Asia weak 6145 6184 6204 resistance – short the rallies!

Support 6135 6133 6117 6104 6013
Resistance 6145 6147 6184 6195 6204 6205 6296
Good morning. We didn’t quite dip as low as 6120 yesterday but did get a bounce off the 100 Hull MA on the 2 hour chart at 6133 instead, however, there was a real battle with bulls versus bears yesterday and we stayed in quite a narrow range for most of the day. There was a bit of divi hunting buying for the 7 point divi between 16:10 and the closing bell. It was a mixed close in Europe after a bounce in oil prices following a surprise drop in US crude inventories limited losses on the region’s indices. The top of the Bianca channels are 6184 and 6204 for today so there is still a case for shorting the rallies, maybe we wont manage much past 6200 this week.

US & Asia Overnight from Bloomberg
Asian equities fell toward a one-month low after a raft of disappointing company earnings in Japan and the U.S. curbed demand for riskier assets. Australia’s dollar and China’s yuan weakened, while crude oil traded near $46 a barrel.

Consumer-discretionary shares led losses on the MSCI Asia Pacific Index. Toyota Motor Corp. and Bridgestone Corp. were the two biggest drivers of losses on Japan’s Topix index after profit announcements. Australia’s dollar slipped toward a two-month low and China’s yuan weakened for the third time in four days. Crude slipped from a a six-month high, having surged on Wednesday as data showed an unexpected drop in American stockpiles. Copper rose in London, while gold retreated after its biggest gain this month.

With pessimism over the global economic outlook and concern over central banks’ firepower already keeping investors on tenterhooks, the corporate earnings season has provided little in the way of support for equity markets, which lost more than $1 trillion in value last week. U.S. consumer stocks tumbled Wednesday as results from Macy’s Inc. and Walt Disney Co. missed estimates, while Japanese profits have in the main proved disappointing so far.

“There’s just enough out there to keep investors cautious,” said Tim Schroeders, a portfolio manager in Melbourne at Pengana Capital Ltd., which oversees about $1.2 billion in assets. “We’ve got earnings disappointments and currency volatility so people are sitting back and waiting.”

The euro area and India are scheduled to release industrial output data on Thursday, while U.S. weekly jobless claims figures are also due. The Bank of England is seen leaving interest rates unchanged at a monetary policy review, as is Norway’s central bank. European Central Bank Vice President Vitor Constancio will speak in Madrid, and the heads of Federal Reserve Banks for Boston, Kansas City and Cleveland are due to give presentations that may include comments on the U.S. rate outlook. Credit Agricole SA, Nissan Motor Co. and Petroleo Brasileiro SA are among companies reporting earnings.

Stocks
The MSCI Asia Pacific Index lost 0.3 percent as of 1:26 p.m. Tokyo time. Benchmarks in Shanghai and Hong Kong sank to two-month lows and the Topix dropped 0.3 percent. More than 60 percent of Topix members to have reported so far this earnings season announced profits that trailed analysts’ estimates, according to data compiled by Bloomberg.

“Given earnings, we don’t feel comfortable buying Japanese shares,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “Toyota’s results have again confirmed the effect the yen has on corporate earnings.”

Toyota fell as much as 4.5 percent after Japan’s biggest company forecast a 35 percent drop in net income for this fiscal year. Bridgestone sank more than 5 percent after posting a 21 percent slide in first-quarter earnings. CK Hutchison Holdings Ltd. slid to a three-month low in Hong Kong after European Union regulators vetoed the company’s plan to buy U.K. carrier O2 for as much as 10.25 billion pounds ($15 billion).

Futures on the S&P 500 advanced 0.2 percent after the benchmark slid 1 percent on Wednesday. Contracts on the U.K.’s FTSE 100 Index fell 0.3 percent. A Japanese exchange-traded fund tracking Brazilian shares was down 0.7 percent, following a 4.6 percent surge on Wednesday, as the South American country’s Senate votes on whether to force President Dilma Rousseff out of office and into an impeachment trial.

Currencies
Australia’s dollar fell 0.5 percent versus the greenback, leading declines among major currencies. Traders are betting on another interest-rate cut in the next six months after the Reserve Bank of Australia’s unexpected move on May 3. The Aussie’s losses will be limited by investor appetite for higher-yielding AAA-rated assets, keeping the exchange rate in a range, said Takuya Kanda, a senior researcher at Gaitame.com Research Institute Ltd.

