Bulls need to defend 7405 and 7380 to get FTSE 100 any higher

13th July 2017

After an initial dip from the 7400 area the bulls powered through thanks to Janet Yellen who signaled the Federal Reserve won’t rush to tighten monetary policy as inflation remains persistently below target. U.S. stocks also rose toward records, Treasuries rallied and the dollar retreated, while the FTSE 100 finally broke through and stuck above the 7385 resistance level that we have been dropping off repeatedly. We go into the next 2 session looking fairly positive and have earnings out from some of the big hitters to come as well. The US markets hitting new highs certainly diverted attention away from Trump Jr and the email saga.


FTSE 100 Outlook and Prediction

FTSE 100 Prediction Daily Channels
FTSE 100 Prediction Daily Channels

For today I expect that the bulls will continue yesterdays rise initially as now that 7385 has broken, and they managed to close above 7405 it opens up the realistic possibility for the next level of note which is 7470. There is the 20 day Raff to start with at 7444 to start with though so may see a stutter here depending on how much momentum they can muster, while the 10 day Raff is now at 7522. With 7405 breaking we can safely presume that 7305 on Tuesday is the short term low and the bulls are now back in the game. The 2 hour chart is bullish again, with support also showing at 7385. Previous resistance there also becomes support.

If it all goes pear shaped for the bulls and we go back below 7385 then the next leg down is likely to breach 7300 and we will see that 7260 area that is still support. For today however, I expect the pivot at 7406 to hold, and 7385 if it doesn’t.

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36 Comments

  1. Agree with everything you’ve said today Nick. It’s vital that yesterday’s gains are built upon otherwise we’re heading to fresh lows. I’m remaining positionally short looking for 7100-7200 but would now exit everything if we break 7450. Longer above a resistance level the more relevant it becomes – so they really need to hold 7380-400 or it’s a bearish development. Got my eye on sterling as I think a breakout above $1.30 might be coming soon.

      2. Yeah.. basically looking for it to get oversold on the daily RSI then see a more sustained rally back to 7400+ and see where it takes us

  2. Morning all. Holding shorts on dow and ftse. Plan to add to shorts if it goes higher.

  3. Morning all,well my take on it is the same as it has been….I think that cable is going to drop and the Ftse will rise back toward 7600 helped by an increase in the oil price….time will tell,good luck all…..

  4. Yellen has basically stated that interest rates cant go much higher, inflation is low and the economy is strong. If ever there was a green light for stocks this is it. Im going all in and not interested in wobbles. There will be no return elsewhere, she has made stocks a default purchase. Will also hold gold. So looks good for rest of year. Im 80% stocks 20% gold. Expect FTSE to hit 8000 by xmas.

    2. If you look at the fund manager positioning data people are already heavily overweight stocks.. they are underweight bonds so a more gradual path for rates will probably see more pour into bonds rather than stocks. Personally would think it’s fine buying stocks unleveraged in an ISA at these levels but when we’re talking about leveraged spreadbets it’s always a bad idea to ‘go all in’ and not care about managing the downside risk. Too many people on here are more bothered about getting ‘calls’ right than they are actually making money. There’s a reason 90% lose and that’s because people don’t manage their positions very well or cut their losses early enough

      1. Agree about leverage. I have many times here advocated unleveraged ETFs which are the only instruments I use. TER is usually 0.1%. Leverage is your worst enemy and will wipe you out eventually. Probably sooner rather than later.
        As for stocks v bonds…I would sell bonds and buy stocks, which clearly has been going on for some time and IMO will accelerate. Why would you buy bonds? The return is a pittance and there is still scope for capital loss. No thanks.

        1. I wouldn’t buy them myself, and I don’t think many individual investors would with yields this low. But we aren’t the ones moving the price the institutions are. And they buy them for various reasons such as matching cash flows on liabilities and to improve the risk/return profile of their portfolios. Typically they might have a benchmark to work with and tolerance levels around it, so looking at the data if they’re overweight stocks already and underweight bonds (and overweight cash) then they will cut the underweight to bonds if rates are perceived lower for longer. Their stock position may or may not change on the back of it but typically when they’re already overweight stocks it means expectations are already high so it’s more likely that something happens to make them cut their position rather than increase it

          1. Fair enough there may well be technical reasons why large institutions will rebalance their portfolios and its a good point. But I ask myself which do I want to own? Of course I want to own the one thats going higher and producing a return.And with interest rates no longer a threat and at least the US market looking not weak – thats the horse I will back, personally.

        2. Hi there. Sorry to ask, but what platform do you find unleveraged ETFs?
          I can’t find any below 0.50%..
          Leverage really is a bitc.

  5. If cable rises over 1.30 it won’t be pouring into the ftse. In fact the opposite may happen.

    1. And it might not. Cable can rise all it wants …it can go to 1.40…and FTSE will not fall back in any meaningful way. And I still say ita headed to 8000 no matter what.

  6. At the end of the day it doesn’t really matter whether the Ftse goes up or down,all that is important to us is that our trading accounts increase in value over time,there are always going to be drawdown periods but our trading accounts are the only true guide to our performance.

  8. Longs failed me today. I had one attempt 12656: b/e. Another attempt 12646 which I left on b/e and went for a Spidey movie. Good I went cos if I didn’t I may have tried another long. I missed morning long and at 9.30 it was a bit late to join so I thought after retrace. Oh well, it’s kind of a pull back day.

  9. Hi fellas, if anyone wants a good audiobook to listen to, I can recommend hedge fund wizards by jack Schwager. It’s long but has lots of relevant nuggets of info for the likes of us. Some of the interviews do go beyond what we need and can be a little drawn out at times but stick with it and at the end the conclusion really hits home the tips gained from the interviews that I’m sure most of us will relate too. Personally I’ve found it really good to instil some of the helpful behaviours that we need to be better. Picked mine up cheap on eBay.

      1. What’s the new version like nick, if you’ve had the chance to read it. , Much the same? or worth getting?

  10. I could be wrong, but we had a huge rise from yelled part 1, nothing from part 2 and now markets are literally stagnant, feels like a fall or retrace from yesterday is brewing.

    Word is data tomorrow is likely to be poor, if I know that then heavy weights will?

    Any thoughts anyone?

    1. I would guess that if the heavy weights knew that the results were going to be poor, the Dow would not be hanging around the highs right now??

      1. heavyweights won’t sell yet, whilst it’s high and there is a chance it will go higher it will grind…However bad data is a catalyst…the data itself counts for nothing.

        I guess if my theory and data assumptions are correct it should fall in the next few hours, Dow this is BTW

        1. Well I had allowed for between yesterday and today bears would technically have to act. Let’s see. With an hour left it’s looking pretty dull

  12. Evening chaps ,only one trade for me tday….sometimes as Jesse Livermore said….”.I make my money in the sitting not the trading” Great Book Mcg interesting read…. Yeah so I’m just waiting up my tree till the opportunity presents itself.good luck all..

  13. I thought I would post a little poem for you all……..

    It’s by Henry Wadsworth Longfellow….

    It’s over 100 yrs old.

    “The heights by great men reached and kept
    Where not attained by sudden flight,
    But they,while their companions slept,
    Toiled ever upward through the night”.

    Hope you all find it inspirational… Happy trading….

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