Support 6070 6064 6036 6024 6000
Resistance 6135 6190 6195 6202 6249
Good morning I hope you had a good weekend. That was quite a sell off on the FTSE 100 on Friday, down over 2% as Brexit fears weighed on traders minds going into the weekend, Latest results were showing the leave camp gaining on remain which spooked the markets. Probably a good week to take off this one as we head towards the vote, but on the other hand the increased volatility should help the number of points on offer. Bear in mind that most platforms have increased their margin requirements this week to cover this increased volatility. Optimism has given way to fear in global financial markets since the middle of last week as polls indicated the U.K.’s June 23 referendum on EU membership is too close to call. Economists predict an exit vote will send the pound to the lowest level in more than three decades, while a victory for the ‘Remain’ camp would drive the currency toward the highest this year. Also keeping investors on edge are monetary policy reviews being held in the U.S. and Japan this week.
US & Asia Overnight from Bloomberg
- Bearish bets on sterling are highest in almost three years
- Ten-year yields sink to records in Japan, New Zealand, Taiwan
Asian stocks tumbled by the most in two months and the pound sank to an eight-week low amid growing anxiety the U.K. will vote to leave the European Union. The Japanese yen rose and sovereign debt rallied as investors piled into haven assets.
The MSCI Asia Pacific Index retreated as emerging-market currencies weakened across most of the region. The pound slid for a fourth day after a poll showing a 10 percentage-point lead for Britain to exit the EU sent it tumbling late on Friday. The yen rose toward its strongest level since 2014 as 10-year bond yields dropped to records in Japan, New Zealand and Taiwan. Oil retreated after a report showed an increase in U.S. drilling rigs, while the price of bitcoins surged to a two-year high.
Optimism has given way to fear in global financial markets since the middle of last week as polls indicated the U.K.’s June 23 referendum on EU membership is too close to call. Economists predict an exit vote will send the pound to the lowest level in more than three decades, while a victory for the ‘Remain’ camp would drive the currency toward the highest this year. Also keeping investors on edge are monetary policy reviews being held in the U.S. and Japan this week.
“Everyone’s scared,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. “There are too many events coming up for investors to take a plunge.”
While the Federal Reserve is seen leaving interest rates unchanged on Wednesday, its post-meeting statement will be scrutinized for signals regarding the timing of the next hike in borrowing costs. Most economists expect the Bank of Japan to expand record monetary stimulus in July rather than on June 16, a Bloomberg survey shows.
Chinese data released Monday added to evidence that the world’s second-largest economy is stabilizing. Industrial production rose 6 percent from a year earlier in May, matching economists’ estimates, and retail sales climbed 10 percent. Financial markets are shut for holidays in Australia and Russia.
Stocks
The MSCI Asia Pacific Index sank 1.9 percent as of 1:38 a.m. Tokyo time. Benchmark stock gauges in Hong Kong and South Korea tumbled by the most since February, while Japan’s Topix index slipped 3.1 percent to a two-month low.
“The market hates uncertainty,” said Yoshinori Ogawa, a markets strategist at Okasan Securities Co. in Tokyo. “Most market participants think that the U.K. will probably remain, but we’re seeing some poll results that show those who’ll vote to leave outnumber the ‘Remain’ camp.”
Futures on the S&P 500 declined 0.4 percent, following a 0.9 percent slump in the U.S. benchmark last session, its steepest drop since May 17. Contracts on the U.K.’s FTSE 100 Index lost 0.7 percent.
Currencies
The pound dropped as much as 0.7 percent to $1.4159. It slumped 1.4 percent on Friday after an Orb/Independent newspaper poll showed 55 percent support for the “Leave” campaign, and 45 percent for “Remain.” Surveys at the weekend were less stark, with an online poll by Opinium for the Observer newspaper showing 44 percent support for Britain staying in the EU and 42 percent against. Hedge funds and other large speculators are betting on sterling futures weakness by the most since June 2013, a report from the Commodity Futures Trading Commission showed.
The yen strengthened versus all 16 major peers. The BOJ should expand monetary stimulus as soon as this week by boosting bond purchases rather than pushing interest rates further into negative territory, Nobuyuki Nakahara, an influential adviser to Prime Minister Shinzo Abe, said in an interview on Friday.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was steady after rising 1.1 percent over the previous two sessions. Odds of an increase in U.S. key rates don’t exceed 50 percent before December, according to Fed funds futures tracked by Bloomberg. There is zero chance of a move this week, the data show.
