Dip and rise but needs to break 6570 for any more bull

Good morning. Yesterday failed to break the resistance level at 6570 so we never saw the slightly higher levels mentioned. The risky long off the 6520 area send round in the afternoon came good for a fairly decent 30ish point bounce in the end, before the bears came back at it. Overnight we topped and dropped from the same level – 6545ish. I mentioned yesterday that I don’t think the Santa Rally is kicking in just yet and it certainly feels that way, the bulls are making hard work of it! The S&P is holding up above 1800 for the moment and bounced well off that 1802 level as well. it was quite fortunate that the S&P, Dax and FTSE all hit support areas at almost the same time yesterday.  Once again tapering was at the forefront of most movements yesterday, off the back of a US debt deal being done.

Asia Overnight from Bloomberg

Asian stocks fell for the first time in three days and precious metals slid as investors weighed the outlook for a paring of Federal Reserve stimulus after American lawmakers unveiled a budget deal. The yen gained versus major peers.

The MSCI Asia Pacific Index declined 0.7 percent as of 2:21 p.m. in Tokyo, with Japan’s Topix (TPX) index retreating 0.5 percent as the yen rose against the euro and the dollar. Gold dropped 0.2 percent, after advancing the most in seven weeks yesterday, and silver slipped. Standard & Poor’s 500 Index futures were little changed, following the gauge’s retreat from a record in New York yesterday. Thailand’s baht rose to a two-week high, while the Indian rupee slid.

Investors are considering the outlook for economic stimulus before next week’s Federal Reserve meeting after a U.S. budget compromise that lawmakers said would ease automatic spending cuts by about $60 billion over two years. India is due to report November imports and exports today, ahead of German data forecast to show stable inflation.

“The taper debate is the sole focus of the market at present,” said Matthew Sherwood, head of investment markets research at Perpetual Ltd., which manages about $25 billion. “A wave of risk aversion has swept through markets.”

Stimulus Reduction

The Federal Open Market Committee may begin reducing an $85 billion-a-month bond buying program at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 survey.

Budget Agreement

The U.S. budget deal, worked out between chief negotiators Senator Patty Murray and Representative Paul Ryan, would set spending at about $1.01 trillion in 2014, higher than the $967 billion required in a 2011 budget accord. The toughest part may be selling it to Congress, where skepticism is emerging in both political parties.

“One of the reasons why Fed tapering was postponed in September was uncertainty over budget talks, so a deal would make the tapering more likely,” said Kengo Suzuki, the Tokyo-based chief currency strategist at Mizuho Securities Co.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

Once again the bulls failed to break 6570, though with a couple of daily tests of this area in theory a third test should break through. Assuming the bulls can get the FTSE back up to that level of course! As I write this we are back on the support level of 6520, however, I think that the 30 minute channel that also exists on the FTSE, as with the one on the S&P mentioned above, might be a more favourable play. The EMAs are currently in a bearish pattern, and with the daily pivot at just 6538 the immediate trend is still down. I think if that holds, or at the most a test of 6496, then a rise towards the pivot is possible, and possibly the top of the 10 day Bianca channel at 6565.

86 Comments

  2. One thing I cannot understand with this taper talk is the following :
    If we have taper in DEC or JAN or MAY or whatever date, why the markets are still buying, if they know that this is a certainty thing that is coming ver soon ?
    Will they sell off in the exact date that will be announced ?
    Markets always price in all those things in advance

    1. Didn’t quite reach the 6505 unfortunately but certainly climbing nicely now. Not even much of a dip off the pivot at 6538

  6. Hashmash,after the federal reserve announces its decision on tapering, what would you do if the ftse fell or rose? Long or short it?

      2. Yes. Hopefully will see atleast my entry mark again to decide whether to exit at B/E or not.

        Could all go Pete Tong though 🙂

  12. hope everyones trading profitably, been away for a bit had 3 uni coursework deadlines this week, looking for a possible retest of my daily candle 10MA which is 6653.4 to hopefully go short or going long at around 6630 if it dips there anyways 🙂
    good luck guys

  17. Looks like NFP longs on Friday (hedge funds/institutions) just booked their profits in the DOW…DOW DROPPED SOME 150 POINTS since Friday to touch 15899.

