Good morning. Ok, so that wasn’t in the plan. Both of my longs got stopped out yesterday, as the FTSE decided to follow the US and throw its toys out the pram. I must admit I wasn’t expecting it to be that bearish yesterday. As I have said though once the headlines starts with the new record highs it often means that the topping out process has begun. I don’t think 6895 will be it (typically just missing the short order from yesterday which was sat at 6905), but it will depend on what happens today. Support has been set at 6821 now, yesterdays low basically, so if the bulls can hold that and break 6860 then it should push up again. I have a hunch that this 2 day dip on the US markets is just an initial pull back from those highs but there is a bit more “gas in the tank” to push a little bit higher. The daily trends are still up – in fact it was the Raff channels that supported the FTSE at 6820 yesterday.
We have US housing news out at 13:30 but apart from that not too much other news today, so we might not get one of those unpredictable Fridays that you often see. Economic Calendar here.
The big question of course is “was that the top then?”. I think we will find out over the next 2 trading sessions. If these daily channels hold then I think No and we push up to 6900, if 6821 breaks today then Yes, it looks that way. There is certainly a bit of nervousness creeping in at the mo, and I and many others wouldn’t be rushing in massively long at these lofty heights. But that said, will still go long off supports just in case!
Asia Overnight from Bloomberg
Asian stocks fell, dragging the regional index from a four-month high, as bonds from Australia to Singapore followed Treasuries higher amid concern the global recovery is stalling. India’s shares jumped the most in five years and the rupee strengthened on election results.
The MSCI Asia Pacific Index lost 0.9 percent as of 1:16 p.m. in Tokyo, dropping for the first time in four days. The S&P BSE Sensex (SENSEX)Index rose as much as 4.9 percent in Mumbai as early counts showed Narendra Modi’s main opposition bloc will take power. Standard & Poor’s 500 Index futures were little changed, following the gauge’s biggest loss in a month. Yields on 10-year Australian notes fell five basis points with 30-year Treasury rates near an 11-month low. The yen rose and oil gained.
China reported the biggest jump in bad loans since 2005 yesterday, fueling concern over the global outlook as the U.S. announced an unexpected drop in industrial output and Europe’s economic growth missed estimates. Modi’s Bharatiya Janata Party and its allies took an early lead in India’s vote count, having vowed to revive growth in Asia’s third-largest economy.
“There’s a bit of nervousness on the part of investors even as the market has been in an uptrend,” saidDonald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd. that oversees about A$1.3 billion ($1.2 billion). China “is no longer a benefit to the market. We just see China as neutral.”
US Industrial Production
U.S. industrial production shrank 0.6 percent last month, after economists polled by Bloomberg predicted zero growth. The gauge rose 0.9 percent in March. The euro area’s gross domestic product grew 0.2 percent, compared with 0.4 percent estimated in a Bloomberg survey. Nonperforming loans in China rose by 54 billion yuan ($8.7 billion) in the first quarter, to 646.1 billion yuan, the highest level since September 2008, the China Banking Regulatory Commission said yesterday.
Bonds Rally
Australian government bonds due in a decade yielded 3.71 percent, with yields declining a third day. Yields on similar-maturity Singaporean bonds fell five basis points, or 0.05 percentage point, to 2.20 percent. Japan’s yield slipped to 0.585 percent from 0.59 percent.
Yields on 30-year Treasuries were little changed at 3.33 percent, after sliding five basis points in New York to the lowest level since June 14. The S&P 500 dropped 0.9 percent, the biggest decline since April 11.
“Ongoing low inflation and full stock valuations have some investors seeing relative value in bonds compared to equities at present,” Ric Spooner, chief market analyst at CMC Markets in Sydney, wrote in an e-mail. “The post global financial crisis economic recovery will be a long, slow haul characterized by ongoing sub-trend growth in the major economies.”
Credit Risk
A measure of credit risk in Asia jumped the most in six weeks. The Markit iTraxx Asia index of credit-default swaps increased four basis points to 121.5, set for the biggest gain since April 3, ANZ prices showed.
FTSE Outlook
So close to the short order but no cigar and then the longs got stopped out. That was certainly a fear driven sell off, not helped by the US industrial figs missing estimates to put the cat amongst the pigeons. The supports levels, which were actually looking pretty strong based on the morning analysis, didn’t even get much of a look in. Which was annoying but thats the way it goes. The key level today is yesterday low at 6821 – which is also the bottom of the 2 Raff channels and the Bianca 10 day at 6832. Looking at the Bianca Channels I would expect us to have a little bounce today, but ideally I want the 30 minute EMAs to cross to bull (they are bearish as I write this).
Todays pivot is 6852 and roughly where the coral is so that will be initial resistance. There is a 30 minute channel in play, the bottom of which is at 6828, which I think it worthy of a long, with a stop just below yesterday low. If that holds then we ‘should’ get a run to 6860 and 6880. I still have 6905 as the top of the 10 day resistance and if the S&P/Dow continue their bounces off the lows then we could see 1900+ again on the S&P early next week. The key will be to overcome the bit of fear thats in the market at the moment. I am still looking to go short at the 6905 though, as its the top of the 10 day Bianca, though the 10 day Raff is slightly higher around 6930.