The currencies of Malaysia, South Korea and Taiwan all weakened 0.6 percent, leading declines in Asia. The yuan weakened 0.4 percent from Wednesday’s close in Shanghai as trading resumed after a holiday.
Bitcoins jumped as much as 18 percent from Friday’s closing level to $683.89 in Hong Kong, the highest since February 2014, according to data compiled by Bloomberg. Profits from mining bitcoins will be reduced in July, a process that’s written into the code to limit supply, according to Chinese exchanges OKCoin and Huobi.
Bonds
U.S. Treasuries due in a decade advanced for a fifth day, pushing their yield down by two basis points to 1.62 percent, set for the lowest close since December 2012. Average yields for the tenor in the U.S., Japan, Germany and the U.K., which have issued more than $25 trillion in government debt, fell to 0.69 percent last week, data compiled by Bank of New York Mellon Corp. showed. That’s the lowest on record and well below the 5 percent average over the course of 145 years.Japan’s 10-year yield dropped as low as minus 0.165 percent on Monday, while New Zealand’s reached 2.5 percent for the first time and Taiwan’s fell to an unprecedented 0.76 percent.
The cost of protecting Asian issuers’ debt against default increased by the most in three weeks. The Markit iTraxx Asia index climbed three basis points to 145, according to Westpac Banking Corp prices.
Commodities
Gold for immediate delivery rose as much as 0.3 percent to $1,278.50 an ounce, the highest since May 18. A Brexit vote on June 23 could propel prices to $1,400, analysts at Capital Economics Ltd. said in a report on Friday.
West Texas Intermediate crude fell 1.3 percent to $48.42 a barrel after Baker Hughes Inc. data out on Friday showed that rigs targeting crude in the U.S. rose by three to 328 last week, capping the longest run of weekly gains since August. [Bloomberg]
FTSE 100 Outlook and Prediction
The bulls have a chance today to force a rise towards the pivot at 6134 and possibly the bigger resistance on the 2 hour chart at 6195. Whether they will actually manage it or not remains to be seen, however, shorting the rallies still feels like the best play at the moment with the brexit uncertainty and the leave camp gaining ground. Not that I have ever really trusted polls and they got it massively wrong for the last general election. We also have the FOMC this week (Wednesday) with the latest rate decision (sticking as is most likely). So, We might see an bit of an initial bounce as we are at the bottom of the 10 day Raff at this 6070 area, but the next support below this is 6026 where we have a fib pivot and a 30min PRT line. The charts are all pretty bearish though so its brave longs at the moment thats for sure off support levels – cut and run if they don’t hold. As an aside, if the leave camp do win the referendum then we will probably be dipping towards 5500 again in a few weeks. Back to today, if the bulls do manage a climb towards the 6190 area this is decent looking resistance on the 2 hour chart and a good spot for a short entry. We also have the red coral on the 2 hour at 6249. The bulls will need to be quick out the blocks today for any rise, after that trending day on Friday. With all these trending days if the support level (or resistance level) breaks then expect another one so just flip positions. I.e go short on a break of 6036, and long on a break of 6135.
going to watch markets but not trading till after the vote, my eyes see short the market but my brain tells me that if i’m thinking that so is everyone else so long the market as I can not decide best too sit it out.
Thanks Nick.
I was about to go short at 6100, but held back ’cause of your analysis. Your 6195 short looks much better.
Morning guys.
Being rather oversold and opening on do not cross recent lows there wasnt much likelihood of too much downside first thing, but 100 is high enough for me at the mo.
Brexit’s the big story and it’s not going to go away, love or hate the pollsters this cognitive dissonance between the bookie odds and the Leave strength is going to make the FTSE plenty vulnerable to flash dips all week as new surveys are released.
The difference market between FTSE/DOW will be interesting, I’m thinking about longing it on rallies into the 100’s with a binary Stay In hedge, anyone any thoughts? Chippy?
Morning tmfp, well, I’ve got rid of my last lot (of difference) at 40 this morning. So small cut but it was looking fairly nasty at around the ‘800 mark, lucky to get away with it!
I see what you are saying with FTSE/Dow vs Brexit binary. I’ve just bought a little bit of binary at 67 but probably leave the difference trade for a bit!
I bought a bit of FTSE just under 70 before the open and let it go at 85. As mentioned before, I’m very small and waiting really unless something screams out at me.
