Bounce off the pivot at 5868, overnight high 5917, then 5929?

Support 5869 5853 5833 5775
Resistance 5892 5900 5929 5965 5984 6000

Market Summary for Tuesday 16th February
The main event of the day was the meeting of oil ministers from Saudi Arabia, Russia, Qatar and Venezuela discussing oil output.
The FT100 rose as the meeting progressed in the morning on the hopes of a supply cut however fell back when only a freeze of output was on the cards.
This was still enough though to move markets higher and the FT100 closed up 0.65% on the day.
The best gainers were companies who consume oil products as the price of oil did not rise as much as expected if there had been proposed supply cuts.
So airlines did well and oil companies were still in the top 20 movers even though they had been higher earlier in the day.

US & Asia Overnight from Bloomberg
Asian stocks declined following a two-day rally, as energy shares tracked a slide in oil prices and a stronger yen weighed on Japanese shares.

The MSCI Asia Pacific Index lost 1.3 percent to 117.09 as of 1:42 p.m. in Tokyo. Global shares have rallied since Friday after more than $8 trillion was wiped from the value of equities this year amid concern growth in the world’s largest economies is weaker than forecast. Crude retreated amid bets that a pledge by the two biggest oil producing nations to freeze output won’t succeed in tackling the global surplus.

“Stay cautious,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “Don’t be afraid to reduce risk because we expect things to be volatile from here — it’s a relatively defensive message. There are a lot of economic issues that need to be worked through. We’ve been incrementally paring back” risk positions, including equities, he said.

The Topix index lost 2.2 percent, wiping out an earlier gain of 1.1 percent. Japanese stocks are coming off the best two-day rally since 2008, including an 8 percent surge on Monday, amid speculation this year’s global selloff was overdone and as confidence grew that central banks will do whatever is necessary to support markets. The yen rose 0.4 percent to 113.68 per dollar after climbing 0.5 percent Tuesday as the agreement between Saudi Arabia and Russia weighed on oil prices, sending investors toward haven assets.

Australia’s S&P/ASX 200 Index slipped 0.7 percent and New Zealand’s S&P/NZX 50 Index advanced 0.2 percent. South Korea’s Kospi index fell 0.3 percent and Singapore’s Straits Times Index slipped 1 percent.

The Shanghai Composite Index fell 0.2 percent, erasing an earlier gain of 0.8 percent. Hong Kong’s Hang Seng Index lost 0.5 percent and the Hang Seng China Enterprises Index of mainland firms listed in the former British colony declined 0.8 percent. The biggest rally for China’s stocks in three months faded amid concern a record surge in bank lending is unsustainable and increases risks for the world’s second-biggest economy.

Both UBS Group AG and Bocom International Holdings Co. said China’s lending surge can’t continue, while Standard & Poor’s said the increase in debt relative to gross domestic product could pressure the country’s credit rating.

China weakened the yuan’s daily fixing by the most in more than a month. Yuan depreciation expectations will accelerate outflows this year, a researcher with the State Information Center wrote in the Shanghai Securities News.

Woodside Slumps
Woodside Petroleum Ltd., Australia’s second-largest oil and natural gas producer, declined 7.2 percent in Sydney after saying full-year profit declined 99 percent as the rout in energy prices forced the company to write down the value of its assets.

Saudi Arabia and Russia agreed to freeze oil output at near-record levels, the first coordinated move by the producers to counter a slump that has pummeled economies, markets and companies. Oil slipped below $30 a barrel after the accord was announced, signaling traders see no immediate end to the global supply glut.

“The rebound has fizzled in the absence of positive catalysts,” Bernard Aw, a strategist at IG Asia Pte in Singapore, said by phone. “While the Russia and Saudi Arabia agreement to freeze production is slightly positive, it’s not going to ease the oversupply situation. Overall market sentiment is still pretty cautious. Investors are concerned the global economy is slowing down.”

Futures on the Standard & Poor’s 500 Index fell 0.2 percent after the underlying gauge rose 1.7 percent Monday, capping the best two-day gain in five months as the market caught up with a global rally following a holiday on Monday. Minutes of the Federal Reserve’s most recent meeting, where officials indicated they were monitoring the turmoil in markets, are due Wednesday.

