6778, 6773, 6748 Support, 6822, 6841, 6854 Resistance

Good morning. I hope you had a good long weekend (if in the UK!). Well wasn’t it all very bullish yesterday, with the S&P virtually reaching that 2003 level that I have mooted in the past. Some selling pressure there though as after breaking 2000 for the first time it has dropped back. I have support at 1995 today, with 1989 below that, which tallies with a dip and rise for the FTSE today, to 6780ish. The news just seemed to be the usual carry on over the long weekend, wars etc. though Germany saw a fourth consecutive drop in business confidence yesterday. So, despite the bullishness there is an undercurrent of worry in the Eurozone, maybe even raising the prospect of QE.

“The eurozone has moved closer to adopting further radical measures to ward off a second recession and a spiral of deflation after its two biggest economies fell deeper into trouble on Monday.

The dual shock of a French government reshuffle and weaker-than-expected German figures threatened to add to the malaise in the eurozone, where unemployment remains stubbornly high, and growth is at a standstill.” From here

So, don’t get too caught up in the bull just yet!

Asia Overnight from Bloomberg
Asia’s benchmark stock index swung between gains and losses after valuations on the regional gauge climbed to the highest level this year. Energy shares rose, while utilities declined.

The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 148.51 as of 11:49 a.m in Hong Kong. The gauge traded within a narrow range of gains and losses of 0.1 percent. Two weeks of increases pushed the price-earnings ratio on the measure to 13.7 yesterday, the highest since December, as concern eased about conflicts in Iraq, Israel and Ukraine. The Standard & Poor’s 500 Index climbed 0.5 percent yesterday to a record, touching the 2,000 level for the first time.

“Gravity tends to pull on the markets after they’ve had a strong directional move,” Ric Spooner, Sydney-based chief market analyst at CMC Markets, said in a phone interview. “The market needs good news to sustain it and in the absence of this, tends to drift down. Valuations are fairly full.”

Regional Gauges
Japan’s Topix index fell 0.4 percent and Hong Kong’s Hang Seng Index declined 0.1 percent. The Hang Seng China Enterprises Index of mainland stocks traded in the city added 0.2 percent. The Shanghai Composite Index lost 0.4 percent and Singapore’s Straits Times Index was little changed.

South Korea’s Kospi index rose 0.5 percent, with Hyundai Motor gaining 1.1 percent to 227,500 won. Australia’s S&P/ASX 200 Index fell 0.1 percent as Boart Longyear tumbled 14 percent to 16.75 Australian cents. New Zealand’s NZX 50 Index added 0.3 percent and Taiwan’s Taiex Index rose 0.1 percent. Futures on the S&P 500 slipped less than 0.1 percent.

Data yesterday showed the pace of new-home sales in the U.S. fell to the slowest in four months in July. Housing has advanced in fits and starts this year, buffeted by tight credit and slow wage growth. Federal Reserve Chair Janet Yellen signaled last week that while slack remains in the U.S. labor market, interest rates could be raised sooner than expected.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

The morning after the long weekend when the UK has been off and the rest of the world hasn’t is always a little tricker, generally as the FTSE digests the action. The S&P has dipped off since breaking through 2000, and interestingly that CMC analyst in the Bloomberg news bit above is intimating a dip in the absence of good news to maintain that run. I tend to agree, and expect a dip on the FTSE from the 6822 resistance area to the support at 6780, where we have a rising PRT channel line on the 30min, and also the bottom of the 10 day Bianca channel at 6773. Todays pivot is 6769 as well, so 3 supports around that area.

If the bulls manage to break 6822 today then the next resistance is 6841 where we have the top of the 10 day Bianca, then 6854. Bigger picture resistance is 6898.

If the 6770/80 level breaks then the bears will get onto a bit of a charge and next supports are 6748 and 6714.

35 Comments

  3. Morning Chaps – Do you have a link for the div info – never seem to be able to find this. Thanks in advance

  5. Hi Nick…I know you are a daytrader, but have you the same perspective for FTSE as Javed has ?
    Is FTSE going to collapse again, before reaching 6900 ?

    1. Watching 2007 on S&P as next key level. If it dips from there then FTSE should dip Sept/Oct then climb towards the end of the year?

  6. Good call today Nick,
    Likewise should see some dip before buying for the Christmas rally. Trying to be patient this year though as we are into record breaking territory with S&P and DOW.,,

  7. Quite incredible: the Germans are suffering, we had some very dismal Italian GDP figures, the French Govn dissolved, change the sentiment of last week and those three events could have caused a 300+ point drop at these levels. Mention the word stimulus in combination with it and hey presto.

    Fast forward and put everyone on holiday and the market rallies and ignores the wealth of bad news. My take is the rise has been on very low volume and expect the Dow/sp500 to start to sneeze soon which will see the ftse back down to 6600 levels.

    Everyone seems to be buying at the moment which as nick says is the time to be wary.

    Bobby (Ps – new here, great blog nick!)

    PPS – gold ominously up + s&p over 2002 levels = ?

  8. One of my friends linked to a broker has advised that the number os short stops around the. 2007 – 14 could if hit could move this market by 50 _ 100 points. Just a thought

  11. Ahwab, agree pointless in fighting the trend today. However Dow has been up 8 of last 10 sessions. Ftse barely moved (and I reckon the ftse is the correct barometer here). The huge run will stumble soon imo. Maybe when s&p hits 2007.

    Sorry for off topic indice chatter.

  12. Yes 2007 – 14 then where. The lucky guys positioned correctly could make a killing. My only thoughts ___ heads up tails down. Should i toss the coin? very tempted.

    1. lol SPX already made that 50-100 points in last 2 weeks. Ypu think you wanna see so soon, another move up or down. I don’t think so.

  13. Rental c – id imagine lots burnt by strength of fight back here, just to think after those massive dax falls a few weeks ago the financial press were hailing the new bear market. No doubt caught many by surprise, brave call to short moment but as you say, could be very profitable.

  14. pms
    Well i am sure that it is possible. A short squeeze oten moves the market by as much or more than the previous 10 days .
    So to bet against that hsppening is probably ridky

  15. Prpbably the ony way to play this is to have a nuy ordet at 2007 & a sell ordet at 2000. i wonder. Probably riskba small bet on that

  18. I will be looking to close my long in August at the end of the week. So far it has been good to me. 90 points….more than I made in the entire period from March to July. But I hate trading in August! Too little volume – too many geo political influences.

    Scores on the doors so far this year. 5 trades – 4 winning (1 unrealised) 1 losing (18 points). Total pnl before costs (dividends, funding etc) is 611.

  19. Btw latest prediction for the year end close is 7075 compared to the 7002 made on 1st Jan 14.

  20. And I agree with Bobby looking for a dip down to around 6600 – 6650 in Sept. 6500 is probably just too far.

  21. I predicted at the beginning of the year that the FTSE would close on 31 Dec at 7002. I have now revised that to 7075 based on the 8 months so far.

  23. Me too but i have a stop sell order on system at 2000 & a buy at 2007. I reckon its the first ordet that will get triggered. We will know anyway by what ftse is hoing to do at these levels.

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