Bounce time?

Good morning. A bit of an odd day yesterday that saw the FTSE moving around quite viciously, from seemingly random areas, such as support at 6463 late in the day. After the initial drop as expected from the pivot area, we found support at 6520 as expected and all seemed to be going to plan. Good news came out, and it broke support and dropped to 6480, bad news came out and it climbed to 6530. Tapering fears surfaced and it dropped to 6463, then various rumours started circulating about US debt deals and such like and it climbed. Certainly not an easy day to trade once the US came online! I mentioned back in October and November that I wasn’t ruling out a dip after the decent run up over the summer and then a rise at the end of the year and it seems like that has in fact been the case, though it did look doubtful for a while. I had pencilled in a dip to 6400 then a rise to end the year somewhat optimistically at 6800. We are certainly testing the bottom of the various daily channels at the moment, as have the Dax and S&P as you can see on the Raff charts below.

Asia Overnight from Bloomberg

Asian stocks dropped, dragging the benchmark index to a three-week low, while Australian bonds declined and gold retreated. Indian equities rallied with the rupee amid state elections.

The MSCI Asia Pacific Index dropped 0.4 percent by 3:12 p.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed. Australia’s S&P/ASX 200 Index (AS51) tumbled 1.4 percent, while 10-year yields climbed nine basis points. India’s S&P BSE Sensex advanced 1.7 percent as the rupee appreciated 0.7 percent. The yen climbed 0.2 percent. Gold fell 0.4 percent.

U.S. payrolls data tomorrow may help investors gauge the outlook for stimulus, after a private report yesterday showed American companies added more jobs than analysts predicted last month. The European Central Bank and Bank of England hold policy meetings today, while Federal Reserve officials meet on Dec. 17-18. An exit poll showed India’s main opposition party is set to win four of five state elections before a national vote.

“As people digest the potential impact of the tapering, we’re likely to see softer share markets in the weeks ahead,” Angus Gluskie, who helps oversee about $550 million as a fund manager at White Funds Management in Sydney, said by phone. “If you’re still positive on the longer-term economic outlook, there could be buying opportunities. We’re still in a reasonable environment to hold equities.”

U.S. Data

Ten-year Treasury yields were little changed at 2.83 percent, after climbing five basis points yesterday to the highest close since Sept. 17.

Growth in manufacturing, technology and housing kept the U.S. economy expanding at a “modest to moderate” pace through mid-November, the Fed said in its Beige Book survey released yesterday. U.S. companies added 215,000 jobs in November, according to an ADP Research Institute report released yesterday, more than the 170,000 predicted in a Bloomberg survey of economists and the biggest increase in a year.

Data today are projected to show initial claims for unemployment benefits in the U.S. climbed to 322,000 in the week to Nov. 30, after unexpectedly dropping to a two-month low in October. Annualized growth in the world’s biggest economy probably accelerated to 3.1 percent in the third quarter, the most since the first three months of 2012, according to a Bloomberg survey of economists.

Employers added 185,000 workers to nonfarm payrolls last month after they increased by 204,000 in October, data tomorrow will show, according to the median estimate in a Bloomberg survey of 85 economists.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

After a fairly dismal start to December, though not totally unexpected really, I expect that we will still end the year fairly positively. Just as you can’t pick the “top” exactly, so you can’t pick the “bottom” either and as such somewhere around this 6450/6500 area would probably be about right rather than trying to pinpoint a figure. I have support at 6480 today and a dip to that would tally with those dip and rises mentioned for the Dax and S&P above. If 6480 were to break then 6445 still looks likely as support. If 6480 is tested and holds then we could get a decent bounce starting to form, with 6530, 6570 and 6630 all viable targets. 6480 is the bottom of the 10 day Bianca channel for today.

It might be a bit premature after the fairly large falls this week but as long as 6480 holds then bulls could reappear.