SoftBank Group Corp. surged 9.9 percent in Tokyo, extending Tuesday’s 16 percent gain, after saying it’ll spend $4.4 billion buying back its shares.[Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

It looked like 5880 was going to stay as resistance yesterday and if it had done so then 5750 looked to be on the cards. Unfortunately the dip on the oil output news stopped at 5811 just missing the long order for the day, however the other trades came good, with 5877 being decent resistance for most of the day. Overnight has seen a rise to 5915 though since then its dropped off a bit and the 30min chart is on the cusp of turning bearish (isn’t yet though!). We have a large 22.4 point dividend today so bear that in mind if you are holding a position on a cash contract later on, and it also means we are likely to see some buyers come in around 16:10 this afternoon to chase prices a bit higher before the bell. Can be a good little long that one, but close before 16:29:59 so you avoid the actual divi. I have gone got an initial rise off the daily pivot at 5869 to start with (the in hours pivot is 5852 though) up to the 5900ish area before some more bears appear for a run down to possibly S1 (with a bounce for the divi at 16:00). There is quite a few news releases today but none of them marked as High Impact. I am expecting an early rise today, then a stall around the 5900 area.

117 Comments

    1. I’m long the break of 9200 DAX (5910), don’t mind temporarily (hopefully) pissing into the wind on the longer term short, but right now it appears to be on a grinding bull mission. Looking for 40’s this morning.

        2. Probably being pumped up from 5500 in preparation for another drop after that G20 meeting later this month. They couldn’t have it dropping from 5500!

      2. Morning tmfp,it doesn’t seem to be showing a great deal of respect for the RSI at the moment,one of those rally’s by the looks of it.

        1. Morning all,anstel have a look at Bianca beautiful channels at the moment,think that will give you a good snapshot for the recent past and some good levels to watch.

          2. Thanks WSF the 10 day Bianca is showing R3 at 5959 and the bottom is around the 5487 mark.Have I read that right? It shows really well the trading levels we have seen in the last 5 trading days. It gives me a better idea thanks for your help.

          3. R3 5959 top of the 10 day channel = 5929,bottom of 10 day 5487.
            I think Nick’s experience is that the 20 day channel is the most influential,think he says that in his book and that is what the last 20 days support,likewise they have aligned with the 50 now and that has held good,20 currently 5480/6000

            1. Yes, generally the 20 day is fairly reliable (as its over the long time period), however the past month or so has seen the 10 day producing good levels.

        2. Morning anstel, on the contrary, rsi hasn’t dipped below 50 nor got overbought for the last +60 pts, classic “sweet spot” channel for a continuing grind.
          There’s a lot more to rsi than just overbought/oversold extremes.
          Just a chink of light here short side, if it breaks 50 before last high of 69 then the divergence will confirm.

          1. Oh ok tmfp.ive got the RSI set to 10 like you said.and it was showing green overbought pretty constantly,whereas normally it drops right back.Apologies still learning!

          2. On the 3 min yeah, it’s been above the blue 70 line for a while but that’s not overbought per se.
            Think of it as driving a car with a red line at 7000 rpm, fast cruising at 6500-7200 is fine, it will do it all day, but go up to 8000 and you’ll have to ease off or it will blow up.

          3. Thanks tmfp ..yes I’m on the 3 minute……on this chart on city it’s not that easy to read….It’s not clearly calibrated…it shows 46.4…..61.9……and 77.3 and it does seem to have held steady at the 70 mark since about 9.45 am with peaks around the 77 level between about 9.10 am and 9.40.am. Thanks for the analogy about over revving a car engine….that makes perfect sense to me now.

          4. You can change the overbought/oversold guidelines,just delete that RSI and put a new one in from add indicator with the settings you like.

          5. Or use a third party one like Investing.com, which has the added advantage of being a cash site and ignoring the out of hours fluff.

      3. Just seen your ’40s tmfp. In terms of “longer term shorts” my next level – ish is ’50 then would be fully “invested” with another one at 6000.

        1. Yeah basically same here mate.
          My scale up short is in a mental box, budgeted for and totally separate from intraday.

      4. If you are there tmfp, with your “longer term short” have you got a target? Are you still looking at 5200-5300 as your bottom?

        1. Would be nice 🙂
          See how it unfolds and how greedy I get…
          It’s basically playing that down channel, depending on
          a) whether i don’t get wiped out
          b) the longer we stay in the upper part of it will decrease the target (numerically)

          1. OK, yep that would be nice! Based on no science whatsoever, I think if I get any sold at 6000 then I’d definitely like to see 5650 but knowing me I’d bottle it higher than that! As mentioned a couple of days ago, I think it has gone too far too fast and is therefore unhealthy. It is interesting that when I was playing with VIX, FTSE was around here and VIX was 21-ish. As I understand it VIX is cost of option premium therefore a move must be coming from somewhere?!

          2. I don’t fully get my head around VIX, I use it as a blunt instrument in preference to IG’s poor r/r binary options.
            With hindsight 5500 was a exhaustion selloff and a good VIX short (and where clever clogs here sold his long).
            An equity long there could easily have been looking at -200 in a couple of hours, but VIX wouldn’t have got much more expensive.
            Playing extremes…
            You pays your money and you takes your chance 🙂

  4. DAX is pretty much banging its head on the steeper of the two daily downtrend lines, a close above 9300 today would target the steeper one around 9600.

