6835 daily support. False rally on Friday most likely and down from 6865, 6885

Good morning, hope you had a good weekend. Friday wasn’t so bad in the end prediction rise, we got the dip from 6852 though it went a bit lower than the 6821 (and typically hit the stop on that alert I SMS’d, before climbing as expected – and nearly reached my upper target at 6880! Thus making Friday bullish as expected! The bears haven’t got it all their own way just yet……. But the week is young! We have some very definite resistance at 6885, and the S&P at 1882, so I am thinking shorts at those levels could be good.

Most of the financial news over the weekend was about the fast rising house prices and what the BoE might do to calm it – though they did say the other day that there wasn’t a bubble! Ha ha! I still think interest rates will have their first rise in Q4, though maybe Q3 isn’t out of the question.

Asia Overnight from Bloomberg
Asian stocks fell, led by Chinese shares after weaker home-price data added to concern that the economy’s slowdown will deepen. The ringgit strengthened after Malaysia’s economy grew faster than economists estimated while wheat fell and nickel led gains in industrial metals.

The MSCI Asia Pacific Index lost 0.3 percent by 1:26 p.m. in Tokyo, with a measure of Chinese companies inHong Kong slumping as much as 1.4 percent and Shanghai shares retreating. Standard & Poor’s 500 Index futures were little changed. The ringgit climbed 0.5 percent after data on May 16 showed the economy expanded at the fastest pace in five quarters. Wheat headed for its longest losing streak since 1998, while corn dropped 0.9 percent. Nickel rose 2.1 percent and copper touched its highest price since March.

China’s home prices rose in the fewest cities in 1 1/2 years in April, according to data issued yesterday, while the central bank ordered banks to curb interbank lending as it seeks reduce so-called shadow banking. The government is evacuating citizens from Vietnam after violent protests and damage to factories there, China’s official Xinhua News Agency said yesterday. Clashes continued in Ukraine’s east between government forces and pro-Russian rebels who have declared an independent state.

“Overall, people can see a number of negatives out there, which is sufficient enough to keep them cautious about the investment outlook,” said Angus Gluskie, a fund manager at White Funds Management in Sydney that oversees more than $550 million. “We might be in for a soft couple of months in the meantime.”

Rebel Killed
Ukrainian government forces continued their offensive in the former Soviet republic’s east, killing one rebel and losing a police station before the presidential election scheduled for May 25. Separatists prepared for a vote in the fall after declaring independence, saying they want to join Russia. The insurgents hold buildings as well as radio and television towers in about 15 Ukrainian cities.

U.S. Stocks
West Texas Intermediate crude oil was little changed at $102.05 a barrel today, after gaining 2 percent last week. Brent crude futures added 0.1 percent to $109.88 a barrel. Escalating tensions in Ukraine and signs of improvement in the U.S. economy stoked WTI’s second straight advance last week.

In the U.S. May 16, the S&P 500 rose 0.4 percent to all but erase its weekly decline. The Russell 2000 Index (RTY) of smaller companies added 0.6 percent, trimming its second straight weekly drop to 0.4 percent as data showing growth in housing starts overshadowed a drop in consumer confidence.

The pace of U.S. home construction jumped in April to its highest level since November, Commerce Department figures showed May 16. Consumer confidence in the world’s No. 1 economy fell in May from a nine-month high, signaling Americans are being shaken by rising grocery bills and elevated fuel costs.

Ten-year Treasury yields were little changed at 2.52 percent today, after halting a three-day drop May 16, rising three basis points, or 0.03 percentage point. Treasuries retreated May 16 amid speculation their rally went too far given the economic recovery.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

There was certainly a bit of strength on Friday once it had hit the lows at 6812, the bounce finishing around 6870. The 10 day Bianca channel still has the top at 6909, and support at 6835, so am looking at these levels as wider resistance and support. For today in the short term, closer support is 6845, whilst movement above 6867 is showing 6885. Shorts at these levels could come good today, as the S&P failed to break the 1880 on Friday and has now dropped back a bit as well. The Dax wasn’t quite as bullish on Friday as these other two, only climbing form 9570 to 9620.

