Asia falls 6125 support 6165 6193 resistance

Good morning. Bit frustrating with the FTSE yesterday getting stopped out of the short to then watch it fall from the 6210 level. I mentioned 6210 and 6232 as the resistance levels in the follow up email – should have SMS’d a short at 6210 after all! isn’t hindsight wonderful! Anyway, the S&P short saved the day instead netting a decent amount of points with the run down (that kept going past the 2050 support area as well). That said, despite the FTSE falling yesterday its held up pretty well considering the bearishness around, and is still at 6150 as I write this. We have a 17 point divi today so should see some buyers come in before the bell around 4pm.

US & Asia Overnight from Bloomberg
Asian stocks fell for the first time in three days and the dollar strengthened against all of its major peers on prospects for a U.S. interest-rate hike. Japanese shares and the yen fluctuated as investors weighed whether better-than-expected economic growth reduces the need for stimulus.

All 10 industry groups retreated on the MSCI Asia Pacific Index, which lost ground on all but three days over the last three weeks. The yen traded near this month’s low. A gauge of the greenback’s strength climbed to the highest since March as South Africa’s rand and South Korea’s won dropped by at least 0.7 percent. Crude oil traded above $48 a barrel before data that’s forecast to show a drop in American stockpiles, while copper and gold fell for the first time in four days.

Global equities have struggled to extend gains since reaching this year’s high on April 20 as investors scrutinize U.S. data for clues on the timing of the Federal Reserve’s next interest-rate increase. Odds of a June hike tripled to 12 percent on Tuesday, Fed Funds futures show, as central bank officials commented on prospects for borrowing costs to be raised and U.S. data showed quickening inflation and a pickup in new-home construction. The authority will release the minutes of its April policy meeting on Wednesday.

“Fed officials have come out all sounding hawkish,” said Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “That tone is likely to continue.”

Japan’s economy grew an annualized 1.7 percent last quarter, beating estimates for 0.3 percent growth, and averting a recession. The figures support the Bank of Japan’s surprise decision at its last meeting to forgo additional monetary stimulus. The focus now shifts to whether Prime Minister Shinzo Abe will push ahead with a planned sales-tax increase. The nation’s shares were boosted on Monday by a Nikkei newspaper report over the weekend that the government was planning to delay the tax hike.

Euro-area inflation data are also due Wednesday, while companies reporting earnings include Cisco Systems Inc., SABMiller Plc and Tencent Holdings Ltd. Finance ministers and central bank governors from the Group of Seven countries will meet April 20-21 near Sendai, Japan, to discuss currency tensions, the limits of monetary policy, and the need for more fiscal spending.

Stocks
The MSCI Asia Pacific Index lost 0.8 percent as of 1:45 p.m. Tokyo time. Futures on the S&P 500 declined 0.1 percent, following a 0.9 percent decline in the U.S. benchmark on Tuesday, and contracts on the U.K.’s FTSE 100 Index were down 0.3 percent.

Benchmarks in Seoul and Shanghai sank to two-month lows, as did a gauge of Chinese shares listed in Hong Kong. Japan’s Topix index was little changed, after swinging from a 0.6 percent loss to a 1 percent gain.

The GDP report “makes it harder to delay the sales tax,” said Seiichiro Iwamoto, a senior fund manager at Mizuho Asset Management Co. in Tokyo. “The market’s core stance right now is that they should not raise it. We’ll be watching very closely what the government says next.”

Suzuki Motor Corp. plunged as much as 15 percent in Tokyo after saying it used an improper method to test the fuel efficiency of its vehicles.

Currencies
The Bloomberg Dollar Spot Index advanced 0.2 percent. Atlanta Fed President Dennis Lockhart and San Francisco’s John Williams said Tuesday two interest-rate rises may be warranted this year, while Dallas Fed President Robert Kaplan said a move could come soon. Australia’s dollar lost 0.6 percent, while the won dropped 0.7 percent and the rand slid 0.8 percent.

“The recent Fed comments and data point to a U.S. rate hike and this has strengthened the preference for safer assets,” said Suh Dae Il, an analyst at Daewoo Securities Co. in Seoul.

The yen was little changed at 109.15 per dollar, after sinking Tuesday to this month’s low of 109.65.

