Asia weak 6170 resistance bulla fail to hold 6200 area NFP today

Support 6118 6092 6088 6078
Resistance 6170 6171 6173 6197 6220
Good morning. Nice little bounce from 6150 yesterday to get a few points and it stopped just short of the 6200 target. Since then its dropped off and Asia was weak overnight, and with NFP today the tide might well be turning for a run down towards 6010. The bulls really have failed to get 6200 to stick.

US & Asia Overnight from Bloomberg

  • Japanese shares slide most in seven weeks after Tankan slump
  • Copper buoyed as official China manufacuring index improves

Asian stocks slumped with oil as a new quarter got under way, with Japanese equities leading losses amid deteriorating corporate sentiment. Metals rose after a gauge of Chinese manufacturing expanded for the first time since July.

After recording its best month since October, an Asian equities benchmark index was headed for its biggest loss in seven weeks Friday. The yen resumed gains amid a flight to haven assets in Japan. China’s stocks reversed earlier gains as the jump in the official factory gauge was overshadowed by a cut in the nation’s credit rating by Standard & Poor’s. Crude fell back below $38 a barrel on glut concerns.

Friday’s data onslaught, which includes manufacturing data for the euro area and the highly-anticipated U.S. payrolls report, will help investors re-calibrate following a quarter of contrasts. After sliding on concerns about China in the first two months of the year, global equities clawed back most of their losses in March as policy makers around the world signaled they stood ready to bolster flagging growth. Bets on further U.S. interest-rate increases this year have been scaled back, while anxiety over China’s economy remains despite rebounding factory activity.
“There’s probably some effect from the Tankan,” said Yoshihiro Okumura, a general manager at Chiba-Gin Asset Management Co. in Tokyo. “With corporate earnings peaking out, it’s becoming more and more difficult to envision profits this fiscal year.”

Stocks
The MSCI Asia Pacific Index lost 2.2 percent as of 1:30 p.m. Tokyo time, the biggest decline since Feb. 12. The gauge added 8.2 percent in March, paring back its quarterly loss to 2.3 percent. Japan’s Topix index slipped a fourth day, tumbling 3.1 percent as the country’s Tankan surveys of business conditions indicated sentiment among large manufacturers was the weakest since mid-2013.

Australia’s S&P/ASX 200 Index slid 1.6 percent, falling for the first time in three days after capping its best month since October. New Zealand’s S&P/NZX 50 Index slipped 0.7 percent, while the Kospi index in Seoul declined 0.9 percent and Hong Kong’s Hang Seng Index lost 1.3 percent. The Shanghai Composite Index was down 1.4 percent, after rising as much as 0.1 percent.

The official manufacturing purchasing managers index jumped to 50.2 in March, compared with a median estimate of 49.4. A private PMI reading from Caixin Media and Markit Economics rose to 49.7. Readings above 50 signal improving conditions. Seasonal volatility is one factor behind the rebound, according to an NBS statement released with the data, as factories started to run machines again after the lunar new year holiday in February. S&P cut China’s rating outlook from stable, saying the nation’s economic rebalancing is likely to proceed more slowly than the ratings firm had expected.

Futures on the S&P 500 Index fell 0.3 percent. While the U.S. benchmark’s losses Thursday cut its rally in the quarter to 0.8 percent, it marked the first time since 1933 the gauge has capped a three-month increase after sliding more than 10 percent during the period.

Currencies
The yen, which typically moves at odds with Japanese shares, gained 0.3 percent to 112.27 per dollar, strengthening for the third time in four days. The currency was the second-best performer in Asia in the first quarter, climbing 6.8 percent amid risk-asset volatility. The euro held four days of gains, trading at $1.1374. The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, was little changed near its lowest level since the end of June.

The Aussie was little changed at 76.52 U.S. cents, paring an earlier advance of 0.6 percent after China’s official PMI.

“The market got a little shot in the arm on the stronger prints, but we would interpret with caution,” said Sue Trinh, head of Asian foreign-exchange strategy at Royal Bank of Canada in Hong Kong. “There is evidence that the great rebalancing is stalling. This risk rally appears to be running out of puff. Payrolls will provide the key directional cue for markets, even if it may no longer have direct near-term implications for the Fed.”