The yen weakened 0.2 percent as Bank of Japan Governor Haruhiko Kuroda said risks to the world economy are large and monetary policy can be eased further if needed. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.1 percent after falling 0.4 percent in the last session.

The yuan weakened 0.17 percent in Shanghai, narrowing its premium to the offshore exchange rate after the spread widened on Wednesday to 0.6 percent, the most since February. The divergence prompted speculation this week that the People’s Bank of China would intervene.

“The PBOC will not want to see a very wide onshore-offshore gap, because that will lead to market concerns and capital outflows,” said Gao Qi, a strategist at Scotiabank in Hong Kong. “So if the gap continues to widen, the PBOC will likely take some action to narrow the difference.”

Commodities
West Texas Intermediate crude fell 0.3 percent to $46.10 a barrel after jumping 3.5 percent last session to the highest settlement since Nov. 4. U.S. output declined to 8.8 million barrels a day last week, the lowest level since September 2014, while stockpiles fell 3.41 million barrels, a report showed Wednesday. Analysts surveyed by Bloomberg had projected a 750,000-barrel increase in supplies.

Copper for three-month delivery on the London Metal Exchange gained 0.5 percent, while aluminum added 0.4 percent. Codelco, the world’s biggest copper producer, seesprices rising toward the end of next year as investment cuts hasten a re-balancing of global supply and demand. The LMEX Metals Index, which tracks the six main metals traded on the LME, gained 0.9 percent on Wednesday, rebounding from a one-month low.

Gold fell 0.3 percent, reflecting gains in the dollar. It has surged 20 percent this year as the Fed refrained from raising interest rates and the European Central Bank and Japan stepped up monetary stimulus. A World Gold Council report showed Thursday that global demand in the first quarter was the second-highest on record.

“Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies,” Billionaire hedge fund manager Paul Singer wrote in an April 28 letter to clients.

Bonds
Japan’s 30-year government bonds fell after demand weakened at an auction of the debt. The yield on the securities increased to 0.325 percent from 0.3 percent.

The U.S. also plans to sell debt of that maturity on Thursday, after the notes handed investors a return of more than 10 percent this year. The long bonds yield 2.58 percent — more than any other benchmark maturity in the U.S., the U.K., Germany or Japan — and the securities are rallying as traders push back bets for when the Fed will raise interest rates. Treasuries due in a decade yielded 1.73 percent, little changed from Wednesday. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Midday today sees the release of the BoE bank rate figure and the asset purchase target, both expected to remain unchanged at 0.5% and 375bn. We also have inflation report released then, so we may well get some chop around this time. Initially today, and while I am writing this email there is resistance at 6145 where we have the daily pivot and 200ema on the 30min. The 2 hour chart has also gone bearish since that drop from 6180 yesterday afternoon, and is also showing resistance at 6145. The bulls will be keen to break this level initially, but then we have the top of the 2 Bianca daily channels at 6184 and 6204 – so swing shorts around this area are with a go, especially as the 10 day Raff intersecting them at 6195. The coral line has also gone red on the daily now since the drop from 6430, showing a downtrend in place on that time frame. Reading some analysts reports yesterday a few are still expecting a 10% correction in stocks over the next few months, so shorting the rallies would be a good move for the moment. With any luck we will pop higher this morning to trigger those decent shorting areas.

90 Comments

  1. Hello chaps.
    Not a sort of told you so guy but…told you so. 🙂
    Classic play out for the bears, silly strong pre market ideal shorting area and the test of 6100 duly completed.
    Very important for me not to get rabid short side, we are still in the recent range but I expect resistance to kick in lower than Nick, around here 6130 (I have started a scale up short again) and all that faffing about in the mid 6100’s to provide considerable work for the bulls to break.
    I would be very surprised if we don’t see 6100 and lower again before the end of the week, it’s all up to the bulls on the DAX, DOW and FTSE to hold these important levels.
    Put up or shut up time.