Commodities
West Texas Intermediate crude rose as much as 0.6 percent to $48.58 a barrel, extending gains at a seven-month high. Analysts foresee a 3.5 million-barrel drop in U.S. inventories for last week, which would cap the first two-week decrease since September, according to a Bloomberg survey before Energy Information Administration data due Wednesday.

Copper, nickel and zinc dropped by almost 1 percent in London. Gold declined 0.3 percent, while silver and platinum retreated 0.6 percent.

“If news of a Fed hike is in the FOMC minutes, this might be negative for gold,” said Brian Lan, managing director of Singapore-based GoldSilver Central Pte. “Gold does not pay interest or provide dividends, and in a higher interest-rate environment, the cost of holding precious metals would be higher.”

Bonds
U.S. Treasuries due in a decade were little changed, yielding 1.77 percent. That compares with a one-month low of 1.70 percent at the end of last week. Similar-maturity debt in Singapore declined by the most in three weeks, lifting the yield by four basis points to 2 percent.
Jan Hatzius, the chief economist at Goldman Sachs Group Inc., warned bond investors aren’t prepared for the Fed to raise interest rates despite officials having flagged the possibility of such a move.

“The market’s underestimating their willingness to follow through on what they say,” Hatzius said Tuesday in an interview on Bloomberg Television. “If you look at where the yield curve is priced — how little normalization of monetary policy is discounted — that’s very striking.” [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

For today the main thing is the 17 point divi which is quite a decent size so will more than likely see the divi hunters appear around 4pm to move the price higher towards the close. Worth going long for this. To start with we have resistance at the 6165 area where we have the daily pivot and also a red coral on the 30min. The 2 hour chart has also turned bearish after that fall yesterday, with resistance at the 6145 level, though it does have green coral support at 6133 – mixed picture on this. The bears will probably try and build on their assault from 6210 yesterday, though they will try to break 6125 to target 6060 again. The bulls however, will be trying to make 6145 hold as support as we have the 30min 200ema here. Battle stations! The 25ema on the daily, whilst breached yesterday is showing 6185 as resistance – that spike up to 6210 yesterday was a bit suspicious and just looked like a bit of a stop hunt really, as the resistance was 6190. So, for today I’m thinking small rise dip then rise towards the bell, probably from the bottom of the 10 day Bianca at 6125.

95 Comments

  1. Morning.
    Good call on the 25 support Nick, pivot is also yesterday’s close-ish, so a gap to fill.
    Doesn’t look in the mood yet, so dip, rise, dip, rise, just the numbers are a bit uncertain 😉
    DAX will pull us through this 50ish resistance if it can get a roll on, but beware 850 breaking short term.

    1. 850 held with a reasonably bullish 10pt reversal, needs to get to the 900’s, hold and build for our pivot to be attainable this morning.
      Rsi in good form today so far.

      1. Talking of rsi, while the 1 min 10 has a 60 lid especially on the DAX, mildly bearish outlook, sideways to lower.

    1. Good point you made last night aces, about the trap the Yanks have made for themselves. Good figures= more likely rate rise= bearish, bad figures= bad economy= bearish.

      1. Tmfp all down too giving free money away as created a monster i was looking at figures that some of these big funds were playing with in 2007 8 billion on average same funds playing 100 billion plus now. if we were in trouble in 2007 because of credit then we are really deep in it now. next melt down is going to be a whole lot worse than 2008.

        1. in saying that they will do a little spin doctoring too pump the bubble bigger, see a article yesterday on the net telling private investor to get in now before the Dow takes out the high’s of last year. So still not enough suckers in yet, too pop

          1. Have a look for coco bonds on inter web…..quite interesting and relevant to your comment Smokin….good luck matey…

        2. It’s a familiar argument mate, and one I don’t disagree with.
          However, you can bet that TPTB will fight tooth and nail to protect the system that put them there.
          The difficult bit is the timing regarding equity price moves.

          1. Thanks Anstel will have a look later need to go and earn a few pennies today… and its P!$$ing down :-(. Yes timing is the main thing Tmfp and your right they will protect the system, to much outside interested but at some point even with all that the bubble burst, I think its not that time yet,and Wall street just spitting there dummy out because there MAY in June be a interest rise.

