Bullard signals April rate rise, profit banking today with drop from 6200 area

Support 6145 6124 6078 6029 6012
Resistance 6165 6178 6180 6181 6195 6287

Good morning.
Market Summary for Wednesday 23rd March 2016
Another day where the market oscillated around the key 6200 area with any moves soon returning to this level.
It’s hard to see anyone trading heavily before Easter so we can expect a similar pattern today or possibly a drop down to the 6110 recent low.
Commodities were the weakest sector with a mix of companies to the upside including Kingfisher and Sky.

US & Asia Overnight from Bloomberg

  • Japan equities fluctaute as Shanghai Composite heads for loss
  • Fed’s Bullard latest policy maker to signal rates may rise

Asian stocks dropped for a second day as oil tumbled below $40 a barrel and investors weighed the direction of U.S. monetary policy.
The MSCI Asia Pacific Index fell 0.7 percent to 127.74 as of 11:34 a.m. in Hong Kong, heading for the lowest close in a week. U.S. shares retreated on Wednesday as Federal Reserve Bank of St. Louis President James Bullard joined a chorus of policy makers floating the prospect of an interest-rate hike as soon as April should the economic data warrant it.

“Fed officials this week reminded the market that they still want to move forward with the rate hikes,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “Investors have been looking for a reason to pull back and this is one. Not surprising given the strong rebound that we’ve seen. Concerns remain about how sharp the slowdown is in China. You still have deflationary pressures and geopolitical risks.”

After halving its projection for rate increases this year to two — a shift that spurred global stock gains and weighed on the dollar — the Fed is back in the spotlight as its own officials start to tweak that rhetoric. China’s central bank chief is due to speak Thursday as traders in some parts of Asia wind down ahead of the Easter holiday.

Regional Gauges
China’s Shanghai Composite Index dropped 0.9 percent, heading for its biggest decline in two weeks, as some of the nation’s largest firms including Anhui Conch Cement Co. and PetroChina Co. reported slumping profits and smaller companies retreated after a benchmark gauge entered a bull market.

South Korea’s Kospi index dropped 0.3 percent. Australia’s S&P/ASX 200 Index lost 1.1 percent. Taiwan’s Taiex index slipped 0.5 percent and Singapore’s Straits Times Index declined 1.1 percent. Japan’s Topix index was down 0.1 percent, after swinging between a gain of 0.1 percent and losses of as much as 1.1 percent. New Zealand’s S&P/NZX 50 Index added 0.1 percent.

Mitsui & Co. tumbled 7.2 percent in Tokyo after the Japanese trading company booked more than $2 billion in impairment charges and forecast its first net loss in its modern history. Inpex Corp. dropped 4.1 percent, pacing losses among energy producers as crude oil futures extended declines. Australia & New Zealand Banking Group Ltd. slumped 5.7 percent in Sydney after saying bad debt charges will be higher than previously forecast as low commodity prices impact its resource-industry clients.

E-mini futures on the Standard & Poor’s 500 Index decreased 0.2 percent on Thursday. The U.S. equity benchmark index slipped 0.6 percent on Wednesday as energy producers declined amid the dollar’s longest rally in a month.

West Texas Intermediate crude declined 4 percent on Wednesday, the most in six weeks, as the dollar gained and a government report showed rising oil stockpiles kept supplies at the highest level in more than eight decades. The oil contract for May delivery fell as much as 0.9 percent on Thursday. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

As we have a shortened week this week and no trading tomorrow I don’t expect a whole heap of buying. The charts are showing pretty good resistance at the 6175/6180 area so if we get a bounce this morning off S1 to that level its worth shorting there for a run down to the recent low at 6110. The 2 hour chart is also looking bearish, as once again the bulls failed to break and hold above 6200. Its been a weird rubbish choppy sort of action recently on the FTSE so it will be good to get some direction going soon. I have a fairly simple plan for today which is to short that level, as we are breaking below the 10 day Bianca at 6165 first thing, which could be showing that the bears are starting to take back a bit of control. I still think we have come too far too fast on nothing much apart from stimulus, and yesterday we had the Fed’s Bullard talking rate rises in April. Could be seen as a reason to bank profits from the rise before the weekend and for today I would feel more comfortable being short rather than long. So, short the rallies today for me.

113 Comments

  1. Greetings from Punxsutawney.
    Probably another quiet range bound day as Nick says, boring but a nice little earner if you’re patient.
    I’m naturally BTDing like a good boy and looking for the usual action, i.e. early weakness, mid morning high and then pretty much lose interest for a quiet afternoon, maybe 15/65 range all day?

    1. Short all out at 40. Think you are right, tmfp, going to bounce around with a small range in front of the long weekend. Had a good week so unless something radical happens going to leave it alone today and stay flat.

