6756, 6700, 6689 Support, 6793, 6800, 6832 Resistance

Good morning. Both the longs saw little bounces yesterday but as expected the overriding trend was down, shame it never managed to trigger the short at 6840ish though, or even one at 6820. Anyway, the long at 6791 first thing got a few points, whilst the 6770 came very late in the day but it was a weak evening session. Today sees support lower at 6756 where we have the bottom of both the Bianca channels, with support at 6700 below that. Bulls will need to break the daily pivot at 6793 today to target 6800 and 6830 (top of 10 day Bianca). Slightly better than expected Chinese manufacturing data last night might help.

Asia Overnight from Bloomberg
Asian stocks rose from a four-month low and copper climbed with Australia’s dollar as a preliminary gauge of Chinese manufacturing unexpectedly rose. The price of insuring Asian bonds against default increased with precious metals.

The MSCI Asia Pacific excluding Japan Index climbed 0.2 percent by 12:50 p.m. in Hong Kong, reversing a drop of as much as 0.3 percent. Copper climbed 0.7 percent after a gauge of commodities closed at the lowest since July 2009 yesterday. Australian bonds rallied while the local dollar strengthened 0.5 percent from a seven-month low. A gauge of Asian credit-default swap prices climbed two basis points. Standard & Poor’s 500 Index futures were little changed after the U.S. gauge slid 0.8 percent. Palladium added 0.6 percent.

The so-called flash purchasing managers index rose to 50.5 from a reading of 50.2 in August, HSBC Holdings Plc and Markit Economics said, while economists predicted it would fall to 50, the border between expansion and contraction. About $574 billion was wiped from the value ofglobal equities yesterday after China’s Finance Minister Lou Jiwei damped speculation leaders in Asia’s biggest economy will implement large-scale stimulus. Factory indexes for the U.S. and Europe are also scheduled.

“There’s cyclical weakness in stocks, stemming from lower commodity prices to the propensity for a mild recession in Europe,” said Raymond Tang, who oversees about $15 billion in Kuala Lumpur as chief investment officer at CIMB-Principal Asset Management Bhd. “There are always concerns about China’s economy and credit risks, whether it’s just worries or something that will break the camel’s back. So far, they’ve been well managed.”

Asian Index
About three stocks fell for every two that rose today on the Asian equity gauge that excludes Japan, where markets are closed for a holiday.

The Hang Seng Index, which has advanced on just four out of 15 trading days this month through yesterday, swung between gains and losses. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.3 percent after closing at a two-month lowyesterday. The Shanghai Composite Index advanced 0.7 percent.

The manufacturing data is “a really encouraging figure, but it does not suppress concerns over China because we have seen a broad-based decline in most indicators,” said Desmond Chua, a strategist at CMC Markets in Singapore. “We’re seeing this knee-jerk rebound in the Aussie dollar. That shouldn’t be surprising, given that there was a lot of priced-in expectations for the manufacturing PMI to come in much weaker.”

‘Slow Grind’
The Markit iTraxx Asia index increased 2 basis points to 95 basis points as of 8:40am in Singapore, according to RBS prices. The measure is poised to advance for a second consecutive day and its highest close in a week.

“Credit seems to be on a slow grind downward,” said Tse Chern Chia, head of Asia fixed income at UOB Asset Management in Singapore. “This is periodic weakness that we see. People are worried about interest rates rising and global growth slowing. But the China PMI was satisfactory and things will get better again after this correction.”

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Todays pivot is 6793 so I expect initial resistance there, especially if the bounce off this 6770 area continues. I closed my 6770 long yesterday just after the bell but if still running (it just missed the stop level) then it might be worth holding, or hopping back on. Above the pivot, then the next resistance (if the bulls can break 6800) is 6832 and 6850. 6885 is flagged above that but i doubt it will get that high today. Mentioning anyway! Support wise, the bottom of the Bianca’s are 6756, with 6700 and 6637 lower down. Doubt it will get the lower one but again, mentioning anyway!

I have put a dip down from the 6793/6800 area to the bottom of the Bianca channels with todays arrows, however, whilst there is resistance there it might not dip that low. Looking at the S&P it could quite easily push back up to 2007 today. The reason I think it might not dip that low is that the 30min EMAs are gearing up for a cross to the bullish side, having been bearish all day yesterday.