Commodities
Copper for three-month delivery in London gained 0.1 percent, while aluminum rose 0.3 percent. Gold is heading for a weekly advance before the release Friday of a U.S. payrolls report. Bullion for immediate delivery slid 0.2 percent to $1,230.43 and is up 1 percent this week.
Oil headed for the first weekly decline since February as OPEC output rose and expanding U.S. stockpiles kept inventories at the highest level in more than eight decades. Crude futures declined 1.4 percent to $37.80 in New York. The Organization of Petroleum Exporting Countries increased supply by 64,000 barrels to 33.09 million a day in March as Iraqi output gained and Iran pumped at the highest level in almost four years, according to a Bloomberg survey of oil companies, producers and analysts. U.S. government data Wednesday showed crude supplies rose for a seventh week to the most since 1930.

Bonds
Treasuries fell, trimming this week’s gain, as an economic surprise gauge showed U.S. data are surpassing analysts’ forecasts for the first time in more than a year. U.S. 10-year note yields rose 2.5 basis points to 1.795 percent.

The Bloomberg ECO U.S. Surprise Index climbed above zero Thursday to the highest level since January 2015. A government report Friday will show the U.S. added more than 200,000 jobs for a second month in March while wages increased from February, based on a Bloomberg survey of economists.

“People are taking profit before the employment report,” said Toshifumi Sugimoto, the chief investment officer at Capital Asset Management in Tokyo. “If average hourly earnings — the inflation number — rise, yields will go up.” [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

It’s NFP news today at 1330 so things are quite possibly going to get a bit choppy around then. The NFP report is expected to show that the US added 205,000 jobs in March, down from 242,000 in February. No change is expected for the unemployment rate, which is currently at 4.9%. Average hourly earnings are expected to rise by 0.2%, after declining by 0.1% in February. I can see a bit of buy the rumour, sell the news today, (though as its Friday its often prudent to reduce the risk a little bit with lower stakes), and a rise to 6170 area where there are a cluster of resistance levels – the daily pivot, the 30min coral, and the Hull Moving average on the 2 hour. As such I think a short from this area will be good. Another reason I think an initial rise is that its the first the month so new money flows in. However, I am still feeling bearish as per yesterday for a run down towards 6000, so any rallies are still worth shorting. It feels like the climb from 5500 to 6200 is running out of steam. If however the bulls manage to break 6175 then we will probably reach 6200, and maybe Wednesdays 6222, which is also the 10 day Bianca channel top area (and worth shorting). So, fairly simple plan today really with the rise and dip from the 6170 area.

141 Comments

          1. Morning Anstel,
            You had decent +40 on DAX at 9830 (RSI overbought on 1min) from your 790 long.
            Try to take profits straight away if you can, DAX might even go straight to North at 10000 area who knows, but if you are playing swing then maybe take half the profits and leave rest running at b/e!!!

  2. Morning chaps.
    A few buyers coming out of the woodwork now that the early selling seems to have stopped (temporarily?).
    I guess its still BTD, seems pointless to abandon it because of weakness, without that there was be no D to B, no?
    Still watching the 9747 lows on the DAX which, given today’s the start of more ECB money (thanks WSF), should hold.
    Locked in a 6100 long on b/e looking for 20ish short term.

    1. out at 17
      DAX overbought short term let’s see if there’s a second wave of selling or not

    2. Have you ever got in situations where you had a decent profit and let it slip away due to pushing for the extra few points tmfp?….. It’s like its hardwired in me and I’m struggling to alter my thinking……it’s a big big problem I’m having.

      1. Rarely, I’m surely known for taking profits too soon.
        If something gets in your profit taking zone that’s when rsi comes in handy, always look to get out there or thereabouts, leave the last couple of points for the angels.

      2. Yeah take the money anstel take the money……keep saying it to myself….take the money….take the money you numbskull……..

          1. CNBC had a regular Guest yrs ok on the European show who had that as a mantra,”Always take the Money”,still hear it in my head everytime I mess up,cant remember his name,Mickey something I think.

        2. You can get stuck between a rock and a hard place if you’re not clear about whether you’re looking for short term or long term profits.
          A ‘bargain’ buy like that has a fixed life, thanks very much and out, resist the temptation to convert into a long term.
          Or conversely, put it in a box and forget about it. Whichever, just be clear in your head.