Cheers
Good luck
Watched some of the Brexit debates on YouTube. The ones representing the remain campaign come across quite pathetic. They are not very convincing. Cameron, Clegg have been average while the women (e.g. Liz Kendall) have been awful. The leavers on the other hand have been much more influential in their arguments, partly I think it’s because they are much better orators. Boris and Nigel are both good while Dan Hannan has been far the best of the lot. He should have been the face of the leave campaign in my opinion. But I guess they wanted a familiar face. The women on both sides have been very weak.
Morning chaps…..well I made a complete mess of it on Thursday and Friday last week…..I really don’t know why I went long on Thursday morning because I had the idea the market would drop…..anyway I kept my longs over weekend…..breaking my rules which was bad disapline and I deserve the kicking ive had so no complaints…..I have been dumping my longs this morning and I’m thinking its best to sit on the sidelines till around the 23 June……I can see downside so rather than try and short it I’m going to wait and see if we actually get the chance to buy around the 5500 level…….just got two more longs to dump…..that’s cost me my two last profitable weeks but it’s more hard earned education…..very best of luck to all…..
Just dumped some at 100 but I’m going to run my three Dax long trades from Friday….
Live and learn young man 🙂
Yes I make some right old cock ups sometimes….:0)…. Maybe one day I’ll learn…..really didn’t expect all that downside on Thursday and Friday to be honest….still learning still trying…… Good luck matey….
Cameron, Corbyn are toeing the party line because they both come across as leavers on a personal level going by their body language.
We are definitely going to break below 5500 if leave wins, maybe even 5000 over the course of summer. Markets will overreact.
Anton, 5000 if we leave, arn’t you being rather conservative on this figure.
look at the knock on effects of leaving
1. War in the tory party and probably The Boris will became Mayor of the England
2. Negotiations with EU with Farage as Captain
3. Agitation and ” please miss can we have some of that” from some of EU countries
4. By that time The Donald will be President
5. Gun running will be legalised and Kim Jong-un will be the first “leader” to be invited to the white house to advise Donald “How to Run a Country”
6. Wall building will be the new Viagra
7. There will be a run on Passports to Antartica
“Brexit” is the only the catalyst mate, now Tune on the channel, “the Lost Generation”
I think you’re being too positive JSft 🙂
Nick
Ya i suppose.
Just wish these politicians would be more fair on the British Public and just did what they were elected to do.
Oh excuse “the Naive Me” ..just woke up from a coma.
have a look at…
http://www.independent.co.uk/news/uk/politics/eu-referendum-british-public-wrong-about-nearly-everything-survey-shows-a7074311.html
I think there will be slight short term pain for longer term gain. We will trade with Europe as pretty normal if we were to leave, but by leaving it will give us far greater leverage when it comes to trading with emerging economies. The EU is a highly bureaucratic, cumbersome body that has the aim of unifying all the European countries into one single entity, with Britain eventually becoming an federal state rather than a sovereign, nation state. Turkey will also join in the mid to longer term.
Anton
I share a border fence with my right hand, left hand and back neighbour. We share a natter, a cuppa, the screwdriver. Good trading practice, investment and brings peace and a good community.
Don’t know about you, but my naive me does not quite get the idea that I have to give up on my fence neighbours to make friends with my next road Mr & Mrs. & why would No67 want to move in with my neighbour and eventually me.
Finishing with the short @ 100 scalp phase of the morning I think, if the DAX can hold above 690 we may run up a little, maybe 120.
By the way, I think it might be wise to stay away from trading any GB assets from several days before the vote day. There could be huge random movements. I am not sure technical analysis will play much part. Once the results come in, quickly take appropriate position.
Re Brexit effects, we all have shades of Apocalypse views but I think the vote should have been restricted to people born since 1973.
This is their world now, my generation raped and pillaged the financial system for their own benefit and kicked the debt can as far down the road as they could. Letting us vote is like allowing a murderer to sit on his own jury.
😉
Discuss….
tou·ché
Among the under-35s, it is a landslide for staying in. Remain prevails over leave by 53% to 29%. The figures are almost exactly reversed among those aged 55 and over. They are 54% to 30% for quitting the EU. It is neck and neck among the middle-aged. That’s in line with surveys by other polling companies, which also suggest that attitudes to Europe are highly correlated with age. The fewer wrinkles you have, the much more likely it is that you want to remain in the EU; the thinner your hair, the much more likely you are to yearn for Brexit.