    1. I think the main selling pressure has abated (mainly stop loss) for the time being so out for +15 on half.
      Not chasing it to short atm, but unless you have deep pockets I’d wait for a while before thinking long, despite the reasonably good hold earlier.

      Decided to spend some ill gotten gains on a complete new computer system running on Linux, waited over an hour this morning for poxy Windows update to finish. Anyone know anything abut this stuff?

      1. Computers tmfp……you should know that a book and a pencil is the way forward! As you said to anstel yesterday, something about old dogs and tricks!

        1. Haha, I still keep a point and figure on graph paper as a nod to the Good Old Days (looks more bullish than candles for some reason).
          No, it’s crazy, my collection of scrap laptops aren’t up to the job with the numbers involved. Wasn’t helped by the sig other deciding to go for some cheapo ISP to save a tenner a month. We have a local company that is promising eye watering speed with some sort of non telephone line service, they’re coming to see me next week. Not quite as good as being in the same server rack as IG, but every little helps.

          Added a bit more to short at 45, DAX getting near 10k lol, good bounce PPS, I’m just waiting for you to go to lunch.

  2. Mid 6090’s good support area – coinciding with mid 2050’s on the S&P futures.
    Crossing the Highs set yesterday would be no problem unless some disappointment on the economic news.
    Bought 6095, 6100, 6110. Reckon will be good for a good 50+ rally

  3. Morning all, covered my short from last night at 15 on the open for +25. I’m not as rabid as tmfp but I think we’ve got more downside to go so short again at 29. Good luck all, we might get some fun today!

  4. Morning all,6130 was yesterdays cash low i’ve got 47 as a key area and 77 as something interesting fwiw,pivot is 55.Carney chat at 12.45,a couple of FOmC rappers after the U.K close.
    I was thinking about the key debate on here yesterday re timing and conventional wisdom and I think that,depending on your R/R and Stop loss position in the out of hours session,this whole Yard arm business offers a false sense of control,Special Brew and Cornflakes is probably ok for a Mean Reversion trader.Hope everyone has a good day.
    https://www.youtube.com/watch?v=si1YtwggkrQ

  5. Morning! Had a good seminar, hope you guys had fun & good earning yesterday .. got to meet some people behind the screen .. Someone suggested to go long 6090 so I had order placed@ 95 yesterday and just woke up to 50 pips up … yeee… GL for today

    1. Yeah, got to be done, I obviously didn’t have this as part of the game plan lol, but total position is only one unit for me, compared to 5X first thing, so as happy as I can be 15 underwater.
      If that DAX grind doesn’t have all the hallmarks of Plunge Protection, I don’t know what does. People don’t realise how hard it is to be a bear, not only have you got to avoid getting rabid, you’re always vulnerable to TPTB cranking up the steamroller. 🙂

          2. Well, the Aversion Therapy obviously worked well. Did it involve Great Danes and sugar lumps?

          3. I have very good reason to be aware of the dangers of shorts tmfp…….especially when you are in big size…..i admire your skill in recognising when they are in play….

  7. tmfp
    the 6150’s is going to be a slight hiccup from yersterdays price action.
    but the 2hr rejection candle at 10am is more likely to take us across this hurdle.

    1. It’s an impressive tail that’s for sure and a good hold, but nothing broke for me until we get above 80.
      I’d reluctantly wear a -40 if that happens, part of the game and in the overall context of being a Sell the Bounce type for the last month, no biggie. Glad I avoided getting rabid re size though.

      1. Yeah but volume is like fib, people only quote it to justify their overview. 🙂
        I’d think that recently volumes have been pretty poor everywhere, I should imagine there will be some red braces pruning going on.
        M&A seems pretty moribund too, especially now the US has put the damper on reversing into low tax bases.

        1. I think we are in Consolidation,but I saw your tech link,matching his analysis to historical precedent on 2nd term U.S Pres pre election with June to mid July as a likely time for a push upwards.Ftse 4hr seems to be telling a tale re where the money is this week,I’m thinking profit taking b4 200 somewhere,then whatever the U.S does.

          1. Glad I don’t get involved in that difficult stuff 🙂
            Explain pls re 4 hour, until today it looked rubbish to me.
            Even now, the last time we were at these rsi levels was 6332 after similar sideways action, then a couple of hefty green ones. That ended in tears.