  3. I see IG’s take is an hourly close above 57 bullish, below 29 bearish.

    DAX just nudging that rsi 60 level very short term, within 5 pts of morning high, we are nearly 20 off ours, may have something to do with bullish talk about STG/Euro.
    And fails to break and hold. Could get boring now, but downside looking favourite.

    1. All that bounce erased, 25 looks possible hold again this time, but the size of the bounce will be important.
      Half out of short, running rest for third time break.

        1. Took a handful, DAX finally made it through 60 rsi, combined with good bounce here, now neutral, although 45 still resistance..

  4. I see the US oil inventories figures that spiked us up temporarily last time are out at 15.30. -3million expected.
    Worth bearing in mind, especially with the big divi.

  6. Hi all,
    Please can someone explain the logic behind the reversal from 6215 yesterday.
    Just curious whether I am missing any indicators at that point. Thanks in advance.

    1. Hi Senu, I can explain – What happened was that I got very long at around 180, didn’t sell them at 215 and watched them all the way down to 40 ish!
      The chart-meisters will be along but I think we are back in the range, 100-ish to 200-ish and 215 was a tail.

      1. I’m still trying to understand last week’s spike to 97 and all the way back down.
        We’re trapped in a low volume range of 6100-6180 with the occasional failure to break out.
        The ballsy way to trade it would be 2:1 R/R, 20 pt scale up shorting from 180 and same longing down from 100, with a 50 av stop and a 100 limit, hoping you get enough in the bank to still come out in front when it finally breaks out.

        1. Morning All,
          “explain the logic behind the reversal from 6215 yesterday”
          I was looking at a Trio on the 15 Min.
          The more I follow the Trio the more I’m kind of finding them like “markers” .
          To explain – the retracement to 6130 closes Trio’s that were flagged a few days ago – that got left behind as the price ran to 6210.

  7. Morning guys !! Order got hit by Nicks support .. added @ 42 b/e @ 30 limit 60.. have a profitable day everybody @ 🙂

  9. Morning all, thought I’d posted this but internet seems a bit on the wonk. After yesterdays trials and tribulations I angry longed at 40 last night, sold them this morning at break even, shorted at 42, covered at 40, longed at 35, sold at 40, longed at 40 and not looking anymore. Not sure what I’m doing so need to go and find a mirror and have a long hard look at myself! Cheers

      1. Chippy may I suggest something……just make a decision on the underlying trend and place your position and hold it..otherwise you will chase your tail in all the noise and your broker will send you a xmas card for all the commission he made out of the spread…just the way I see it matey……

        1. Revenge madness – if I can get it out of mysystem without costing too much then happy days.
          Xmas card from my broker – anstel, mate, you’ve got it all wrong……as pointed out above it is wealth distribution – maybe I should change my name to Robin Hood?!!!

        1. It was an hour ago 😉
          Third try at 25 ish support , germans still happy above 50…
          Dow’s got to pull something out of the bag really, these sort of high 400 numbers are the equivalent of us being around 6070, looking at last ditch lateral support with a big hole underneath. Bottom of their 4 hour channel is now 380ish.

          7 point bounce underway, all is not lost.

          2. No one wants to sell our stuff with an impending divi? Perhaps looking to get smashed after it has gone ex? As you know I look at the diff a fair bit and it is as tight as a ……..(insert what you like!) at 11340 odd. Watch and wait for me but like you said earlier, I’ll be looking to pick up some around 100.

          3. Divi’s effect is overrated for me this early.
            The main impetus on the upside comes from shorts not wanting to pay it, as much as longs wanting it.
            If the market’s weak and looking weaker (like it arguably is now) then the last minute scramble can intensify.
            If you’re showing +50 on a short you don’t mind paying 20 later to get out, but why buy early for 17 pts when it might cost you more overall?

          4. Having said all that, the DOW’s not been in a mood to open much more than 50 away from its close recently and then try for unch, so another visit to the teens in the next half hour I’ll cover my dusty short and maybe look for a long.

    1. 1-0 to the bulls, bit early to call low of the day though.
      IG DOW binary close up looks a cheap flutter/short hedge at 33.

  12. Oh it is alive then….dividends now that’s a nice thought……17 nice big juicy points….

  13. Thanks Hugh. that was helpful. couldn’t see that trio in your chart (written in your language), IG shows it. So you will need to check this trio happening in all 3min, 5min and 15min ….charts?

