Bullish today – 6500, 6520?

Good morning. Well Friday was interesting, we failed to break the 6500 area and saw a drop all the way back to the 6393 area that has been holding as support for a while. I expect us to have a bounce today as the risk of all-out war over Syria abates, though it might well be fairly quiet as the US is closed for Labor Day, to around 6460ish. Fridays long worked, but not as well as I expected – I think the market was unsettled by the Government losing the vote over Syria, however it seems that the US isn’t rushing in now either. Last night there was positive news out of China that’s manufacturing expanded, hitting a 16 month high. That bounce might only last today though (also helped by being the beginning of a new month), with more downside later this week as we hit the top of the Bianca channels once again. If 6393 breaks then 6338 is likely, possibly 6270. For a really bearish outlook, there is a chance that if 6150 breaks then we will see 5550 would could be a good long term swing low for an entry.

Asia Overnight from Bloomberg

Asian stocks rose for a third day, copper gained and the Australian dollar strengthened as Chinese manufacturing expanded. U.S. stock-index futures advanced and crude fell as prospects of an imminent strike on Syria faded.  The MSCI Asia Pacific Index added 0.8 percent at 2:19 p.m. in Tokyo. Japan’s Topix Index increased 1.1 percent and Standard & Poor’s 500 Index (SPA) futures rose 0.7 percent. Indonesia’s Jakarta Composite Index fell 2.1 percent after the nation reported a bigger-than-expected trade deficit. Copper climbed 2.2 percent and silver rallied 2 percent. The Aussie strengthened 0.8 percent versus the dollar. West Texas Intermediate crude sank 1.5 percent to $106.07 a barrel.

China’s economy is strengthening after a two-quarter slowdown, with a manufacturing gauge rising to a 16-month high in August. Data today may show euro region factory output maintained growth in August. India’s slowest economic expansion since 2009 adds pressure on Prime Minister Manmohan Singh to stem a slide in the rupee. In the U.S., where markets are closed today, President Barack Obama delayed action against Syria by seeking approval from Congress.

“Growth expectations globally continue to improve,” Michael Kurtz, Hong Kong-based chief global equity strategist at Nomura Holdings Inc., Japan’s largest brokerage, said in an e-mail. “An ongoing rebalancing in China keeps growth there largely on a moderating trend.”

Outlook

ftse 100 prediction
ftse 100 prediction

With 6393 holding again it’s a good sign for a decent bounce today, which puts the top of the Bianca channels back in play again. With the US closed today then we may well get a fairly flat day so that’s worth bearing in mind. I have initial resistance at 6465 so have plotted a dip from there, before a further rise to test the channel tops and Fridays high at 6504. There is a chance that we overshoot to 6518 though which would be a “safer” short than the 6500. Today’s pivot is 6441 which could act as support for the initial dip if we see one. With the US closed it will be the S&P algos trading the futures, and that has support at 1628, with resistance at 1646 (where we are pre market) and 1655.

80 Comments

  1. Its just unbelievable, FTSE have recovered everything it has lost last week and more!!…..and all that in just few hours!!

  2. When’s dividend day? How does it work? Say if I am in a long positron (went in on Friday at 6393.3 with 3 points) how does that work?

    1. You will be credited or debited {position size} x {div}.
      If your long £10/p you will be credited 10×4.23 £42.30.

      However market will also drop that much so your account will effectively gain or lose nothing as the credit/debit and loss/gain of your position cancel each other out.

      I’ve traded one or two bigger divi’s days now and there is usually a dip then a rise before close. (thought I’m not sure if this is always the case) Look back at previous big divi days to see this. August 5th and Aug 9th are good examples.

      http://uk.reuters.com/search?blob=ftse%20dividend%20adjustment

      This happens on IG at 4.30 Tuesdays, other platforms maybe different.

      This weeks maybe to small to have much effect?

  3. I don’t get it, today is supposed to be a holiday in the US, why the market is still working? I didn’t even look today in the morning being sure it is closed…

  4. Placed a short a few days ago at 6530 targetting 6435…….might get hit today it seems.
    Already shorted Dow at 14925 this morning……medium term target 14725, possibly onto 14660 and 14475.

    1. I’m almost of the opinion that we will now make new highs. I have been bearish for sometime but every move down has been met by a strong move higher. As someone mentioned earlier, we have taken back all the losses from last week in a couple of hours today. To me that looks like there are still many bulls willing to buy the dip.

      1. Not really, the volumes are really pathetic and with that you will get moves like today. This probably got people by surprise so you get stop losses triggered to which will push the market even higher. On IG platform for example all day you have majority orders today are sells so the market is hunting the shorts….

        1. An aurgument can also be made that volume has been low over the past several weeks and on bearish days has not pulled the market lower. I agree at some point buy the dip will not work but as long as there is printing there is no point fighting the Fed.

          1. True -but we will sonn find out which side is right.This month’s NFP is going to even more actively traded than usual. Friday and at least early next week is going to be volatile with volumes higher than average.

  5. Last time the miners rallied on China data I lost a load of money trading against the trend. Wont be making the same mistake today. Long until R2 or any pullback before then.

    1. I think I was right, US is closed and there’s no volume. I think I will snore in a minute. I’d better come back tomorrow.

  6. Partially closed my FTSE short at 6504. The next target is 6471 and then let the remainder run till 6440-6435.

  7. Looking for a close at the 61.8% fib level today – 6500 dead. Would be nice just below but looks like it will finish above.