          1. Thanks tmfp…….I seem to have a head full of broken biscuits this last couple of days………..My decision making is absolutely terrible sometimes ….. Setting limit orders might be worth trying again…..like chippy says….leave some for the other bloke…..Rande Howell calls it The Thief in the night…..I do seem to have a tendency towards longer term trades…Thanks for your clarity and overview …..you really do have a really good mindset for trading…….plenty of head scratching going on here again……good luck today.

  3. Morning all,everything in a recent S area by the daily,so i guess this is btfd for 200 or 100 points depending on what you are trading lol.9780 is CMC’s number for the bottom of the Dax range,not sure how they got it ,but it just held well enough to break the recent downtrend on the 5 min.Looks like an interesting day.

      1. Don’t worry WSF ……I’m my own worst enemy sometimes……definitely need to look at my decision making with regards to taking profits……I’m making some big mistakes…..it’s like I’m hardwired the wrong way…..I know better but can I put it into practice….I keep reverting back to let’s squeeze the last drop mentality….I keep asking myself why can’t I change my thinking and I just don’t know?

        1. It would have worked with more of a trend and less of a range,my ASX being clever trade last week was stopped in a pretty ugly way and I looked at Dax and Dow day charts yesterday to see what would have happened with the same trade there and Dax would have been the same result,but on the Dow it would have worked.I think it is the same with your Dax trade,not enough Dow correlation,wrong time for it rather than completely wrong method.Think that makes sense.

      1. bought some FTSE at 6104, S20
        Will hopefully hold this for a bull ride 🙂
        Tmfp – are you buying the lows as well, I am expecting a rise to 6140/6150 before 1300?

        1. Waiting to see what happens now at 9850 and 20ish
          Just took out small long and marker short at 23

  5. 9750 equates to roughly 6080, 9850/6120 has got to break for the bear side to neutralise this morning for me.

  8. here is a stupid question. I am only trading the ftse 100 and i know all markets are globaly connected but why would the NFP news have significant effect on the FTSE? where does that movement come from?

    1. Sentiment worldwide is affected by the fact that the US is still the world’s largest consumer.
      No jobs=no money=no Chinese crap bought=bad.

      On the NFP subject, interesting view from Beauchamp at IG. It’s not the gross jobs number so much as the Average Hourly Earnings which is important. Basically, poorly paid jobs don’t translate into money into the consumer economy, just keep people alive.

      https://www.ig.com/uk/market-update/2016/03/31/non-farm-payrolls-look-ahead-31561

      2. Also you are less likely to be killed or abducted by an american when Pizza Hut are taking on delivery guys and they dont go into the army,but with Q.E and the current size of their military sometimes fewer recruits for Pizza Hut is bad and sometimes its good,eg if Pizza Hut employ a lot more Drivers the Military might want to justify their existence by going on a bit of a spree,so that would be bad in that it increases your chance of being renditioned rather than reduces it.Usually people talk about the health of the global ecomomy as a short way of saying that,but clearly if that was literally true then the All Global mfg number at 16.00 would matter too and it doesnt.

          1. 🙂 Yes,sorry been reading too many blogs about Macro Trading this week,always ends badly.

  9. Very light trading again, FTSE looks like its waiting for an excuse to go up and the DAX has gone to sleep.
    Frustrating when we get a bit of momentum going then the lights go out. I hope this isn’t set in for the summer.

    1. Yeah I know, I was thinking this morning exactly the same what if we have the similar momentum to March for rest of this summer!

    2. No alarm bells just yet, but watching the DAX for an increase in down momentum, needs to get back over 20 a bit quick or that mid 700’s lows resistance isn’t very far..

        1. Yeah, but that’s a long way off just yet.
          Weakness till noon maybe, then re assess, although I have to do my Friday duties so I’m off at 11.30.

          1. DAX has got an outside candle to build on now, I was probably getting a little rabid but it needs >20 for me and then still has 50 to contend with.

          2. Thanks,I’m still trying to work out where CMC got 9780 from,probably missing something obvious.
            Have a good morning,hope they appreciate you and dont just claim theyve lost the receipts or something.

  10. Don’t try this at home but doubled my short at 09 for a punt on the down side.
    Av now 16 and b/e stop.

    1. All I have to do now is take 40 instead of the 5…….just like Rick said earlier…..numbskull trading at its best :0)

      1. I’m goin to stay in the corner with my little triangular shaped hat on for a bit and have a cup of tea…..good luck all……

      3. 8×5=40 🙂

        You know what’s quite satisfying about what I do? When you make more points than the day’s range.
        Fair play to peeps who can sit for days/weeks looking for the Big One, my 09/99 short just paid the week’s shopping. Isn’t that why we’re here?