I wouldn’t be surprised if it was bullish today……
Morning all.
Bit choppy yesterday. Lost a few points on the sudden drop off. But gained them back this morning on the double bounce.
my charts seem to show – sell any rally.
my 4 hr & daily channels are 6870 & 6865
my rsi of the 2 hr & 1 hr is also at 6865 & 6860
TR factor at 6860
support at 6790 & 6800 based on pivots & ext.
major channel support along with ext Rsi & stoc
is around 6788
though the bullish nature may not be over
the market has to go down for the next few ( 3-4)
sessions. based on this and other standalone
TL & eliiot analisis – suggested play on these markets
incl dow & dax is sell any move higher and hold for 3-4 days
Currently this year the FTSE is up 1.33% whilst the Dow is down .8%.As mentioned in Dec I do believe this will continue this year.
Javed where have u been ? R u still sticking with ur 6800 short ??
Hi Scotty,
I can’t post all that often these days and also try not to either, as I trade longer term.
Yes I’m short from 6780 and will be sticking to it till the end of July.
Hope you are well and trading is good.
GLA
Javed I have really benifitted from ur Longet term trends and wud be hapy if u share ur views … here more often … if u think otherwise .. please be in touch via email : scott4883@gmail.com
Many Thx
Scott
I’m also short from 6780!
What’s your target?
Javed/Havies — “Outperforming” — Just semantics really. I should think of the FTSE outperforming other indices if and only if it managed to establish itself on a superior positive growth path with some prospect of maintaining that performance in the medium term. I don’t see lesser short-term decline, for example, as genuine outperformance. But that’s just my personal idiosyncrasy. 🙂
Long @ 6825
stopped 🙁
Hi belly, marco, how r u doing ?
Scotty
Thanks, I’m flattered. I Will email you later this weekend.
Take care.
Anyone here, why this drop?
Jim
Good point. My view was that the US markets would be affected by the tapering of QE whilst the UK would finally have the good economic data as result of its traditional lag to the US. Given this I suggested the FTSE would ‘outperform’ the Dow. Doesn’t mean of course that it will go up while the Dow slumos……we aren’t decoupled and never will be. It’s just a suggestion for a relatively low risk strategy for this year and so far would have earned 2%. I expect it to remain…with the spread getting as big as 5% at times.
Yes Javed, given the growth disparities over the past few years, and the different scales of QE remedies, corrections across the Atlantic could well be a lot sharper than those we experience here. Good luck with the shorts!
One other thing to bear in mind obviously is that we have an appreciation in GBP USD by approximately 1.5% this year which further enhances gains if you are Long FTSE Short DOW.
Im still in buy mode..
Got order at 6810 .. big one.
I think this will lift after US open
Said yesterday dax was ripe for a pull back have just reduced my by 50% that a sweet 120 points leave the other 50% too run
Almost went 50:50 – I’ve cut mine by a third.. ave 9710
Hoping for a dump this pm
Thanks Jim
You too mate.
It looks very gloomy on Dow, will it be any long today, sitting in losing position atm. gutted.
Data has come good. Favourable to long . Let us c
ye, that was it for a long
hope so, Senu.
IMO we will see the direction post the sentiment report..
Dow — Looks like support around 16400 – could be interesting. Might risk aversion be dissipating already? 🙂
so us open imminent
good price levels to sell indeed
most probable play is for a slight up move – 3-4 s&p 30-40 dow
at the max. then a gradual move to break the lows of yest on us markets
and ftse dax will follow to break morning lows
quite predictable trade play
Sound like crap for my long.
lols.. falling. Nowadays good news has become bad
non lol for me. Cheep stocks and they’re not buying, what’s the matter with these people. It’s cheaper than yesterday. (laughing)
Managed to get out relatively unscathed yesterday and today but a missed opportunity as I had to drop some of my £pp at the high. Waiting for 6900 plus before getting back short
Jack, have u booked ur long?
No, It haven’t reached b/e yet and I didn’t actually witness the rise, I only discovered it after the close. But my loss dramatically reduced. If it holds I will close with less loss on Monday. I am prepared to take some loss here as I took the wrong trade.
that 1872 in spx is key level.
4-hr views of the FTSE, Dow, S&P 500 and DAX suggest that recovery from the latest slides is likely under way. Not everyone will agree, but, if this turns out to be the case, then current up-channels will remain intact. For once the FTSE appears to be leading the pack, having already reached centre channel. So generally I’m expecting a fairly bullish week with the DAX and Americans doing a bit of catching up to return to centre-channel values.
Dow: http://i1348.photobucket.com/albums/p736/jmca01/WallStreetDFB_zpsb5bd30ae.png
morning guys that drop through pivot on open suggested further weakness, so I am short from 6831
Long @ 6821 (risky)
Hi Marco, I am thinking for a positonal short around 35-40 area, any views? Thanks
Senu
I see this bouncing shortly then short once dow opens and heading down to 6718 look at 4hr. Will it bounce up to 6835/40 not sure
Thanks Marco, Good I came out in my long in few pts..