I have 3 main trades today, mainly with a short bias as you can see below. There is support at 6845 so a little long there is also worth a go – a break of that support will see a move lower this week. the bears tried to break the bottom of the daly channels last week, I think they will try again this week. I was watching for 1910+ for the S&P for the rise prior to that bearishness at the end of last week – its now looking like that might be optimistic, and its topped out at 1902.

The good thing about 6845 is that it is the bottom of the 30minute channel that is rising, hence the long at that area.

I have put bullish arrows with dips off the resistances – I am in 2 minds as to whether it will push on to the upper target so have put short trades at the 2 main resistances instead.

52 Comments

  1. Hi guys I was away at the end of the week on a stag do so thought best not to trade while under the influence. How was it for you guys. Had an early short this morning that nicked me a nice profit. Just gone short again but can see a bounce coming so I may lose what I banked. Whats you game plans Marco? And Senu?

    1. Belly
      Short this ,morning from 6831 will close in a minute and go for the bounce. Then I can see this dropping later when dow opens

  7. Any bad news from the weekend ? I do not see any.
    SO as long as things are the same, any dips are for buy

  8. We need really bad news, like a war in Russia or something even worse to take this markets down.
    Every nice sell is for buying.
    Also as long as POMO is working, it’s even more difficult to sell.
    I think October is when markets may reverse, as POMO will end

    1. ALso I take my hat to the people who have balls to sell this markets.
      I do not recall the last time I sell, except for exiting from a profit in the long side 😀

  12. I’m not sure how you can say it needs such dramatic bad news to cause a sell off. The market has effectively done diddly squat in May – up about 40 or 50 points and bounces around these levels several times. Could argue that it is consolidating nicely for the next rise up but I wouldn’t rule out a dip to the 6750 levels and it wouldn’t take too much to do it.

  13. That’s only my view.
    Also, if Europe starts to copy what US as done so far, concerning eurobonds, then we may see even more upside…

  14. Senu. Google POMO and you will find easily the May calendar.
    Today and tomorrow as I recall is POMO day

      1. yes, thursday when the yankees woke up with feets upside down, they were upset for no free money that day 😀

  15. I don’t disagree that sentiment is generally neutral to positive, but its the view that it would take war for there to be a sell off from here. Such dramatic news would result in 5 to 10% pullback. We could have a gentle 2 to 3% dip into the summer on little more than time to book some profits and take off risk.

  16. Does anybody know where to find what is the next dividend on FTSE and Wall street, and when it is? I’ve been searching searching and all in vain.

  19. Senu
    I too went long at 6830 looking for a run up to 6880, had a cheeky short over lunch from 6841 closed at 6833.

  22. Im in Long at the mo went in at 29. Hoping to see the bull run up to a nice short later.

    1. Oh, I don’t think I need it anymore cos half an hour I settle my long with loss of 55 points including charges. It’s better than going back to -140. Close at 16487.5, my b/e was 16536.5
      Maybe I closed a bit too early, but it was like taking chances. This morning it started crashing and was back to my -100 position which was annoying to witness for 2 days now. Glad it’s over. Silly me.

  27. I’m not bothered. I just won 10. It comes and goes. My mistake was to take trade against my strategy and hold. I always should pay price for it otherwise I don’t get it. Good thing is that my account is big enough and I can gain it back hopefully with good trades. When you take any trade you agree to lose, I just didn’t agree with it when it came to it and moved my s/l. The lesson should have been learned not to open s/l. But in reality: it’s very hard. So I try to train myself to have a loss and do not care about it. If I closed then at my initial s/l which was just odd 10 points (tbh that wasn’t a great trade set up – there wasn’t any support to place my s/l, just possibly some resistance level or previous peak or something) then I would have lost only 10 points and didn’t have to pay charges and witness the loss of 140 points at some point on Thursday.
    I was moving s/l every 10 points down down down until I realized that basically I should remove that f s/l as Oops I’ve done it again…

  32. Stopped out so frustrated I never let things run over night and on the odd occasion I do it kills me should have taken profit I had.
    Also not being able to break pivot yesterday should have told me something about today

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