186 Comments

  1. Nick

    Interesting to hear from you regarding the present Price – 6720.
    Much lower than your prediction.
    Would you consider this price as overdone and therefore a
    good oppurtunity to go onboard a long ?

  2. Hugh
    read in your post – yesterday morning – are you still holding any positions from yesterday?

  4. Hugh says:
    September 23, 2014 at 8:46 am

    RC- Just going back to the technical indicators…..
    One of the one’s I like is the Elderay indicator.
    (Sometimes this not available on some platforms)
    It can measure the distance from the average (200) and the current price.
    As I’m looking at a 5 min Chart the 200 period MA is 6771. FTSE 6722
    It produces a gap of about -50 (MA-Price).

    Two things may happen.
    The gap will close (FTSE go up)
    or
    The FTSE continue to fall and the 200 MA move down in value.

    Nothing is ever certain.

    I don’t like doing this …as it ruins the trading strategy and confuses it…
    I have put some Short orders in 6700 – 6705 – and will play these if these FTSE continues to move lower .
    Reply

  5. OK – So I have new Short positions (as well as Longs) – to protect my bank mainly.
    I will probably close these at 6881 – if it gets there –
    6881 is the 50% Fib level…
    Or use trend line to reverse

  6. Hugh
    I am in a similar position to you.
    Nursing a 100 pip loss from yesterday.
    @10/pip. Going through the alternatives.
    Your alternative to short at this level – Emotionally Sound
    Technically – Not sure.

  8. Hugh
    technically – a bounce to 6718 & 6743 is due? So not sure If I will
    Hedge my position – 6797 long from yest.
    Saying that – I acted like a Jerk. Saw a Short today but – was not
    ready on time.

  10. Not happy about it – but I am completely covered Shorts=Longs.
    I don’t like sitting with positions like this but that’s the way it is ..

    One good aspect to it though is that it forces a trade !

  11. Hugh
    Yes – sure does force a trade.
    Emotional control. Allowing technical skills to florish.
    Interesting saying – ” Its all about money Stupid ”
    A good trader friend of mine – has a saying ” Its all about numbers”
    This is my sasying ” Its all about time”
    So I think that sums up trading.

    1. Did anybody watch yest. BBC2 – show about us ?
      No doubt – Theres a queue forming outside the doors
      of the spreadbetting firms today.
      Any ideas how to see last weeks show? missed it.

  12. Went short first thing and closed for good profit. Now gone long @6705 will probably just try and sell in the rallies. 75-25

        1. Cheers Hugh, simply sticking to principles. If the market opens up/ok it will tend to dip. If it opens down will tend to rally. Got lucky with the news coming out though and clunking it. Still closed a little early but simply set next price and go again.

  13. Shorts will be gradually moving their Stops down and at some point SAR (Stop & Reverse)
    Sometimes – it’s just as well to go “flat” – let things settle down, maybe for even a day or two and then take another look.

    Just looking at the price gaps from the MA to price…5 min Chart
    3 this month >-60
    8 Sept
    11 Sept
    Today

    1. I don’t think there is any reasonable answer …
      If you’re Long – Just put a Stop ( or an opposing position ) in at 6690.

  16. Missed these couple of sessions, today getting back to trading. May need to watch a little bit first.
    As I expected it would go down without me so it did. However I still don’t forget the overall trend is long (daily) and it may bounce off EMA at any time.
    I hate when Intertrader shows different directions for FTSE and Dow, it warns me to be cautious. But generally now I will be watching and pour into short directions.
    So yes, Senu, I expect a bounce otherwise there’s nothing to feed on.
    And hopefully this temporarily short trend will continue.

  17. Went short on DAX this morning at 9742 and closed it for a 40 point profit. Missed the boat by failing to hold on to my short trades from Friday DAX 9886 and Dow 17337.

    No trades for me now.

    I am looking to short DAX if it gets to 9710-30 region and Dow 17180-90.

  19. So we got 6690….a bit quicker than I expected. What a fantastic short from 6900 that would have been over a couple of days!

    Have 5 and a bit trading sessions to go this month. Revised my expectation (not target) to 6600 – 6650 by the end of the month.