          2. 🙂 I just mean for sentiment the 4hr greenies cover more space than the 4hr Reds,but until there is something sideways over 200 I’m not getting enthusiastic or counting A,B,C or anything.Going off hindsight I’d say 420 odd to 160 fits a pattern and it could still be in play.That end of April period to me never had anything you could hang your hat on as a rising trend this has last Friday lows we havent revisited.Like you said yesterdayv 6160 now vs 6200.
            Re RSI,Dow 4hr is at early May levels,and healthier than Mid April when both FTSE and Dow went overbought.Not pretending to your level of knowlege,just chucking it out for discussion 🙂

  9. Ok guys I’ve closed out my longs.lots of points….I will work it out and post then that’s me done for the week……

      1. Yeah 6400 lol …… bird in the hand though…..like you said metaphysics doesn’t pay the bills…..maybe I’m learning at last after all the advice from you ,WSF,chippy ,Rick ,and the gang :0) all your help tmfp…….and P*sstaking gratefully received. :0)…..I know I know very little about trading but maybe there’s hope yet :0) cheers matey…..

    1. Hi Senu, taking the bull by the horns are you mate?
      Watch out you don’t get gored, my red cape is looking a bit small at the mo.
      GL.

  12. Points gained since yesterday after 10 am.

    Ftse bought…..6141…….sold……..6169….+28pts
    Ftse bought…..6147.3….sold……..6167.5..+20.2pts
    Ftse bought…..6146.8….sold……..6169…..+22.2 pts
    Ftse bought…..6140.4….sold……..6168.3..+27.9 pts
    Ftse bought…..6134.6….sold……..6168…..+33.4pts
    Ftse bought…..6133.8….sold……..6170…..+36.2pts
    Ftse bought…..6135.1….sold……..6174.4…+39.3 pts
    Ftse bought…..6128.6….sold……..6167.5…+38.9pts

    Dax bought …..Jack you can do this……bought 9971.3….sold…..10066.1..+94.8pts
    Dax bought ……………………………….bought 9971.8….sold…..10073.3..+101.5pts

    I also gained Ftse dividend x28

    Added 2k to my account this week…..helps to make up for all the dumb things I’ve done ……still learning and trying to improve….a long long way to go yet but I don’t like holding longs after Paris over weekend so that’s me done for the week…..Best of luck everyone….tmfp WSF chippy Jack have a great weekend :0)

    1. Great stuff, pleased for you.
      I won’t p*ss on your chips by pointing out that on all bar one you ran a bigger loss than the profit you took. R/R mate. Have a great weekend yourself 😉

      1. Good news is I can actually afford some chips this week……thanks for not urinating on them…..I’m bloody starving :0)

      1. Not intentionally dodging Friday the 13th WSF but I don’t want to get stuck holding longs over weekend….I’ve learnt that by pushing sometimes you go one step forward then two steps back…..so this time I’m going to go out and do other stuff……let the dust settle till next week and come back fresh on Monday…..Very best of luck today and tomorrow WSF see ya next week….:0)

        1. Cheers,I was only kidding,we know the Knights Templar are long and likely to be Bullish on Friday 🙂 Hope the weather improves for you,have a great break.

  14. And I say a not so fond farewell to Son Of Brian, still in minor blue from today’s short antics, but got that 100 pt rally completely wrong.
    Off for a blast in the sunshine to avoid revenge trading.

      1. And back after numerous attempts on my life by 4X4 wielding MILFs.
        🙁

        Yes, it certainly has Nick.
        I know its bad form to cry foul when things don’t go your way, but that grind up stinks of intervention. I mean, look at it, a week of listless nothing, then both ftse and DAX pull the same tempo move out of the hat, with a trend line drawn with a ruler off of crucial lows that just walks through short term technicals.
        If the weather forecast wasn’t so poor I’d be tempted into a long weekend (that’s in time, not position) myself.

  15. Looks like the PlungenVerboten Squad have gone for lunch, but the ftse barely blinked.
    Anyone got input on sector strength or is this broad based?

    1. I’m looking at sectors flat or up,31 co’s showing a bit of red,Supermarkets not having a great day Sainsburys down a couple of percent leading the way.