90 Comments

  2. I think if gdp comes out good then market may react positively today and the impact of bad nfp will be bad (as in wont.be good news).
    So im expecting upside today and down on nfp (thats if nfp comes out worse)

  3. Not sure about ftse but reckon the Dax will go higher today after the loony Draghi has had his press conference.

  4. Think last nights drop was flushing out the last of the sellers. I’m in agreement Nick, could rally now sellers have exhausted…

    1. Possibly.
      Not sure.
      my indicator works in 2 ways to show reversal.
      Assuning a downtrend.. the indicator can show a bull trend wen markets are still down (perfect scenario as ur able to catch more upside on reversal)
      Or
      markets reverse n keep going up n then a bull signal is given (not a great scenario as u dnt catch much )

      Currently my indicator has dropped a bit…but still showing a bear are still in control. Hence why i think today is up day n tmrw down

  5. Personally i believe if there is any big upside to come then it will be after fed meeting on 17th and 18th.. from then the liquidty will be much less making the upside bigger

  7. we are very close to the bottom of that broadening wedge. Looking forward to buy there

    1. But that new trend line in the block is growing it´s potential. Need to see a reaction there, tomorrow so that it will be a definitive new trendline.
      For me it needs at least 3 touches.
      I see many people drawing these lines with 2 touches and saying is a new trendline

  8. I will take a stab on a long at 6485 with my shorts running. To get a better average profit..
    Lets see.. dnt usually do it but i think we may see 6540 today so y not try it..
    Going have stop loss small though

  10. that Nick´s pivot at 6593 is different from the IG’s pivot for today at 6508.
    What you make of it Nick ?
    It’s from the CFDs daily chart (with overnight hours)
    Yours I see it includes also overnight hours.
    But overnight hours shouldn’t be calculated.
    My own pivot do not use overnight hours

        1. I don’t have any pivots at 6493? though 6493 was the price at the time I saved the chart and is that number in yellow on the right in the chart above?

  15. Took a small long on Dax @ 9140 stops set @ 9040 target 9260.
    Small long on ftse @ 6500 stops @ 6430 target 6600.
    Let see how this pans out.

  16. Now FTSE for me has 3 points for reversal :
    1st – the bottom of broadening wedge
    2nd – 2-3 days the most, below the 200 ma (which would go with the 1st)
    3rd – hold above the new trend line for the next 3 days

  17. Well FWit trader 86% were shorting dax on Monday at 9400 and they were not wrong if you use ig as a indicator give up now mate.

    1. Well, not even IG customers can be wrong all the time lol 🙂

      PS I DO NOT use IG customer positions as an ‘indicator’ lol – it’s not even in the ‘toolbox’ lol 🙂

      PPS I recall also saying to short the DAX on Monday as well 🙂

  19. Btw Hashmash try not to predict reversals 17/18 before this/after this, etc. do what you are best at play the trend…

    1. yeah ahwab…im still short .. iwas thinking of putting a small long at 6485 but now i think about it ..its just stupid and im getting cocky lol
      gonna stick to what im doing and whats working

  20. Then if you don’t use it as a indicator why keep mentioning it? Instead why not tell us your trades as you place them.

    1. lol I have only ever mentioned once maybe twice in passing and for entertainment purposes only 🙂 And yes, I do post my trades as I place them 🙂

  21. Wow no difference from 8:30 came back from uni expecting some decent movement, meh. Tomorrow should be interesting.

  23. Still £-1.6k down lol. 6542 to b/e , nothing worse than waiting on the sidelines. Rather keep safe that reducing my margin by opening more trades. Gl everyone, taking a break till tomorrow catch up on some work…

    1. 6542 aint that far off mate…u will be fine, pretty sure ull break even!
      Im bearish and im expecting a 6550ish lol..maybe today ull see it because of GDP 🙂

  24. u can expect markets to be positive today..with these numbers im guessing people will think tapering is fine as economy is strenthening

    3. looks like im wrong..but still making profit haha (not as much though, i only have 1/3 short position running now)

  25. Dow/1 hr. – Downslope steepening again – a further fall on the cards – to ≈15800 I think. FTSE hasn’t much to celebrate – shows little enthusiasm for an uphill struggle.