    1. By the way, interesting bit of news. I’ve always wondered how I could trade the opposite to what I actually wanted to, without wondering if I was only choosing one direction in order to pick the other. The other day, I made a genuine mistake and clicked the wrong direction and still lost money. So just to confirm, that doesn’t work. 🙂 They know.

        1. Yes,good book,cant understand why I have never read any of his others.The Illuminatus Trilogy is really good too,think it influenced Douglas Adams.

  6. tmfp & chippy
    ref. Vix
    for practical purposes – vix = inverse s&p
    have a look at both charts – you will find a close mirror image

    1. Yeah I get that Paul, that’s how I trade it, but that’s what I mean about the blunt instrument approach.
      I’ve read and re read the actual technical composition of the VIX but don’t quite get the call/put scenario. Granters of options tend to be institutions doing complex hedges against portfolios and buyers tend to be speculators, trying to work out the open interest quality is something I find difficult and am interested in because it can have quite a profound influence on equity indexes on witching days.

      1. Not yet actioned the 50 short, wondering whether it’ll run a bit more so keeping powder dry. I think I’ll wait for the Dow….hmmmm. Definitely going to be paying a dividend!

        1. Would be nice.
          I just sniped +7 off the 1300 blip, first short profit today.
          Difficult to see where the selling will come from but we were saying that about the buying at 5500…..

  8. Looking at the DOW, this rise has been European, mainly ftse led, and they really need to chuck some weight behind it for it to sustain.
    My view is they need to break 16500 and run on before the recent action can be see as a double bottom.
    That’s another 300 pts, ~+100 on ftse, which puts us approaching the top of the weekly down channel.
    (And turning round just before stopping me out at 6115 and going straight to 5200 🙂 )

    1. I’m naturally a bull. I said at the start of the year that we’d see 6500 but that we’d see 5700 first. As I said yesterday to anstel, if something goes up a lot it normally comes down again and vice versa. It has now run 7.5 ish per cent but more especially the single stocks that are supposedly the most risky, Banks, miners etc have run the thich part of 10% (and more in some cases). I can’t see 5200 happening, I think I can see 5500 happening but am a buyer if it does and can easily see a shank to 5650 ish. I cannot see tmfp getting stopped at 6115 before this happens. All the above is not based on anything scientific and should definitely not be taken as advice!

      1. I’m a bull too chippy and I can see 5500 again. This rise has come a long way in 4-5 trading days. It’s not showing any weakness that I can see just yet though. Not based on anything scientific either just talking out loud.

    2. Dow 8hr makes a retest of the high 400’s/500 area look quite likely at the moment,half expecting to hear someone claim inverted H & S.

        1. I looked at the monthly chart for the Ftse….it looks to me like in 2007 we were overbought on the RSI before the financial crisis….In May last year when we had 7120 highs on Ftse the RSI was no where near overbought.Dont know if anyone more experienced can add a further comment to this observation but thought I’d mention it.

        2. Yeah,Feb 4th,Draghi,Carney and worse than expected US Unemployment which should have been Bullish I think,sad that I can ref that 🙁

  9. Sad when your best trade of the week was a stop(i.e 5938)…..what the ‘#” is causing this over exuberant strength in the Ftse, any ideas?

      1. Yeah the M word. It does smack of sour grapes when we bring this up just because we’re wrong lol.
        Of course it exists, maybe part of the deal is accepting it as part of the landscape, just another thing to quantify and deal with.
        Just sniped another few off overbought, they’ll never take me alive! 🙂

        1. Yep it just looks a bit crazy what with everything they said on Thursday as it hit 5500, now its 6000 in no time at all. Have all the reasons given on Thursday for the fall disappeared?

          1. That’s why fundamental and “news” analysis is so dangerous.
            As the man said
            “The markets can stay illogical for longer than you can stay solvent”.

          1. I kind of had Mid March as a possible turn date,but if it turns now then maybe that means News is due,at the end of the day its a US Election year,so big problems next year fit the pattern.

          3. My turning point WSF was April / May.based on nothing scientific plenty of time for tmfps short to come good IMO.

          4. My science with Mid March was pure astrology and then thinking,yeah,why not 🙂 wasnt betting anything on it,but it would suit me for buying a few Shares.Think the last time Financial Astrology got mentioned the site stopped working so I’ll shut up.

          2. It doesn’t really matter.
            We are picking up dimes in front of a steamroller.
            Trade it with logic and a protection system, i.e. watch the driver and make sure you’ve got somewhere to jump if he speeds up.

