Dip and rise?

Good morning. Good old Santa, nice to put in an appearance after the dip to 6400 and I am still pretty confident that we will get the 6800 year end.  I also think that the start of 2014 will continue this bullish run. On the S&P I am thinking that it could reach 1967 in Q1 before any major bearishness. Its going to be low volume stuff all this week as most traders are off still, so will probably continue to drift about. Today’s pivot is 6733 so we will probably get another dip and rise day again today with likely support around that level.

Asia Overnight from Bloomberg

Asian stocks climbed, with Japan’s Nikkei 225 Stock Average poised for its biggest annual gain since 1972, as the yen touched a five-year low versus the dollar. The Thai baht dropped, while natural gas rose

The MSCI Asia Pacific Index added 0.3 percent by 1:52 p.m. in Tokyo, gaining for a 10th day, as the Nikkei 225 rose 0.4 percent. Standard & Poor’s 500 Index futures and FTSE 100 Index contracts were little changed. The yen sank as low as 105.41 per dollar, while the baht dropped to the weakest since June 2010 amid speculation Thailand’s army may stage a coup. Natural gas futures jumped 1.6 percent, while silver and corn declined.

The Bank of Japan is pressing ahead with stimulus in contrast to the Federal Reserve’s plan to scale back asset purchases starting next month, weakening the yen and sending the Nikkei 225 above 16,000 this month for the first time since 2007. Companies in the S&P 500 are worth $3.7 trillion more today than they were 12 months ago amid signs the world’s largest economy is strengthening. Returns on U.S. stocks are beating government debt by the most on record this year.

“Market conditions won’t deteriorate much with the U.S. economy being positive,” Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value, said by phone.

U.S. Stocks

The S&P 500 closed down less than 0.1 percent Dec. 27, after advancing 1.3 percent in a second week of gains. Treasury 10-year yields were little changed at 3 percent today after touching 3.02 percent on Dec. 27, the highest since July 2011. The S&P climbed 29 percent in 2013 in its best year since 1997, beating government debt by 32 percentage points, the widest spread since at least 1978, according to data compiled by Bank of America Merrill Lynch and Bloomberg.

ftse 100 prediction
ftse 100 prediction

FTSE Outlook

Looking at the S&P initially, if 1842 can be exceeded then 1844 and 1848 look viable targets for today.

Keeping it pretty simple today and movement above 6757 should reach the 6803 level being the top of the 10 day Bianca channel. After that the next target is 6934 which I don’t think we will see this week! I doubt that it will suddenly get all bearish this week unless something major and unforeseen happens, however the bottom of the 10 day Bianca channel has support at 6686 as well. We are still nudging the top of the 20 day Bianca channel, being 6761 which is why I think it will be a slow drift up today rather than a rapid climb to 6800. Still a case of buy the dips at support levels though, whilst this bull run continues.

52 Comments

    1. good place to build longs should be 6712 tbh..in prep for tomorrows US confidence report. i’ll prob add 1 lot around there

  2. Sorry for not replying on friday just been extremely busy, hardly on this site.
    For people who asking if im still holding, yes i am.
    I am currently long and have been for a while.
    At this moment i am only currently holding 50% of the longs.
    From my strategy we can see some uncertainty being built up, there will be a decent pullback coming…cant say exactly when, hence why i have cut my position by 50%. Saying that, i believe we will be seeing 6900ish-7000ish ftse in Q1 2014 (unless we hear something bad unexpectedly). On the pullback (assuming everything is inline) I will be building quiet a heavy long.
    The pullback range (CURRENTLY) i have is between 6580 and 6630ish, within that if i still hold bullish views then im adding to longs…BIG TIME!
    After Q1 I believe we will see a sell off in the equity markets..how much confidence i have in saying that? hmm 0% because its too far out, we will have to wait and see as we get closer to that time.