  26. Great to hear different points of view here. I am long with a 6555 average. Clearly jumped in too early but wanted to catch the next leg up. Can’t see this falling too much further. 6450 I will add more. I cannot see an argument for different asset classes at present. Short term may be rocky but we are nowhere near all time highs in PE terms.

    1. Is starting to building a base. If this is for reversal or only consolidation for more downside is something to lookout for

        3. Guess tomorrow could be volatile. Noticed too that ‘Fed’s Fisher Speaks on the Economy in College Station, Texas’. Hell, that’s the centre of the universe! Went to school (uni) in Texas – that was back in the ‘swingin’ sixties’! 🙂

  29. FTSE Dec flip chart. Sometimes it’s good to have a different perspective. Look at flip chart twitter 😀

  30. im thinking imagine if fed even do taper in dec..whats going to happen, a quick sell off? because not as much money injected into economy..
    But then again with such good growth and with still some money being pumped, isnt that better than just have a shit economy with more money pumped?
    If this mentality sits in investors thought process…maybe next year will be more bullish?
    Or on the other hand even more bullishnes if they dont taper in dec and we have good growth lol
    we will let the markets decide!

    1. I’m quite sure that Ben and now Janet spend a lot of time double-guessing the market effects of their actions, or inactions for that part of it. ‘What matters a couple of hundred points if we get the direction right?’

  31. Looks like some hardcore support at 6500.
    but im still hanging in there with short till market reverse

  32. Hi everyone

    New here – been reading in recent days as I wanted some more insight into FTSE trends – very useful website and discussions. I am neither short or long at the moment but am starting to convince myself we have stabilized at these levels (ie 6500). Not doing anything until the US figures out tomorrow – as we will either bounce or drop further and if I miss a bit of the trend then so be it but at least I shall be on the right side of things (hopefully). Cheers David

        1. Hi Hashmash – Heard to the effect that the pension age is extended to 68 for people now in their forties. No specific mention of those in their twenties – but there’s plenty of room for further extension‼ 🙂

  34. Wonder if there is any significance in the FTSE landing almost (+.80) bang on the 6500 spot… hmm 🙂

  35. Feds will not taper till 2014 the markets are showing the Feds now what will happen if they taper, Green span was right 1st bit of tapering is going to drop the market can the fed risk that? Yellen is a big believer in QE she not going to risk wirhdrawing it just yet and blow the 4 trillion plus that been pump into it already.

  36. Fed can’t even think to taper in December…..not because the data doesn’t support it but because the liquidity in the Money Markets dries up in the last two weeks of December. To try to taper on top of that would be insane.

    The only way I can see a sell off after this month’s meeting is if they were to say that they will taper in 2 months time – which of course is as likely as Man U (I could add Arsenal as well) winning the league this year…..In the end it will be a damp squib this month without the usual volatility surrounding the release.

    Merry Christmas Everyone……

  37. Agree totally there javed, this is just the big boys flexing there muscle. If the market going to drop 300 points just on there might be a taper imagine what’s going to happen when there start tapering…. Feds have made the markets like crack junkies feeding them on easy money, now they face a massive problem how to withdraw Qe without blowing the market.

  41. How do you know they wrong flash? How do you know what time frame that work too. Far too many people obsessed with what’s on ig clients base.

    1. Fair point, but consider this, 95% of people who SB, loose their accounts. Go with the trend if you like.

  42. Well 77% are long now, the biggest reason most people lose on ig cause they over trade there account which many of us have done in the past, even now I over trade easy to do. As for the ftse we are now heading to heavy support on my daily and weekly charts.
    Cause the market drops 250 points over a few days this don’t mean that we are in a bear market/correction pull backs are healthy in any market, booking profit and entering back in at a lower level is common we have had a strong bull run since January.

  44. Dnt kno y people basing their opinions on ig purely… u lot will get caugt out big time..
    if 77% are long now and market goes up 50 points i guarantee that number will drop.. as most ppl who SB dont like to let their profits run… meaning if that 50 point move is a big up trend the client sentiment only drop to about 70% say n if u enter long now.. ur gon be totally fked

  48. Last signals on the FTSE were to go short on the 25,27 and 28 of November… not a peep since lol 🙂

Comments are closed.