    Expect a small bounce across Wednesday and Thursday perhaps upto 6735 before further bear in the last few remaining sessions in the month to finish below 6700 and hopefully in the 6600 – 6650 range.

  20. Yes Javed, am with you. I am expecting ftse to hit 6600 region and bears would probably carry on into first week or two in Oct. DOW is still above 17000 and SnP in 1980-90 region, am expecting them to drop and that should drag ftse and dax further (6600). Surely Indices should drop further this afternoon when US opens. Lets see.

      1. Am good Javed, thanks. I am short from 6900 couple of weeks ago target 300 points. As of now am a happy bunny 🙂

  21. Hi Sue,

    When it’s like this id say go short (despite me being long). You’ll get a turn on sale as it goes down or sell again into the rallies and get a turn as it comes back down. Only problem would be if it kept going up. We don’t know what the markets are going to do though but it’s important that you know what to do. We have to play the odds.

        1. you’ve done so many brilliant profitable trades in the past 2 weeks i’ve seen, sometimes if you follow your strategy you get into losing trades, but if you in overall win, that’s what matters.
          yep, we are small traders, it’s better to reduce stress cos it’s our life.

    1. made that trade few times this morning, long at 9645 for quick out 5-10 points, repeated 3 times and now just did the same going long at 9633 and got out at 9646. adds up though and perfect (morning) day for it

      1. It’s not easy that’s for sure. Stops for me in a market like this don’t work. I have followed the SPX a lot over last few days pre open and it always seems to go down a lot in pre market for some reason. So that was on my mind. Now that we get to US open I might start playing the same game but shorting as I think the US will have taken notice of Europe and makes sense to take more chips of the table for investors that end. Maybe short DOW to buy back at 17000?

    1. yep, it’s long on Dow, but FTSE lagging but still MACD favorable.
      how long will it last, that’s a question.
      approx. answer – till 13.30-14.30 suppose.

          3. no, too busy talking. still, if it doesn’t break 17125 then it might rise to 17160-68 by 13.30-14.30 when i might try to short.

  25. UAU, what’s happening with FTSE ?… just log in. I have a long order at SPX, that placed overnight after the China data.

    Why these crash in the morning ? any news ? Do not see none important, only good news meaning bad news, out of China…but also real bad news out of Europe with those PMI’s…

  27. A mixture of things PMS. Poor data in Europe, Tescos still being sold off and escalation in the middle east with the US taking on ISIS and Israel shooting down a Syrian jet.

    Also just the general feeling that the US indices have had a decent run…..time to take some short term profits.

    Sentiment is always the key.

  28. No stops for me just go long again. Annoyed it didn’t quite hit my target though as could have made a quick turn into the rally. Could either take profit or use it to bring my bull from earlier down.
    Anyways hindsight is a wonderful thing. Especially in trading.

  29. Hmm.., as I recall Jim was saying a few days back he was trading using 8hr MACD to gauge the rise for the week/s…

    9600 on the cards for DAX

  30. After 9600, 9570 for the 200MA. Closed 80% of positions for a tidy sum. Might be worth shorting the DOW, just waiting till it opens…

    1. yes. looks like this. sometimes they have a little wobble twds 14.30 on the upside, say to 17150, but I am not sure this time. but it’s still another hour…

      1. another thing might happen at 14.30 – it may start going up if it’d been going down all the time before. and the drop, if any, would happen only at 15.00 or later. but it’s all speculations. let’s see.

  32. Oh, it doesn’t want to go up. oh dear, it looks like the only road is down. but Nick’s chart, m…. not sure what to think. some bounce should take place i suppose, but i am not sure at all.

        1. I just did in fact, overall long 6652 now. Bit nervous but I think the FTSE is a bit oversold even if we get further US weakness later. So might have to carry this long around for a while. Missed opportunity to go long DAX at 9600, that would have been the better one for today

    2. such contradictory opinions. some people say long and bounce, some people say it will break to 6600, 17000.

      1. that is why we have volatility Jack2…No positions for me yet. My only plan for today is to short the Dow if it gets to 17180-190

  36. I said to go short at 10.30. Too stubborn to listen to my own advice. Now long of 2 close to being 3… Gulp.

    1. I said I would sit this one out after having gotten out of a terrible long in the morning without pain. Look at me now. I have been trading all day DAX and FTSE..It is so tempting to ignore your own advice, drives me nuts.

