6860 initial resistance; then 6881 and 6903

Good morning, well that was a full on bull day in the end yesterday. We got the dip and rise, though unfortunately the initial long order for 39 took and then got stopped before the FTSE spent the rest of the day rising. In the chat room we retook the long as it started to bounce back which was good. The later short took and managed a few points before the bulls grabbed control and never looked back. It has remained bullish overnight and with 6836 trying to get broken, 6860 looks like the next area of interest. I had a drop pencilled in for January/February after the Christmas rally to maybe as low as 6200. It looks like that fall took place but stopped at 6400 (still quite a sizeable dip from 6880) as maybe the power that be didn’t want too bad a start to the year. Anyway, its now climbing and it looks quite bullish for the moment (exactly the time to start thinking bearish), though the 10 day channels still seem to be the ones to watch – Bianca channel top at 6881 and the 10 day Raff at 6894 – good shorting areas here for a few days hold I think. I see a rate rise is being mooted for Spring 2015 as well.

Asia Overnight from Bloomberg

Asian stocks rose, with the regional benchmark index rebounding from its biggest drop in two weeks, after a larger-than-forecast climb in a measure of U.S. manufacturing tempered concern about global growth.

The MSCI Asia Pacific Index gained 1 percent to 137.05 as of 12:11 p.m. in Hong Kong, extending this week’s advance to 1.3 percent. The gauge sank 1.3 percent yesterday as a preliminary reading for a China purchasing managers’ index unexpectedly fell to a seven-month low. A U.S. manufacturing index jumped more than expected, a separate report showed yesterday.

“We are in the relatively optimistic camp on the U.S. economy,” David Cassidy, a Sydney-based strategist at UBS AG, said by phone. “Investors are positioned for an improving growth trend in the U.S. Earnings growth is getting better and that will be enough to lift the market further this year.”

Japan’s Topix index today rose 1.7 percent. Minutes from the Bank of Japan’s Jan. 22 policy meeting showed some board members said the central bank should provide a clearer explanation that an expected decline in second-quarter domestic growth was factored into its outlook.

S&P Futures

Futures on the S&P 500 advanced 0.3 percent today. The measure yesterday gained 0.6 percent after the manufacturing data and as Facebook Inc.’s $19 billion purchase of messaging service WhatsApp Inc. fueled optimism about deals.

U.S. Manufacturing

The Markit Economics preliminary index of U.S. manufacturing increased to 56.7 in February, surpassing economists’ estimates, while Labor Department figures indicated fewer applications for unemployment benefits last week. The Conference Board’s index of U.S. leading indicators, a gauge of the outlook for the next three to six months, rose in January in line with estimates.

Group of 20 finance ministers meet in Sydney this weekend, with U.S. stimulus cuts and political turmoil from Ukraine to Venezuela stoking concern over emerging-market volatility.

Investors have been dismissing lower-than-forecast U.S. economic data over the past two weeks, pointing to harsh winter weather as a reason for unexpected weakness in reports from housing to hiring. The Bloomberg ECO U.S. Surprise Index, which measures how much recent data has beaten or missed economists’ estimates, fell to minus 0.423 yesterday, the lowest since September 2011.

Yellen Comments

Federal Reserve Chair Janet Yellen last week said the economy has strengthened enough to withstand continued cuts to monetary stimulus, adding that only a notable change in the outlook for the economy would prompt the central bank to slow the pace of tapering.

FTSE 100 prediction
FTSE 100 prediction

FTSE Outlook

The FTSE is in bull mode still I feel, and is actually sitting within some fairly decent channels on the lower time frames (10 and 30 min). With the daily channel tops at 6881/6903 area we could be on for a dip from that area if seen later today. For the moment though, whilst its bullish I think that 30 minute channel will hold things up. initial resistance is 6860 where I am going to try a short though if that breaks then the next obvious area of resistance is those daily channels. I have put in for the rise to continue initially. The bottom of that 30 minute channel is around the 6800 area, though that is a pretty big drop, but could be likely as the daily pivot is a lot lower at 6786. Don’t think ti will hit that unless sentiment really changes today. There is option expiry today so there might be a little bit of choppiness at 10:15ish this morning (plus its Friday so usually weird anyway!). am also watching for some Dow support at 16080 today.

58 Comments

  1. Retail numbers in UK worst then expected, yet retail stock ,almost all of them UP!!….what am I missing??..lol…..

  2. holding a short at 6833 went a bit early hoping to get back to 6800 , sometime early next week
    think a dip back here before push back on and up to 6900+

    1. The dividend days are every Wednesday, sometimes there is non…depending on who your trading provider is they will apply them on Tuesday after 4.30pm

        1. If you hold long position on stock or the FTSE then you get the money credited to you but if you hold short then they will take it from you….then the stock or the FTSE gets adjusted down for the following day

    1. I think it will…. We had an option settlement day today and in my experience if the market dropped like today , it usually indicates the direction. I have to say I haven’t seen this kind of drop since probably 2012..

  13. added more long at 6815 today, and then added more at 6820 on the leg down.
    im expecting a break of 6850 (will be choppy) and of setting new all time high on ftse on this leg up

  15. Have gone for a long with but with a hedge .. feeling very uncomfortable playing long at these levels … keeps my BP normal

    1. About 35points down around 10 to 10.30…Over the last 16 months the option day was usually bullish. It dropped few points and then it was of to the races but today is different….In my view the economy is not doing so well as they all think. Funny how the poor data over the past two weeks was attributed to bad weather and yesterday when the manufacturing PMI in US come out and was better then expected no one even mention the weather!!..lol….The morons over the pond kind of pick as they go what the weather effect and what it doesn’t…..

    1. why you do not adopt a different strategy … trying to trade less, waiting for retraces to enter long ? Nick also invites to short, maybe that’s the problem here.

    2. I’m waiting to add to my existing long which started at 6725 a few days ago. Short term trend remains up so whilst it is getting “high” I am not going to trying disagreeing with what the market is doing, as its complete guesswork where this current cycle will top out. Was expecting a 20-30 point drop when options expiry happened which I hoped would give me a top up opportunity – so just at the point where I think it may be turning back up – but not quite there yet

  24. Tapering decision can only be good for stocks. Worst case they maintain the taper. Likelihood is they will ease off tapering and blame weather etc! Boom!

  25. Let’s hope that my long at 14 will make it to 55.

    Then I’m out until Monday. Have a great weekend everyone.

  26. What luck I’m having today my IG needed funds at 6226 but my card issure has system errors!! and now its up to 6838 fantastic 🙁

  30. S&P failed to get over 1850
    NAS failed to stay above 3685
    Dow Failed to crack 16200

    THIS IS GOING DOOOOOOOOOWWWWWWNNNNNNN!

  33. US still in negative territory for the year and 2nd month close to end.
    Expect at least (after crossing 16588) between 3% and 9% in DOW in next months. 16700-17600

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