          2. “Fuf” means: breathing out – now out of danger (I had to survive a surge to 9348 from my short 9318. Eventually closed lower trades b/e and profited from 9345 and 9348 trades. so in profit 25 full stake points today.

        2. Would have down better if it wasn’t up and down up and down. Had to reduce stake to a minimum: always the best for some reason. On the lower stake it goes.

  10. This is a load of old tosh and yep it does smack of sour grapes! So glad I’ve saved up my ’50 short and just let the nice man from IG have it at ’90. So that has pushed my next (and what should be last….) up to 6050 ish.
    If we do get to 6115 on this rise tmfp, I reckon I’d like to have the chance of selling you what you need to close your short!!!

  11. Sounds like conspiracy theory but this artificial rise could be just to sell into divi hunters on the close, it’s the biggest div we’ve seen in a long while so it sounds like a good strategy to me, then see where the real market is tomorrow. Sold 10@ 5990, got 10 to go at 5995, 6000 & 6010. Stop on all at 6050. If that happens, last 2 weeks gains have gone but sometimes it may be better to be in the mix than look back and say I can’t believe we didn’t short that 500pt in 3 day rally-wish me luck and GL to all.

  13. Agree tmfp but everyone knew what the divi for today was 4 days ago and in oversold conditions we are where we currently are and up 170+ points on yesterday’s low with no news. Last week I earned the money through hard toil, this I confess is nothing more than a punt-on that note my stop will be in at 6025, then I have some profit to show for the fortnight 🙂

  14. I’m finished with my shorts for today (not attempting longs at these levels). I expected a proper retrace at US open, but it stalled and I see now it bounced off the certain trend line (which I see) on Dax: it wasn’t broken and I’m not usually the one who waits until it breaks. So leave it to the market. There’s nothing to short, EMA are strong for long on upper time frames. But had fun today. GL

    1. Thanks Jack,I ‘m with you about letting the Dow breathe a bit,see how they are when Lunch starts to call them.

      1. OMG, Dow went crazy comparing to his peers. I wish in the morning I chose the “long side”. I did, but for a short time as it was between 10 and 11, but i didn’t manage to hold for long, got scared and pull out.

  17. My template for today’s close…
    Look for overbought short around 1545
    Buy dip in following 15 mins
    Sell the first bounce after 1600
    Buy the dip about 1610
    Get out about 1628 depending where -25 puts the price
    If its into a support area keep the long take the divi and sell the immediate post 1630 bounce

      1. It has sort of worked out like this before but

        “Past performance is no guarantee of future returns”

  19. IG have got shorts at 55%, first time I think I’ve seen that. One thing that is telling us that this a squeeze and if it starts to drift it wont go down with a smack.

    1. Thanks chippy City have 53% short Dow and only 53% long FTSE makes it look like this is going up there too.

      1. Yeah it doesn’t look like a good short environment at the moment but hey by next week we could be back down at 5500 again.if we had said on Thursday we would be pushing 6020 next weds nobody would have believed it.

        1. Probably a good short environment when it’s just gone up 500 points with barely a breather! Let’s hope so anyway after the four divis I just paid. 🙁

  23. Well the divi plan sort of worked out after a slow start
    It went
    -14 +16
    +16 -19
    -21 +18
    +13
    then it was a choice of +12 out at 25 or hold for 24.7 divi and the long back to 6000. The DOW meantime has showed no signs of serious weakness so I took the divi and dumped the long at 12 after the close.
    Total moolah +39.7.

      1. Thanks for the implied compliment/trust custard, but not really.
        I’m of the “teach a man to fish” school, that’s why I post all my secrets (most of them) on here.
        Having said that, you’re welcome to a share of my 5924 average short 🙂

          2. Si it’s at a resistance dating back to Jan if that breaks and the M word is in play or whatever the 200sma is at just over 17k.I’m assuming you have this Hedged,but if you dont you really need to watch this R level and focus on managing this trade and getting out of it not running it,because the R/R means it can never be good,so the only real lesson is a mgmt one.The 50 SMA is 16496.Classic SMA’s are what Funds play with.Good luck.

  25. So, what happened today…! My best trade today was not selling any at 5950 and getting ’90 instead! Don’t know what that is telling me. I’m afraid I can’t “Top Trumps” any one’s losing short but suffice to say it is looking pretty poorly! Let’s see what tomorrow brings!

  26. Evening chaps,after all the rises we have had from 5500 it would be quite logical to expect some downside now….my guess is it will go higher first.FWIW

    2. The way the Dow just came off 16420 odd and broke 50 was pretty strong.
      Nick answered your Bianca Q earlier.

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