Scary Nick, is this all that takes to work out peoples age.
I am predicting an easy victory for leave, something in the region of 60-40%, or better. I think lot of people will get scared at the last minute. A remain vote will give legitimacy to an irreversible strengthening of integration. There’s already a plan for federal EU army, a federal budget, and so on. Brits generally don’t get along with their Euro counterparts. Man, can you imagine Japan giving up their rights to self-govern in favour of integration with China. The British have become so meek. What was the point of saving Europe from Germany twice only to then vote to be ruled by them now?
When I say they don’t get along, I mean in the context of examples that we see around us. In Spain, for example, the British generally don’t integrate. They create separate colonies there. UK football fans generally carry out violence on their Euro opposition in the name of the queen, and so on.
Brexit voting – Understand what you are saying as yep, we fully raped it from the mid ’80s. That said some of the old ‘uns voted us in in the first place and yet older ones fought to give us a vote. At the risk of “ducking responsibility” we voted Cameron in, we therefore pay him a few quid and give him a couple of houses to live in, he thinks he has done a good deal so he should do a deal. Simply, I’m not paid to make the decision, he is, so get on and make the decision!
Brexit and FTSE – Most FTSE constituents are global companies so I’d imagine any massive reaction to an out vote would be wrong. I actually think that more damage is being done to “UK output” whilst we wait for the the vote/result as no industrialist/chief exec etc is going to commit to any investment with an unknown hanging over him/her.
Finally – If Brexit happens and the doomsayers are right, negative interest rates etc etc, FTSE at 5000 suddenly becomes an income play not a capital play.
Here endeth the lesson – none of the above should be taking as advice…………!!
Its certainly going to be interesting thats for sure.
Well, gone through 690 and accelerated into oversold, DAX needs a quick retrace. I think it may so a little ftse long at 85.,
and a little more at 80 stop on all 72
Got the DAX bounce and we lethargically followed, 50% on DAX is 715 and 1/3 min rsis wil be a little hot then so looking to lose at least half soon, right up there with the stop to b/e 83 as well.
Poor action out for nowt, pressure on 80ish to hold or it’s back to test the lows this morning
Here’s to a bit of “conspiracy ” theory about the elections based on Nick’s poll
1. Why did Cameron choose June 23 ?
think about it, Euro 16, Glastonbury, start of summer hols.
sending all the Remain Under 35’s away from the polling booths
that leaves the roads clear for the over 55’s to make a bee-line to the Leave-X box
2. Does Cameron have an ulterior motive or is he just having a Mid-life crisis, or is there a secret feud between Osborne & Cameron and Cameroon is thinking “… anybody except Ossy..”
3. Farage being a beer-man, does he have a secret spot for Belgium beer, hoping he’ll be on the Exit-negotiations team parked in Brussels for the next 15 years?
4. Is Boris the Bleech just overcome by the fumes that he’s just afraid that his secret to his fumbling will be found out
5. Is Gove actually gathering material for his forthcoming Autobiography about his family and a Brexit would give him a good Chapter 11 material?
Is this really about you & me, nah!..
did man land on the moon, nah!..
Nick
Any chance of you posting your video analysis
Here you go https://youtu.be/jmp6CkfawWI
Thanks Nick
much appreciated
well not much happening, guess its up too the american markets now either a pump or further dump
I think that although general short term trading sentiment will still be related, US and Euro/UK indices could be pretty disconnected until the BREXIT factor is resolved.
I think we would follow them down, but not up, for this week. The point has been made that only about 22% of the FTSE components rely on the UK for revenue but, like it or not, the FTSE is prone to being used as a UK economic barometer.
You could probably even make the case for a Brexit weakened Europe being bullish for the US on a competitive basis.
Technically in the short term the DOW looks in good nick while it holds above 17700 and the S&P holds 2090ish.
There’s no doubt that Brexit opinion polls will be a larger factor than anything data based for the time being.
With the huge bets being made on cable, arbitrage trading across the pond will be a bit of a minefield.
In other news, Bitcoin continues to make me happy, up another 20% over the weekend and nudging $700. I’ve started taking small scale up profits on the hope that it’ll pull back to around $450, but the Chinese whales are playing hard atm and could run it to four figures.
I first recommended longing it here around $240 I think. A year ago. 🙂
I actually remember you saying going long on bitcoins.