  14. Looking like a short around here 60 for me, DOW’s unch, but the divi muddying the water a bit.

  16. Stuff the divi, like anstel said, take the money, so various piddly longs I’ve collected all out at 60. If it does fall back below 50 before the close I’ll buy some back.

    1. Let’s up the anti chippy……let’s have the divi as well…..costs nothing to dream….

  18. For today the main thing is the 17 point divi,
    based on past experience, is that 17 point being done on the first
    5 mins after 16.00?

    1. Depends on your platform mate, IG adjust at 16.30 on the cash close, other later around 21.00 I think.

        1. But the week before was a disaster for the divi hunters if I remember correctly.
          It’s an opportunity, no more, depends on other factors too.

  19. I think it’s a bluff job ….everyone’s that relieved to get out on the rise….no I think it will go up further….

  20. That’s enough for the mo I think, although those oil figures are supposed to be out now? Not that they won’t be interpreted any way that fits.
    Bluff job? Yeah I think so too, short at 63 and 60., not looking for much.

      1. and 50 on the rest.
        That divi’s priced in for me now, no expensive long tyvm, might pick up a bit low 40’s max in next ten minutes, otherwise, you’re welcome.

          1. LOL, a couple of weeks ago there was a big-ish divi and it was exactly the same place, looked at 60, dropped back to 50 ran hard for the div in MHH and covered the div and more after, hope history repeats!

          2. I think that once we get this 15 minutes out of our system, if ftse bounces by more than half the divi straight after the bell it’ll be worth a short on the basis that the DOW may have lost momentum. 50% retrace at 520 held ok though.

    1. Yes it’s the Dividend payout from all the company’s in the Ftse that have gone ex dividend at that point in time….it’s every weds now on Ftse for our purposes….

        1. Only by holding real shares.
          On index trading its a zero sum game. The price goes down at 16.30 (IG) by the amount of dividend. You lose money on an open long but get it credited back and vice versa.

          2. You hold a long or buy around 16.00 and sell before 16.30 in the hope that the market will rise because of what are called “divi hunters” who bid the stocks involved up to collect the dividend.
            If you have an overall position at the close, on balance nothing happens financially.

          3. so really its about the rise that you target?
            and close before 4.30.
            am I getting this correct?
            thanks

          4. That’s the theory, doesn’t always work.
            Today for example, the last 5 minutes put on 14 pts.
            If you have an overall position long or short you can ignore it, because what you lose/gain on the price adjustment is credited/debited to your account by your platform.

      2. So tonight for example you will receive 17 x the number of contracts you have in the market if you are long…it will be added to your account balance…….if you are short you will be charged the dividend ……so 17 x the number of contracts and it will be deducted from you account balance…

    1. Nice chippy…..very very nice….I didn’t actually see 6100 but that’s great I reckon.

      1. Like tmfp says it’s talking my book but I wouldn’t be long if I thought otherwise…

  29. Hello guys, thought I’d find you here. Are you planning on staring at that screen 24/7 until it goes up anstel?

    1. Hiya tmfp just watching on phone …..too nice to be inside… Got a little iPad to carry about so I’m not tied down if I need to check out stuff with charts etc…..it’s great…..the beach beckons……

    2. Just back from a nice bit of animal with some carbohydrates. Put a tight stop on at 20, got hit, lovely 15 points, just replaced at 16., stop at 05, limit at 40 again. I like 40.

  31. Yes, these light evenings are nice, a bit cold and overcast here though.
    I see the DOW managed to close over 500 in the end, still trapped in the channel.
    Good luck with 40 chippy.

    See you in a few hours.

  32. Morning chaps….just woke up……ummn not looking too brilliant…just dumped two Ftse longs for -48pts and -61pts to reduce exposure…..sold at the 6 pt spread too but hey ho…….too much risk…..sometimes to win the game you have to get out of it for a while…..can always get back in but I’m feeling uncomfortable….GL all.

    1. Typical it’s just gone up two points……I will have to come back and get those points back maybe next week…..should have listened to tmfp when he mentioned evaporation…..

      1. Just checked… The divi has more than covered the loss in money terms which helps …..in fact I could dump another one out of the divi to reduce risk further……made a bit of a B@lls of it so far……ummn the first cut is the cheapest……or is it …..?anyway I’ll shut up now.

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