    2. the reason to why i said theres some uncertainty is because my indicator fell quiet a bit from being a strong bear to being a weak bear…and yet the markets are climbing. I mentioned in the start that the indicator either flips on a massive reversal or continuation in the market direction for a period of time…this time around i think it will be a combination, the indicator didnt completly reverse on the jump after fed meeting (it did move a quiet a bit though)…meaning even with a decent reversal the indicator didnt totally flip and still stayed in the bear area…meaning either ftse will keep sky rocketing (small probability), or there will be a bear trap (pullback – higher probability), this is my view, i maybe wrong maybe right.. lets see. The skill is to be prepared for all the views. if i see a pullback then great im still in profit..if i see ftse sky rocket, great ive made more money..if ftse collapses then thats when i need to worry to exit my positions at atleast B/E

  6. What is worrying me is that the US futures are pretty flat. If they open lower ftse may be at 6700 soon. Some swing today.

  18. nick you should start tallying up how often you are correct as opposed to incorrect, break it down monthly, weekly is too short, it would be interesting to know how many days this year you were right; i know you had a period were you were off the mark for a while.

  19. This market feels remamrkably similar to that of 1999.

    Just looking at the first week of 2000, the FTSE declined 4.65% in 5 days.

  21. Well we are all entitled to an opinion surely ?
    This is such a complacent market imo…
    And that sort of correction would only take the FTSE back to 6390 ish.

  24. Started to question my longs but held nerve – looks like a daily shake out prior to the next leg. We could easily finish up today now

  33. Don’t think we have enough to get to 6800 in a shortened session tomorrow but 6760 is likely and good end to the year (around 170% ytd profit for me). In the end I don’t think we were far off with our predictions during the year. Santa arrived – unless of course we do have a 80 point dip tomorrow – very unlikely indeed.

    As for next year – I will be holding this long till the close on 6th Jan. 3 trading days should get us close to 6850 and then short the remainder of the month.

    Happy New Year All and good luck for next year.

    1. Hi Javed, out of interest if you are going to short from around 6850, where will you be putting your stop loss?

    2. Nice profits. I am at 600%, but then again I trade quite small.
      Gl all.
      Depending what happens tomorrow I will be looking at 650%
      🙂

  34. Definitely agree there. 6850 is the magic shorting area.
    tomorrow is looking like a day for 6760 for sure. I am very confident that we will end the year on a high.
    NFp day is where i believe we will see the next major dip. Over-optimism means everyone will expect too much. And if its too good there will be renewed additional tapering fears.

    1. no more tapering fears (relative to what we have seen)..people are prepared now, it was only the first taper…next taper we wont see much vol.

  35. I have two positions average at 6740 if it reaches 6840 I,m out till the first big dip of the new year !! Here,s hoping !!

  36. Just a little breather before more upside. Mo why are you shorting a bullish market on a 30-40 point drop? Keep shorting buddy only going to push the markets higher. The bearishness was just a result of light trading…

    1. Well, then we may say the same about all the upside in the last 5 trading sessions, it was due to very low volumes. On the 23 and 24 of December FTSE went up 106 points, the volumes were 350M and 101M respectively, compare this to the usual 650M….

    2. I am trading long & short thanks, no position right here but I am considering the possibility of a repeat of 1999/2000.

  39. Fais
    I’m not a daytrader so I have very wide stops. I trade seasonality more than anything……probably not relevant to a typical daytrader’s strategy. But typically I’m looking at 12-15% of the nominal value. The largest drawdown in 30 years of the strategy has been 17%….so ultimately need to be able to cover that in extremes……

  40. Hi Javed,
    Thank you for taking the time to getting back to me. I am new to FTSE trading, I’ve been burnt by having too tight stop losses.

    So I was thinking about shorting at 6825 with stop loss of 7100. Does this sound reasonable?

    Fais

    1. Fais – no problem……Without sounding too vague – it really depends on your strategy, timeframes and resources. You can email me on jkhan30671@aol.com if you want to just thrash out some ideas…..

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