  16. The 6090’s had a lot of support and any move down to that area was going to have a reaction. A lot of buyers would have been around the 6100 area with stops in the 90’s. This also tallied with the S&P support. The price rejection was clearly seen on all timeframes. Even though Ftse looks top heavy – the S&P is looking like an upside breakout which ftse is going to follow

    1. Yes, I agree that 6100 was and still is a support area despite being marched through to 6060 and quickly recovering. That was my early trade plan and worked fine. I find the “lot of support in the 90’s” difficult to follow though, but obviously it was there. I treated 92 as an overshoot of 100, not a support area in itself.
      And yes, now the rejection is clear, but +100 points in half a session and recent context bemused me (obviously).
      You mentioned S&P futures support at 2050 earlier, which contract is that, Sept?
      All I can see in S&P is nomansland with a big declining triple top in the last six months and minorly higher lows, unless you mean the 4 hour neckline with 6th May as the head of an inverted H&S?.

  18. And +10 on the revenge short. Sweet.

    So, what’s the DOW going to make of this, up, up and away?

    1. Hardly, they seem to be taking less and less notice of our morning’s antics.
      So, we’re back to what I had as good resistance, 58/60 I wonder if it will provide support now? Bang on 38.2% retrace too at 57, try a risky one I think.

    1. I suppose we should get with the long program Senu, but I don’t fancy another long at 57 really.
      Very difficult here at 52, so sit on hands time for me, coming up for 50% retrace of this morning’s totally authentic rally. s/

  20. What does it feel like to be completely conned?
    Worked out nice for anstel though, bless him.

  21. Thought I’d posted so if I’m repeating myself I apologise –
    Very sweaty but managed to nick a scaredy cat +5 from 90, just closed the 59s at 45, was going to run the rest but as I was typing took paid 25. All in all got out unscathed and nicked a few quid but as tmfp says above r/r is rubbish, saw the thick part of 60 points offside to get around 35 points.

    1. Good escape mate, that last 40 points of rise was pure bullsh*t, if not the whole thing.
      I am not going to kick myself too hard, a stops a stop, but quietly seething. If they think that sort of cr*p is going to discourage shorting they’ve got a few more thinks to come.

      1. Whole thing was bulwarks (I’m allowed to say that?!), and I’m a bull! I can feel your pain from here but tomorrow…. etc etc.
        Anyway, it is not all rosy in chippy’s garden, just cheer you up I’m currently a little bit offside with my HSBC divi hunt!

  22. Apparently the whole thing was a mistake.
    The ECB was holding one of their daily banquets and Draghi grabbed a passing guy to help, but he misheard “Go and buy lots of ducks” and bought lots of DAX instead.
    You read it here first…

  23. So, here we are again 6100 ffs, will it bounce? Are those buyers still lurking in the 90’s? Close at 6200? There’s still half an hour….

      1. Crazy day today, shorted 90 earlier on today and took +50 at 6140 tgt level and now we are at 6100 again.
        Don’t know what to do here really!

          2. Nice.
            I shouldn’t moan really, the 6140 to 6100 short first thing was bigger and it’s still a good blue ink day, just that sometimes the bs smells too strong. Must be the hot weather.

    1. I mean short 03 and out for +4 for now.
      That’s it for me for today. Good evening all

  27. Chaps, chaps, chaps, we have all been crying out for a bit of action for weeks and then we get it and we are all crying!!!
    Is it the death throes or a bit of warning to any shorts that they are going to get squeezed, who knows. For me, I’d like to see another 50 points down at least before I start thinking about longing it and with my sensible head on I shouldn’t really get too excited until 6000.

    1. Haha, action I like, but this was like going to the Cup Final and seeing the Harlem Globetrotters.
      I’ll stop moaning soon.

  28. I had a great day in the nature walking in the pine forest near the lake with the company of a friend with 2 dogs so wasn’t trading.
    That upthrust I’d say was a “killer whale” or basically a “killer wave”. I’ve rarely seen so big one: 200 points in one direction!? That was massive, I wish I was trading with you folks: at 12.41 I clearly see MY signal, PERFECT like in a book. Oh. Have to console myself with a fantastic day I had.

    1. Nice Jack those are the days you end up remembering.Dow only needs 10 to close up on yesterday now lol.

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