  8. These are still quite early signals, but growing in confidence:

    Daily –
    S&P 500 – Confirmed up
    Dow – Confirmed up
    FTSE – Confirmed up

    I realise I might be in a minority of one … 🙂

      1. I think I’ll give it a few days yet Javed, I’m out of the market just now apart from a few high-dividend holdings. As you mentioned earlier, Friday will be important.

          1. The signals are purely mechanistic and unexpected reversals are always possible. Unfortunately, end targets are not addressed – although one does form a contingent view! E.g., in the case of the FTSE, if some upswing does develop, 6600+ should be achievable in the near term.

  9. I don’t know what’s really going on today, missed short 6525 as planned and went to school. When I was back it’s gone. I should have placed an order, but it would have missed half a point anyway. Just now took 22 points as a surprise on a little twitch from 6473 to 6495 where the spike ended. I see very confusing signals today all over the place. It looks like short from 6525 was the one I missed today.

  10. No advice or anything today. Thank you guys. First day back to trading, cannot get the idea what is going on.

  11. Jack – I don’t give too much advice because trading is all about personal targets, limits and psychology.
    You are short at 6498? What is your target? Personally I would look to get 6474 with a stop at 6522, but it depends on your timeframes too.

  12. Hi Jack,

    Stick with the short if it is small. Resistance is at 6530. Given the rally yesterday, any short at around the 6500 level should net some 30-40 points. So I agree with Javed above. May even see the retouch of the 6454 level earlier. I missed that as well. Took the 30 points from 6529 to 6498, but missed the big one to 6454. Went in the garden for a break for an hour…came back saw could have had another 45 points on the way down and the 45 up. So potential 90. Not that upset because I trade small sensible sizes because I often average down sensibly if the trade goes against me.

    If your short is big, that may be causing you the indecision. Unload some of it for a projected retouch of 6460-70.

      1. Your welcome Jack 😉 Hope it goes well for you and also because I have a short at the same level as you.

  13. It will Jack…relax…give it till 4.30pm….go away from the computer and set a text alert!. You are forcing the market…the market listens to no one!! If not at 4.30pm today then by U.S. close or tmrw. Instead of making it a day trade convert it to a position trade of some 48-72 hrs..

      1. Thanks, it is hard to start trading again after a break, you kind of forget some of the things.
        Plus today is divi which always puts me off shorts, but I am short at 6500 now, the previous was closed b/e so I opened a new one. We’ll see.

  14. I have also got a short at 6499, at £4 point. Not stressed because of the small size. If it goes past resistance of 6530 (which I do not expect) then I will open another small short to average down.

        1. Nick is going part-time now….but don’t worry he has hired a new guy for the next 3 weeks to do his daily updates….DOLA! 😉

  15. Everyone be careful and watch the final half hour between 4-4.30pm. Last few sessions huge sharp drops in minutes. I think one was a straight 40 point drop 2 weeks ago. Also FTSE divi day today…

  16. I think it is 4.1. Will phone IG now and put it up. Jack you have 6486 now if you want a small profit..or lock it in…with a stop and wait for more downside .

  17. Jack / Ray – My 2 cents worth…..lock in half at 6474 – effectively short at 6522 which is the high for today. Then look to run the remaining position.

    1. Thanks Javed….stop got hit…was very tight…only £86 profit..but hey it was only £4 a point…not complaining because I now tend to lots of small trades and tally them up to make my daily bread…so far today just under £200..good enough for me for a 8hr shift with 2-3hr break… 😉 Looking to re-enter >6500 level…6529 would be nice.

  18. Holding short position till 4.30 close, got enough short term momentum to go a bit lower possibly to revisit the 6460…

    1. No, I came out just before 15.00 as this is when I finish. I cannot trade after that time, I have a very busy time after that collecting children, working etc. So I had only 8 points out of that. If the move doesn’t start before 15.00 I am missing out of the opps. It’s not the first time happened. But I have no guts to just leave it. Don’t trust it at all.

  19. If everyday in September is going to be like this our nerves will be wrecked! It is only going to get worse with the build up to the NFPs and Syria vote early next week. I’m glad I’m short…….but it is a tense ride.

  20. Going long to 6500, where i will placed a medium term short for the remainder of the week. Too much volality in september…

  21. Friday’s NFP number and next weeks Monday geo-political risk of Syria as Congress votes, expect extreme volatility. Not because of Syria on Monday because the big boys will use it as an excuse to make it volatile to ‘make money’.

    NFP this month is probably the most important because this data will precede the Fed meeting of Sep 17-18……this is it….well should be data wise….should determine Fed trajectory regards tapering.

    I think as usual the city boys will hammer the market in one direction BEFORE NFP data is released, (1-2 days before) as they have done in some of the last few months.

  22. Jack two
    Just set your stops and limits, most of the time when I am busy I may not check for the whole day but I know I am safe cause stop are in place, and if my target is hit then my trading platform close. Take lots of the emotion out of trading.

    1. Thanks, that’s exactly what I was thinking yesterday. I thought about my stop loss was OK and the limit was OK though as you can see it dropped even further. But it was unbearable for me yesterday, maybe it’s the 1st day after a break but I had those old creepy feelings came back. As soon as I stopped I could breathe as I could not calm myself any different. I will try better next time 🙂

  23. Expectations are that it is a good number which conversely will be bad for the market. However I get your point……if it misses expections but not by much then yes it’s gonna be an even more interesting and volatile day.
    Syria still has the propensity to crank up intraday volatility as well over the next week or so.

Comments are closed.