    Budget deal rally in dow..NOT!! 😉

  18. So the tealeaf indicator was right after all – SHORT the DAX 🙂 … pity they didn’t say WHEN lol 🙂

    1. I’ve been waiting all day to short the damned thing… patiently waiting for it to flush out the shorts… pop out….. come back in and miss the party lol 🙂 and the points lol 🙂

  20. Im still short…
    In my view we will re-test 6550ish, im just looking for opportunities to add to short.
    Still a strong bear signal i have.
    I was thinking that 17th-18th might be the stimulus for the bull signal but im not sure..whats other peoples views on it?

  30. 6500 seems solid, especially as the 200ema is just above too. Does not seem like there will be significant dips beneath this. Tomorrow will be interesting to see if the bears really do wanna play or not

  33. Never heard of this guy, but if he is right 6300 here we come. Now that would be a nice launching pad.
    Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking, saw this as a support area that could form a floor for a new rally.

    “And if it breaks, then we should see a continuation of the weakness towards the horizontal support of 6,330, a low in October. In the near term, the bias is more on the downside.”

    1. thats what ive been saying 6350ish we might see but then i thought maybe 6400s the lowest (as i cannot see ftse to drop 3% continuously in 4 days..) we will see because 18th dec (fed meeting) has to be a bounce otherwise ftse will be tormented!!!

    2. By extension the current 10 day RAFF channel reaches 6300 on Sunday 22 December. So it’s Monday 23 December then for a ‘Santa Rally’ from 6300 🙂 Perfect timing….. lol 🙂

    1. Neither do I. Bought at 6495, but my first thought was to buy at 6480, as DOW had a gap to fill. So it seems I missed by 15 points lack of patience.
      Tomorrow will be a green day, as we are inside the engulfing candle consolidation from Friday. With that hammer I expect bounce

  35. Same bullshit…different day! So nauseating….yawn….seen this movie a zillion times…taper..no taper..taper..no taper…taper…Taper fears back today..surprise????. More like bang on..the 200 up move on NFP day last Friday..profits booked today..right down to the last penny…all 200 bloody points! Hashmash…your back in the game…so soon…

    1. yup, i really think we will go lower, maybe see really low 6400s before 18th dec..really think 18th dec will be the stimuli for the bull rally, but my indicator right now is heavily bearish and i think its kind of hard for it to become bullish soo quickly. So the only explanation is that there needs to be a BIG bounce with high vol, something like what we saw on NFP day but that rally will not stop as early as it did on NFP…instead what people will do is sell their longs prematurely and start shorting around 6600s and before they blink ftse will be back at 6700-6800s

  37. VIX close outside BBands.
    Look for tomorrow for a close inside and below today’s close. Then you have at least 50 points up in SPX

    1. After that close below/inside, #VIX needs another daily close candle below the previous. Then we have the 50/100 points triggered in SPX

  38. my next weeks view is if we dont see a big bounce after fed meeting on 18th, FTSE getting fked in the butt till year end, so im betting my money on that and will start building longs soon.
    CURRENTLY IM STILL SHORT!

  40. Got a couple of indicators (one on each) on the daily chart to SHORT both the FTSE and the S&P 500. FTSE seems to be being nudged back down. Still a downward push on the DAX, CAC and SP&P 500. FTSE remains in a downward bearish trajectory.

  43. Hoping for 6480 to hold until the US open then a push back up later today. Think we may be in for another roller coaster

  45. Breached my discipline and rushed into a large trade without waiting. Hopefully will pay off today. Think the sell off was overdone last night

  49. FTSE daily trend is back to down, bears are in control… Short the push up’s against resistances…

  51. If we do dip to 6350 by 18th, I find it hard to see a 450 point rise on low volume for the so called “Santa rally” ….

  52. Fully agree with you there white, but still think the Feds will not taper which will cause some kind of rally.

  53. i agree with you Luke – trouble is the market will go into a panic before hand on the possibility and i think will sustain the sell off until the given day. Its becoming a bit of stretch to regain all December’s drop so could be a damp squib

Comments are closed.