  37. Am starting to build Longs for long term (year end) starting 6650. But expecting markets to drop further in the short term (this week and possibly next week).

      1. usually i build longs/shorts small stakes in 100 points range and hang on them for weeks – that works for me. 6650 is starting point.

  38. The Ftse has broken all supports for the day. So from a technical perspective – all parameters are normal tech analysis out of the window.
    The only one remaining tech – is the – “Oversold- Factor” and if the market is going to go higher – it is only for this reason.
    Targets – where this oversold – can take it to – possibly to 6698 – 6705

    The only external factor is the USA. Can they do it – Looking doubtful

      1. thank you Nick.
        When you went long, I thought, it contradicts my thoughts but the rise from 1.30-1.53 looked like it’s the rise for the reverse, when it retraced 62% and pushed up at 14.30 and I looked at my indicators and decided – have a go, even if I lose that will be it. And it went up.

  45. Sorry RC – Bit pushed for time …bit brief

    5 Min Chart
    Price breaking through the averages
    Supertrend Switched to positive..
    trend Line Break…

    So I’m taking the profits on the Short positions (Bank) .
    As each is increasing I am putting Stops in …just to cover any change in direction

    1. Ftse – Oversold – Reason – Move higher
      targets are generally Fib – 23.5%
      US fizzling out
      This move is highly probable – only a Retracement

      1. I will leave this trade open until EOD and see how it goes. I think there is still more downside looking at the Daily charts. If it goes higher I will add . Will watch for 17190 and 17240.

          5. I would suggest take some profit and leave the rest running at b/e. You might be in for a sweet surprise. worst case the trade would have closed b/e but still you have made some profit.

        2. oh and yes I did follow suit on DAX @ 9653 but took profit at 27 as I did not want to risk to shorts till after close in Europe

  56. Sue

    If you are unsure – Dont trade

    But from my angle – there is a shorting oppurtunity from where we are.
    I presume you are talking of the ftse

      1. Good one Dutch..On the Dax, I have had three trades. 2 Winners 100 points and one loser 10 point. Overall good for the day. I have now risked 20 points on the Dow trade.

  61. every time i click on pdf file to open or download it opens the page where it says – you need to be registered….

        1. now i see that was a good entry after all. I missed the fact it could have been a 61.8% pull back. the entry at 5.20 would be ok. at 4.47 I couldn’t say it for sure.
          17140 at 4.41 was an absolute a no-entry for me. if i was here at 5.20 I would say otherwise. the situations are changeable on the markets. the price would be the same 17140.

    1. he did couple of times, but i still not convinced about his service, he works mostly on ftse, so as Nick. and Nick does it cheaper, if you know what i mean. i still think of joining Nick at some point, it’s more realistic.

  65. Hi RC,
    I went short @6770 – closed @45.
    Long 6705. Should have just closed this straight away and gone short but got stubborn and stuck to principles.
    Long 6675. Now long of 2 @6690.
    Kept going down but grateful of the rally and then went short of 3 @6690 2 of them closed my 2 long for 0 profit… Could argue i should have left one open. But anyway i now wipe my brow and start again so currently short of 1 @6690.

      1. I should also feel that i dug myself out of a hole though. I’m not happy with my last trade. Emotional one trying to make a quick turn and get back what feels like lost profit… Asking for trouble.

      1. Thought the market opened high/ok this morning, expected a dip so went short @70. Price 85-45 (closed at 45).
        Thought sell into the rally so set price 05-55. Got down to 05 so bought. Maybe got greedy and wanted to make at least 20 points on that turn so new price 6675-6725. Bought @75 Alarm bells at hitting my bid twice so easily and also my own views that should cut and go short – But was stubborn, didn’t want to go long again so 6640-6790.
        My 2 longs averaged @6690 after staring at it going down all day was then happy to cut losses when it got back there (be great if all losses = £0!)
        I was cross so went short of 3 (2 to close) leaving me short of 1 @6690.
        Next price 6655-6705.

        1. Not best trading not sticking to prices – but at times got to go with gut. Now might close my angry trade for a small profit, some how end the day up and go again tomorrow.