        1. My FTSE average trade is 8 as well.
          I try to keep my trades to a maximum of 15-20/per day subject to we have some momentum.
          Since January this year, I have scalped an average of 25pt/day and I only work Mon-Fri 07:45-16:30 with a 3-4 lunch break 🙂

          2. Hi Tiberius,
            I trade with different points everyday from £10-£200/pt so it’s really depends on how much I am willing to risk each day, for example yesterday I was only playing with£10-£25/pt and today my average trade is £100/pt and in January I was shorting with over £250/pt!
            At the end, it’s all depends on how big is your account and how much you are willing to lose before you even b/e!
            Cheers

        2. Yeah it’s like fishing looking for the big move……..it’s great when it happens,but you don’t half suffer with a bad back through all the cold and rain waiting!…….. <:0)…..

      1. I still believe we can get a push to 9950 DAX & 6150 on FTSE by end of play today, let’s wait & see how NFP data plays out in a bit!

        1. I agree with you Rick……still hovering around the 6080-6220 on Ftse.if it breaks to the downside might drop quite a bit. Dax is a sensitive barometer to sentiment in my opinion.

          1. Yes,feels more real than the pre yellen stuff,but the Dax has been lagging like it wanted a fall for a bit and that is quite an opening gap today,Ftse and Dow out of hrs arent showing the same thing at the moment.Without an NFP push up there doesnt seem like much in the news for a while though, just been reading that Jpn might do something in April with free money.

          2. Previous was 242…..consensus 205…….it’s got room for a bad number but that Bloomberg article I think you posted WSF suggested growth in the US economy of 1.4%…….if we are to believe that article,you would think they would have a few more folks working to create the increase……Also is good news good today or is bad news good…..or is any news bloody terrible.!! Soon find out……

          3. Here is the CMC opinion.
            “it would likely take a huge surprise in nonfarm payrolls to change interest rate speculation away from the current party line of 2 rate hikes this year with the next one most likely in June. It would likely take growth above 300K to set a more hawkish tone and a negative reading to make the tone any more dovish than it already is.

            The street is expecting a 205K increase in payrolls down from 242K last month. ADP payrolls were 200K even beating the street by 5K, but jobless claims have been rising over the last month although still well below 300K. Based on all of this, I think we’ll see a 10K downward revision to last month and 220K payroll growth. This would keep the US in the Goldilocks groove of job growth strong enough to maintain confidence in the US economy and keep recession talk at bay but not too strong which would put pressure on the Fed to raise interest rates sooner…. Cleveland Fed Mester speaks later in the day giving a chance to see what the hawkish faction at the Fed is thinking…”

            http://www.cmcmarkets.ca/en/blog/2016/04/01/mixed-reaction-overnight-news-traders-prep-nonfarm-payrolls-and-more-us-news

  16. Afternoon chaps, looks like I’ve missed the fun. Deliberately haven’t looked so far today but situation report – arb is a little out of the money and vix is getting towards being on the money.
    I’m now paying a bit more attention and plan is to short any strength coming from a ‘good’ nfp. I’m not going to punt the figure so roll on 13.30.

    1. Afternoon chippy…..I need your trading rule number 3 etching into my trading brain…..always leave some for the other bloke!

  17. afternoon all.
    Had myself a good morning – managed to draw some nice trends on the 1m charts which gave me 25 points by 11am. Fought the urge to keep trading and managed to relax a bit. Speculative long on ftse @ 6089. 15pt stop. target 6150 (trailing stop while i go out).
    The big question for me is – ‘is good news bad news today’… 🙂

  20. ARGH – After weeks of being short and getting burned, I went long yesterday. Enough said.

    1. So you got burnt on short and now gatting burnt on long? What’s the point really. What’s your strategy?

  21. well thats it for me i have withdrawn my funds from my plus500 account and
    i am switching next week to IG, cant wait.
    Thanks to all here for your help….

  22. A couple of reasons to be bullish in April. Ultimately Yellen has put a floor on the market. Any short-term weakness is expected to be propped by the central banks. Secondly Oil has been falling but OPEC is expected to cap production this month. So we are probably in BTFD territory for now.