      2. Good move mate.
        Just a chink of light for the bears if DAX breaks 9900 but pretty poor r/r to short it I think.
        I’m all out at 40 too atm, looking for that test soon.

  2. Just added to my Dax long at 40…..and 30 only small that’s me done for now…we have that EUR LTRO soon so I’m expecting some volatility around that time.

  3. 9900 DAX is gone I think.
    I am still my short from 10030 from after hours yesterday, added at 9980 this morning and at 9950.

      1. It’s a bit of a lottery Rick really isn’t it……as usual it all depends on Mr Pump and the Dow……

          2. Maybe get yourself another short higher up than 50 if it’s the short side you favour if we get a spike at 10.15.

          3. Hi Anstel,
            Thanks – I was actually waiting for a quick bounce to 40s/50s after 9900 dip.
            I am all square now except my DOW short from 17600s and still looking for a decent bounce to short.

  4. Interesting little wedge formation on the FTSE 1 min, should resolve at or before 0945 off 33.

      1. Looks like the upside prevails, IF 9930 and 6145 break and hold, could have seen the lows. Brave, not entirely convinced, call.
        If 900/125 do go, could be 100 point DAX hole, but given the end of term feel I’d be surprised.

          2. I bought some at 15 as well and sold it for +2 lol, was sweating to hold a long.
            Anyways looking for a bounce in 30s now

  5. Morning all.ASX last night looked a bit,”normal service is resumed”,but Dax 9930 just feels like more of the same and CMC still have ASX a buy over 5000.I reckon if ASX can stay up anything can.

  8. tmfp – Pretty much all the charts are oversold now including hourly, do you think it’s time to BTFD or short the bounces to be on safe side?

    1. It’s ranging Rick, I’m just pottering about off the extremes for entry and taking what I can.
      This weakness is certainly going on for longer than I’d anticipated but I just don’t see a huge move, not given the weekend etc.
      DAX is looking particularly poor, just bounced back and failed to hold 9900 so everything says more down BUT it’s always darkest before dawn etc.
      R/R says BTD to me, but wait for extremes to enter.

      1. Thanks tmfp for your brief analysis, much appreciated.
        I was also expecting a bounce to 6150 by now as we have seen this quite a few times over the last couple of weeks.
        I’m not convinced with BTD at the moment, small short at 6117 now on RSI 40 S4

      2. Still watching, thinking about BTFD but am very nervous. I would like to see a re-visit to around 5800 then I’d be throwing the kitchen sink at the dips. Just to keep an interest and on the basis of absolutely no technical analysis at all I’ve bought VIX at 18.18 for the obvious cataclysm that will happen next week!

  9. Krispy Kreme in the States had below expected Revenue growth over Christmas,thats either a massive red flag or an accountancy trick 🙂

  10. Well I expected a bounce on the Dax around 10.15 but no real movement…….oh well let’s see what the Dow has in mind for us? 200 or so off the Dow recent high.potential for some upside I would have thought after all the effort thats gone into getting us up here? Unless of course it was just to suck in some more longs before the collapse.

    2. Lol!!!!……it’s goin to happen Si that’s for sure…..but being on the right train is another story……I’m always on the wrong bloody platform….never mind finding the right train….Good Luck….you deserve some……I could do with a couple of Bob off my longs first though if that’s OK :0)

    1. It’s right down at 9800…. I know it’s along way down but still.The Dax is a heavy breather!

          1. It’s very difficult to know how best to play it……I’m afraid it’s just a will they ….won’t they ….situation regarding the Dow…..it’s a game of bluff really…we all know by rights Si should be staring at blue ink with lots of zeros after it but who knows really……?

          2. Financial Mkt’s and the real Economy arent the same thing though.Non mfg Co’s are still returning greater than bank Interest rates or Gov debt,employment and Incomes for Fat people arent in decline and Prop is still bubbling away,all that due to free money.Collapsing it would leave nowhere for money to go and risk what they have been trying to avoid since 2008.A correction in line with a normal,pre 08 pattern,wouldnt matter much on a day chart over 12 months and wouldnt mean Dow 6000 or whatever the current call is.

  14. Happy easter Senu,tmfp.
    A Dow close around here would be prety neagative,but could still just consolidate for a bit,RSI has been overbought for a couple of weeks I’d take a close in the 470’s as not meaning much about what will happen next week.I can imagine NFP on April 1st as being good for a laugh though,one with three sixes in it might get the midwest back buying doughnuts to cope with the stress.