          1. Your 90 short – is a good trade – from my tech analysis. But what puzzles me is why have you chosen 35 pips – as targets 6655 & 6705.
            The 6655 is going to get hit – So your next trade is 6620 & 6690 I presume ?

  66. Sue

    Good advise from your friend.

    Copy a good traders trades. but also only copy if you understand – otherwise it is as good as tossing the coin.

    Nick – ( forum CEO ) – explains his reasons. They may work or may not work. To be honest he has found it difficult over the past 2-3 weeks. But that is not the point. you know where he is coming from.

    Similarly – Hugh / Jim / Javeed & recently Mlawrence – have all explained their strategy. Once again it may work – or not. But you get the flavour. A learning game.

    I have been using a software. Good but irritating – as i dont know why it throws out the trades.

    1. My performance was P.Poor today (Note : Capital P !).
      I failed to follow through with my initial trade at 4747 (that was a reasonable entry – nothing wrong with it ) – I should have stopped/actioned a covering position much earlier than I did. It was a brisk, even sturdy market at the open!

      I can feel I have slipped a bit “mentally” over the last couple of weeks
      (My body fat has probably gone up or something like that !!) and
      working at the same time as trading is difficult sometimes !

      Getting your trading methodology pinned down is crucial.
      Mine (Should be) is something like:
      1. Pick a sensible entry point and Stop Point – See point 2
      2. Tight Covering position equal or twice the original entry.
      3. Run with it …see where it lands.
      4. Chances are, if you’ve had to take a covering position – that is the overall direction of the market – providing the original position was a reasonable entry point.
      As always never let a winning trade become a losing trade – so stops go in relatively quickly at resistance/support which hopefully is just above or below the entry point.

      For example – This morning I might have been a bit keen to pick 6747 – but had it written on my sheet of paper.
      I should have known trouble was up when it bounce off 6728 to 6737 and then closed lower at 6725. That should have been the level to put in a covering Short x 2 .

      Any comments welcome !

  67. Too many shorters on the DOW… For it to drop though still intent on that 17086 mark , not really any bullishness either.

  69. Closed my Dow short for 63 points..Done for the day !!

    Dutch, you could have held your short for a little long.

  70. RJ well done, very well done. We need to talk tactics tomorrow. Currently I have a small long going on DAX at 9580, let’s see…

  71. Got decent pips on the DOW =].
    Dutch like you I am currently long on the DAX after it touched the 200dma might see some relief before further drops.
    Keeping that long till tomorrow’s DOW open as I feel it still needs to drop.

  73. Given that close……more bear to come tomorrow. Another 1% at least…..so 6600 to be tested tomorrow it seems.

    1. Javed, most likely ftse might breach 6600 tonight. Accordingly to your model where will ftse be by end of this month/bloodbath! To me, any further drops in ftse would be driven by US markets (Expecting SNP 1940/1920 and DOW 16500/16350).

  74. Well the ultimate stress prediction was 6535ish. I think that is now a distinct possibility although another sharp fall tomorrow may result in some kind of bounce on Friday.

  76. Think we are very much in sell the rallies mode at the moment. Any bounce that does come is a good oppprtunity to short. However looking to the medium term……anything around 6600 – 6650 will be a great opportunity for a long. Expecting to finish the year near 7000.

      1. I am only saying that this is the software generated target.
        Possibility that I will keep it as close to 6618 as possible

  83. Went back to the drawing board because my previous system failed to pick up yesterday morning’s 7:30 SELL — disaster! Trialling new system which is backtesting well.

      1. Jim
        “Went back to the drawing board because my previous system failed”

        I think every oscillator system probably failed yesterday !
        Have a look at the MACD in the morning – that was positive in the morning yet the market just descended lower.

        It would be good to develop a PRT BackTest/ Auto system on Support and Resistance which I think can be done – just needs a bit of programming .

  88. RC – Good entry.
    Line Resistance 6677 (Close above Stops/Long)
    Initial Tgt 6648 (Yesterday’s Low)
    Other turning points.
    6644 (10th July)
    6622.50 (1 Aug)
    6598 (6 Aug)
    6526 (8 Aug)

    Last night I actually printed off some charts !
    For me, printing off charts really helps when studying these but I seldom do it as it seems a chore & a bit of a waste – but it is certainly worthwhile.
    I use Saxo to print off charts – very easy.

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