  23. Interesting Dow dropped 100 or so Ftse not overly upset…..could this be the set up for a decent break above 6200 ?

    1. Nope.
      What did you expect from the DOW after Europe and Asia weakness? I know they don’t take much notice of the outside world but..

  25. Annd…..I’m back, just in time to short at 03.
    My limit at 82 worked out ok on my short and I think we’ll see it again.

    Let’s get that DOW in the 400’s that’ll put the wind up a few 🙂
    #STYBTDUYA.

    1. Lol, Welcome back – I closed my 18 short earlier in 90s but nevermind as I managed to catch a bounce from 81 to 98 🙂
      and out now for +5 from my heavy short from 6104

          1. Something I rarely do, but moved the stop to 35, looking to add at 30.
            I don’t know what that 40 pt DOW candle was about, has someone found Yellen’s female Viagra scrip?

          3. Still hanging on by skin of teeth, must take my jacket off before diving in in future 🙂

          6. Still hanging on, the great thing about manually operated stops is you can bend the rules, esp on Friday afternoon when you’ve had a beer.
            I always feel like Patrick McGoohan after a couple lunchtime Stellas/

          8. Damn, hope that was a good stella 🙂 I had four pack like that on Wednesday. oops.

  30. Just seen that 9674 low on DAX….finding “top quality corporate debt” a bit hard to come by are they?

  32. Rig Count could spark a decent reaction today,they only need another 20 points to close the U.S above yesterdays high and it doesnt seem to want to retrace.

      1. Yes looked like the Dow was looking for an excuse to go up and the rest wanted to come down.Mind you if you look at recent ranges then really Dax and FTSE are still in them at the moment.I had low 600 area as a bad place for the Dow to close,going by EMA’s .Wish I’d only traded Dow today lol.Guess the Dow does think it has a Yellen endorsement,even ignored that OPEC stuff and Oil in the end,although a close around here would just be sideways at the top of a steep climb,so maybe not conclusive either way,just pushing a decision re a retrace out to next week.

  33. Oh well, it was unfortunate for me as well with my Dax short soon after 15.00. Now all positions closed although maybe I shouldn’t have given up so early but market started behaving very suspiciousely so I decided it’s better to get out, but lost -20 of my usual stake. Level I was from 9750, level I got out 9780 (I had 2 shorts 9805 to cover but in the end still lost). When I go in too early I noticed I have no guts to hold because SL gets huge (as I removed SL on 9780 initially the price went higher). Now it looks like it’s going down but I couldn’t wait. Just annoyed now.

    2. Next week will be different Jack,it’s been a long week.I closed a short at 9838.1 this morning,how stupid was that….then I had 3 consecutive losing trades even though I was staring at a screen that was telling me what was going on 🙂 6 since then been o.k though,it’s just relearning the same lessons until they sink in I think.

      1. The same here, last day of kids half term: not the best atmosphere to be trading, plus missed all morning until 15.00 when I decided to join the party, but it was too late 🙂 At least you had the short but not otherwise. GL next week.

    1. Its got a Doji forming next to a Doji on the day chart at the top of a climb from Feb of over 2000 points,dont think anyone trading for themselves is going to buy and hold it for the weekend,but people have been shorting it for 7 weeks without success and based on the stats they have been holding those trades,so there could be stops around 17800 and start of the month money waiting to come in there.April is usually positive too.

          3. Last fishing line pulled in with plus 70……. I can hang up my triangular shaped hat now for the weekend….after that total two days of being a numbskull :0)

  36. Ftse and Dax still not having it…………Sunday night one of two things will happen….The Dow will drop significantly and pull Ftse back to 6090 area or…..and I think this is more likely….the Dow will be resilient and the Dax and Ftse will jump up…….Roll on Sunday night for an idea which way it will play out……

  37. I’m long Ftse (6127) but wow the dax looks cheap here compared to US. 80% short on IG US stocks. Must go higher. Massive shorts in May when S&P cracks new highs

  41. I think the all time high on the Dow was the 18300 region last May…..would have thought it’s getting close enough to 18000 to start considering the possibility of a short position……still got oil relatively cheap though……and when the Dow wants to go up nothing stops it!!Surely 6250 next week Ftse and Dax back at 10100 unless we get a black swan over weekend…..

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