Dip and bounce for a bit today? 6570 support…

Good morning. As expected Merkel won a third term in the German elections so the Dax should remain pretty stable. The main news for the UK over the weekend seemed to be a very upbeat media about the UK economy and how well its currently doing, at the same time talking about the “housing bubble” that is brewing. The FTSE is still hovering around the 6600 area and looking a little bit more positive after the drop on Friday. Unfortunately Friday wasn’t quite as bullish as I expected, running out of steam not far above where I closed that long – stalling at 6635. Knew I should have gone short when I closed it at 6623! The second long on Friday at 6592 didn’t amount to anything at all such is the joys of Friday trading.

Asia Overnight from Bloomberg

Asian stocks were little changed, with a regional benchmark index trading near a four-month high, after a Chinese manufacturing index jumped more than forecast.

The MSCI Asia Pacific excluding Japan Index climbed less than 0.1 percent to 469.44 as of 1:15 p.m. in Hong Kong. The gauge reached a four-month high on Sept. 19 after the Federal Reserve maintained its bond-buying program. Japan’s market is closed today for a holiday.

“It’s an indication of a continuing expansion,” Hao Hong, Hong Kong-based strategist at Bank of Communications Co., told Bloomberg TV. “As long as we continue to see economic expansion, the depressed expectations will continue to reverse and that is positive for the market.”

The Asia-Pacific gauge rallied 7.9 percent this month through Sept. 20 amid signs China’s economic growth is stabilizing. That pushed valuations to 13 times estimated earnings, compared with 15.5 times on the S&P 500 and a multiple of 14.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Chinese Manufacturing

Chinese factory output expanded for a second month in September. A preliminary HSBC Holdings Plc and Markit Economics’ purchasing managers index released today rose to 51.2 after jumping the most since 2010 to 50.1 in August. A pickup in China’s growth may boost Premier Li Keqiang’s odds of meeting this year’s 7.5 percent expansion goal. The final reading of the manufacturing PMI from HSBC and Markit will be released Sept. 30.

Outlook

ftse 100 prediction
ftse 100 prediction

If the bottom of the 20 Raff channel holds today at 6575 then we could retest the recent highs, however the 10 day Raff has turned down a little and has support at 6530, and resistance at 6670. With the Bianca channels at 6654 and 6690 then the bulls I feel will struggle to push much past 6700 in the short term. That said, I think the bulls might have a go today as the 30 minute chart isn’t looking like a busted flush just yet, though this week could turn quite week as it progresses and prices likely to stall at around the 6650 area where we have the top of the Bianca 10 day channel. Initially this morning we are just hitting the 30 minute coral line, so expecting a bit of resistance there, though as long at 6575 holds then the bulls are still in with a chance. So, an initial dip and then hopefully another push from the bulls but the bears are certainly getting stronger now and I expect the general theme this week to be bearish. I have plotted arrows 3 & 4 to go higher and that assumes the bulls can keep the strength and break the 6615 area. If they don’t then the bears will maul them  with a drop from the 6615 area and the pi8nk arrow will play out from 6615, not 6638.

33 Comments

    2. You out of that short Jack?

      Sorry to see you not using stops. They are your friends.

      Three right and three wrong for me last week. lost 62pips on the losers and returned 104 on the winners. The stops kicked in on the three losers and so protected me.

      Tough week though for sure.

      Trade safe

        1. I am in deep s… lost all interest just watch the account disappear. See what will be by Wednesday. Just curious. Just wasn’t a good month, mood up and down. If it gets to above 6620th I will close, but now there’s no point to close any more.

          1. Sorry to hear that.

            With the greatest respect do you think you are cut out to trade. You are very honest with your posts and the emotional roller coaster cant be good for you.

          2. Yes, I know. I try hard to use stop losses but it works for some time until one nasty time ruins everything. It’s hard to fight it. Sometimes it gets ridiculous – I am saying to myself Press the button, close it, but then I say to myself I can’t, I can’t.
            I can close now of course, but then… I don’t want to regret any more if it goes up after that. Let’s say that my account is my stop loss, whatever happens.
            Obviously if I lose it, it will stop me trading for a while and I will cut it out. It’s hard to fight yourself. I feel that market is against me and cannot fight this feeling at this time.

      2. You need a new mindset. If you went into the bookies and backed a horse for say £50 at 2’1 you wouldnt put another £50 on during the race if your horse was last with a furlong to go. If you cannot discipline yourself to place stops then you need to get out of this game as you will blow your bank time after time.

        You can only last in this game by learning to both accept and take the losses.

        So many posters have come and gone from this bb as they blow their banks.

        1. I will see where to close, hope that tomorrow will be a bit more bullish. I may keep part of the account if I decide to close tomorrow if I am lucky but it will take me ages to recover, if ever.

  4. Looks like a healthy pullback taking place. Hopefully will continue for a day or two more so we can get our longs in for the next leg up!

      1. The fact that the markets were overbought last week and are now easing off allowing for further upward movement. All technicals and recent news point to more upside. Good luck if you are short but be joining you for now. This is merely a pullback and not the start of some sub 6000 downside.

        1. I think John is right.

          Last week we opened up with a large gap. It is not unusual to see this type of gap filled within a couple of weeks. The DJA has done this today. So it took 6 trading days.

          I cant take any credit for trading it though.

          What we do need to bear in mind is that there could be some volatility if the debt ceiling goes to the wire.

  6. I think that will be all the bearishness we get this week, might touch 6500 but end of the month normally is bullish..

  7. Dow’s fall from last weeks high of around 15721 to 15373 today is just the longs booking their profits..nothing else…and are using the background noise on debt ceiling issues to do so…ask them why did they go long in the first place in the last 2 weeks every day with the debt ceiling issue looming and before fed QE decision ?

    1. True Ray. Expect us to have a slight dip this week but then close your eyes, hold tight and go long till 2nd Jan. It may be a rollercoaster but the final quarter should be positive.
      I should only do 6 trades a year. Key for next year is to maintain my discipline as I’m sure it is for everyone.

      Jack – you aren’t alone!

  8. Still have 5pips out of 20runining in my long on ftse from 6604 friday got to 6635 sliped all way back selling parts of my trades as it did……lesson take good money when getting it,,,,,,ftse shaping to go up slightly at minute will hold to later this evening…i think from now on i am going to cut out any dicey trades,if you could get either top or btm range and leave longer term.you would be much beter off.making good money here in last number of weeks.will fight with what little is left to get all back agian.had a great system in place. it is quite often said what comes easy goes easy,that is why i say to only leave minumum in account.put tht rest to good use dont take any chances with it. GOOD LUCK TO ALL

  9. Great advice today from solid regulars. Thanks all and Jack Two, take it easy mate. Stop losses are hard to do but will save you big time and allow you to let your winners run when you get them. Discipline in taking the good trades and avoiding or limiting the bad ones is the key to long term success.

  10. Everything looks red today, stocks, bonds, commodities… Fed decided not to taper, and we are facing deflation? Where are the dollars going?

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