When I used to read your comments about a year ago on bitcoins, I bought them via exchange at $300 and sold it for $380 🙂 so thank you for that! S
I have been reading alot about bitcoins recently and the recent rise in prices by Chinese and can’t wait for a dip to buy them around $400 or maybe $300 if I am lucky maybe around December time. Bitcoin is a new gold and I wouldn’t be surprised if it is around $10,000 mark within 2-3 years.
Looks like the traditional pre DOW shakeout is starting, difficult to know what to do, long around 50/5 with a 15 pt stop?
Hello tmfp, I have just went a small long at 60 S15 and will add at 55 as well and Stop at 6045
Hi Rick, yeah makes sense, GL.
Risk it for a biscuit 🙂
As you know I don’t like holding longs so just a very small punt @ 5/pt 🙂
On the other side, I can’t wait to short around 80/90 again with a triple digit pts.
joined you at 58
took 6 lol
I feel a short coming on in the 70’s
out at 70 and shorted 69 S8
out for couple, will wait for 80s or 90s for a good R/R
Would be surprised if we get there soon tbh, short at 75, more at 80 stop 85ish haven’t made up my mind exactly
I was going to ask you the same thing about 75, it’s holding nicely now so short at 75 S10
out at 60
took 15
lol
short 67 S5
lol stop copying me
took 8
Interesting reading this week from MFR
http://practicaltechnicalanalysis.blogspot.co.uk/
Tc,dr: S&P will probably bounce from here, but lower break expected over next week or so, possible equivalent of 5900 FTSE.
The more I look at the overall situation, I would be astounded if we hold the 6000’s for very long.
Buy puts? They’ve got a bit dear…..
http://www.cnbc.com/2016/06/13/microsoft-to-buy-linkedin.html
If that DOW cracks, you won’t see the ftse for dust
Grrrr, real life calls, see you shortly. Stop to b/e limit 45
I am all square now, will wait for a decent long entry 30s may be lol, Would love to buy some at 6000 as well?
Was trying to type, “cheeky long at 56” but already out at 64!
Brexit trade nearly recovered the spread.
By the way, tmfp, did you buy any difference?
Shorted 74
out at 68
Afternoon all,if anyone is still around.
Right ho, another go, long at 33.
Yep, hmmm, not what I planned, saw it down to 22, up to 31, cut it at 30.
Just got back, strange action since our close, almost as if we were keeping the DOW up. It has been a regular thing recently though, if it opens down it comes back to around unchanged before deciding what to do next.
No chippy, I haven’t done any difference stuff yet, waiting for a FTSE rally, quite what will drag us back over 6100 I’m not too sure. I’ll also trade it 3:1 stake, can’t get my head around straight diff. Also trying to work out the Brexit hedge bet.
Hello WSF, so what are you doing, apart from stockpiling Scotch eggs?
Hi Tmfp,I went long at 17809 turned my back on it and missed that trip to 35,so still long 🙁
out at 21.3,because that seems to be where everyone else is exiting.
Between about 840 and 789 I dont have an opinion and with a spread of 1.6 and nothing due before tomorrow that’s me done for the day.not much of a response on the Linkedin/Microsoft deal,seems a bit familiar.have a good evening everyone.
I should of kept my shorts from last night still looks like its got further too go 🙁
Bulls have given up to much selling pressure atm ftse possible 5800 and Dax 9400 this week.
Sea of red again on the Index’s, guess it must be all those central banks pulling there money from the markets, good to create fear before a major vote.
It does look like a trip down to your 5800 looks conceivable Smokin…..
Hey that’s my Omen 5800 if you don’t mind anstel 🙂
Just hanging on in there atm isn’t it, but feels a bit brittle. Two stabs at 6000, the more it resists the bigger the bang if it goes, whatever strength there is is coming from the DAX.
Still waiting for my 5999.5 buy to execute, (only short covering I hasten to add) but today could be the Day for another leg down.
Anybody know how to find out when op polls come out? That’s the only thing that matters this week.
Got it, first trade in 5000’s!
Yes you told us about the number plate……I remember….I’m playin with some small shorts…got a little short from 6117 at the moment…..good luck Matey.
Oh that’s good, I thought you stayed long over the weekend.
Good job dumping those longs anyway.
Technically, I suppose the DAX should bounce off the 400’s really, but v difficult with a slo mo Black Swan flapping about.
GL.
Morning anstel yes I 5800 could be the tip, the way european markets are nose diving maybe 5600… German bonds 0.004% money is piling into them. If this continues up to the vote then Dax will be under 9000 imo.