTSE this year, we are way to close to continue upside for too long. The markets will correct again before it can climb higher, it’s natural progression I guess.

        There is the odd chance that we may fall further and not see our 7200 this year, but that’s unlikely.

        So basically it’s my own opinion on the market and the weather…lol

    1. I expecting markets will react to all bad news (China, Europe) from tomorrow/next week after hitting that 6850.

  49. Not so sure Marco the big boys are really pushing these markets now…. Even big name pro bulls have said how shocked they are with today push up …

  50. Very unexpected..ftse effectively climbed 100 points today on what sentiment! Fair play bulls fair play-interesting to see how next week play out 6950 anyone!? 😀

  52. Got a massive, massive short built up.
    A bit shocked like everybody but still believe in some correction occuring soon.
    Agree with havies 6250 in march.

  54. Just look at how strong ftse is this week compared to dow… I’m afraid those short may be in for a shock margin call soon, i see 6950+ by end of next week with high odds.
    But GL all

  56. Marco, Ye i took the hit early at 6825… But my order at 6860 triggered. Options Ex today, so not sure whether this goes towards 6900 today or whether the high is in… Thoughts welcome.

  57. Hi Andy, yes looks very bullish and looking at daily I can see we need to hit 6950/7000 before the big drop

  58. Ftse very strong atm got stopped in the morning very tight stop…long now from 6836 possible retest of the high-still very early in the day though so we’ll see gl guys

  59. Deez / Marco – Yep i decided to close Short for a nice 21 pips scalp. Makes up for the short getting stopped last night. Won’t be going long here, but if we see 6823 i will consider a long, although it could head back to 6812 region. Keeping it light today due to options ex

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