    1. U.S no’s on Jobs and durable goods orders in 15min.Kind of a mthly guess at GDP with the orders.

        1. just took my £80 profit on that trade, now lets wait
          what the US does to the FTSE when it opens in 30 mins.

          i predict a pretty nice drop down.

    1. For what its worth Si, the World and his wife are still short (77% on IG), and it could easily get down to 350 then bounce to 600 without blinking. Buying VIX is basically me gambling that it’ll shank next week…..but I’m not certain!

      1. I’m short from 17,640 too but not sure how to play this. May just keep it open in hope for 17000 area. If Brent closes below $40/bbl today that’s pretty compounding negativity too (currently looks likely).

      1. Out at 6120.Would rather be long higher up and still dont like that C&H,appreciate it though 🙂

    1. You’re probably right looking at Dow 15 min,but I have to play the patterns when they appear for my %ges 🙂

  19. whats your idea folks? there is low volume in the FTSE and worldwide
    markets are the same worth going in short on the FTSE?

    1. I didn’t mind seeing it at the open, but don’t fancy it now. I’d like it to just crashadoodledoo from here.

  24. that’s it, my entire life savings; buy, buy, buy the goddam irrational, multi dimensional, downright erratic dip..

    all on dax and dow, go on me son…

        3. Hi tmfp I’ve got that daily a bit lower,but what do you reckon on S&P 2000 as a line in the sand for the U.S ?

          2. I was going to say that breaking 17460 might pose problems, looks like our attempted rally ran its course.

            That’s it from me folks, have a good one!

          3. Thanks,yes it has the recent history and the Psychology working for it.Mind you I wouldnt be surprised to see an outbreak of good news over the weekend and sideways for the U.S.Weekly Dow is 500 odd points below R & 400 odd above a trend imo.

  29. Just come back,what’s going on…..Dow has recovered nicely…..doesn’t look like any things broken…..my Dax is still in the game…wonder if Ftse will break 6200 after Easter again?might even edge up a little into the close.

    1. Hi Anstel,you missed all the fun 🙂 got out of the Dow just before it closed,but sort of regret it so dropped a bit on the FTSE at 6137 to join you in the out of hrs holiday fun.Be interesting to see what comes out of the U.S tomorrow no.’s wise.

  30. I’ve got 3 Dax longs from 30…. 40…..81….. Stop was at 9800 think I will be keeping that over weekend and I have a Dow long from 35 that’s showing +7 pts….might be cheap that next week think I’ll be keeping that too.if nothing Black Swannish happens over w/e might be a good price next week…6137 Ftse long? Nice. Reckon that should put a smile on your face next week….if recent performance is a guide between 6150 and 6210 is a reasonable guess for some upside.have a great weekend WSF if we don’t speak again tonight.

    1. Thanks,hope you have a good weekend too.I’m thinking there might be something in the U.S numbers out at 12.30 tomorrow,looking at 6144.5,9897.3 and 17548.8 closed at the moment with 6 and 4 point spreads.
      Might be worth playing around with some Orders,Stops and Limits tomorrow anyway,if it has turned here then your Dax trades could really run given the way Dax has been lagging the Dow,be interesting to see what the Volume was today too.Interesting day in the end 🙂

  32. yes good data end of month too can only see more rising next week for the Dow might drag the others along too, but for now it seem all about the Dow.

  33. Morning All,Dow at it’s Wednesday high and europe looking interested in reaching their Thursday highs,with the Dax lagging everybody else again.Apart from last week this is a Dow area from last yr and a bit of a trend area on the weekly,so fair enough that it might want to be open and awake in order to make a decision about it 🙂

  34. Morning WSF probably be no one about on here tday but like you say interesting push higher on Dow to the 620 area and 168 area Ftse.Be interesting to see if we get FTSE over 6200 this week.and the Dax back for a look at 10100.The closer the Dow gets to 18000 the safer a short position…….we have seen some pretty big sell offs on the Dow wonder if we will get another 1500-2000 point move in the quieter months after May before a SnapBack up for the election?

    1. Morning Anstel,Yes,if you stick a downtrend line on the Dow weekly,you can see why this area is so big in any Bear analysis at the moment,but like you said last week,low volume and news coud easily favour a breakout to the upside.I’ve been a bit casual with the U.S Election backstop,it lasts so long even if you dont count the warm up stuff before the official rubbish,but basically it is in November,so Sept,Oct could well be a stable trend one way or another this year 🙂 and I was thinking Sept coud set a tone and Oct is normally a bit funny but maybe without all that imminent doom stuff we usually get to allow a preparation for a Santa Rally ? That stuff about cycles last week and Rick with the Almanac link re Easter holidays and a rally has had me thinking about the calendar all weekend,added a few books to my list to get too.
      Hope you had a good Easter .

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