Dip and rise today, 5880 support. Will we reach 6050 this week

Good morning.
Market Summary for Friday
After some tough trading times the FT100 moved up for a couple of days last week, mainly on the back of higher oil prices and stimulus talk from the ECB. The 5900 level still seems very low when viewed in the longer term but for the moment it seems a satisfactory closing level at the end of this week.
Oil companies were some of the biggest gainers with most sectors rising, however commodity shares did lag a bit. The positive for the day is that shares rose into the close which means traders are less nervous about holding over the weekend so we can take some confidence from this, certainly for the next couple of days which are likely to see a bit more upside. However, I think, if we manage to reach the 6050 area then the bears are going to reappear and are certainly not done yet with taking the FTSE down lower – I am still thinking 5400 is on the cards.

US & Asia Overnight from Bloomberg

  • Measure of global shares gained most in 3 1/2 years on Friday
  • Investors awaiting decisions this week from Fed, BOJ

Asian stocks extended the rally that sent global equities to their biggest gain in 3 1/2 years as Japanese shares and materials companies climbed.

The MSCI Asia Pacific Index added 0.5 percent to 119.07 as of 9:02 a.m. in Tokyo, with materials and health-care shares leading the advance. Japan’s Topix index climbed 1.1 percent as markets across the region extended gains that began after European Central Bank President Mario Draghi signaled it may boost economic support. Bank of Japan Governor Haruhiko Kuroda, who decides on policy on Jan. 29, played down the impact of recent market gyrations on his economy, while traders are predicting the Federal Reserve will hold interest rates when it also meets this week.

“There will be some waiting and seeing among policy makers until they know how this market volatility will affect the global economy,” Michael McCarthy, chief strategist at CMC Markets in Sydney, said by phone. “Given the depression in the markets, there’s scope for the market to add to Friday’s gains. We’ve got a very eventful week, with the BOJ and Fed meetings, so there’s a lot for investors to react to. Volatility is likely to continue.”

A measure of volatility on the MSCI Pacific Gauge climbed to the highest since September last week, while the Shanghai Composite Index swung between gains and losses every trading day. Japan’s Topix surged 5.6 percent on Friday after losing 6.4 percent the previous two days.

The MSCI Asia Pacific Index is still down 9.7 percent this year, while the Shanghai Composite Index has tumbled 18 percent as investors retreat from riskier assets on concerns about China’s economic slowdown and a rout in oil and other commodities.

South Korea’s Kospi index added 0.4 percent on Monday. New Zealand’s benchmark gauge rose 0.7 percent and Australia’s S&P/ASX 200 Index increased 1.1 percent. Markets in China and Hong Kong have yet to start trading. Futures on the Hang Seng and Hang Seng China Enterprises indexes gained 1.3 percent in most recent trading, while contracts on the FTSE China A50 Index futures rose 1.2 percent.

Chinese stocks rallied on Friday as energy producers surged on higher oil prices and after the government signaled it will curb overcapacity in industries such as coal that have been dragging down economic growth. The Shanghai Composite Index rose 1.3 percent, while the Hang Seng China Enterprises Index climbed 3.4 percent.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent on Monday. The U.S. equity benchmark index advanced 2 percent Friday, the most since Dec. 4, while the MSCI All-Country World Index posted its best day since June 2012.

Energy shares advanced in Asia as oil fluctuated near $32 a barrel following the biggest two-day rally in more than seven years. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Looking at the Bianca chart we are above both the 10 and 20 day channels, which suggests that this rise has come a little bit too far too fast, and a dip back down to within the channels is likely. However, the daily RSI(10) is only at 51 so that isn’t quite as overbought as yet. I have gone for a slightly bullish day today with a retest of the 6000 level, despite the fact that we are just nudging the 5950 20 day Raff channel resistance. The FTSE has dropped off a bit from the 5960 are overnight but not by much, and we are coming off the back of a strong Asia session. Its managed to come from 5600 to 5950, so might just want to recapture 6000, even briefly. I still think the bears are just hanging back and regrouping waiting for their chance later this week. The 30min and 10min charts are both positive for some early upside, however, looking at the 2 hour chart we haven’t yet had a dip back to test the 100 hull MA yet since crossing to bullish on 21st Jan. Support for that is around the 5808 area as I write this – a level I don’t think we will see today though bear it in mind. If we do drop down the 5980/90 area where we have the daily pivot and some PRT support and it holds, then I think that we will see a rise from there up towards the 6020 and 6050 levels – and I expect that we will start to see some bears appear at this level. However, if 5880 breaks then a dip to 5810 is likely, so flip to short on a break of the daily pivot. I am also watching 5929 quite closely which is the 25ema on 30min as that is current support, a break of that is quite bearish.

94 Comments

  1. Morning All,
    I really thought it would have found some support here at 5875. This was an inflection point and key level on Friday in so far as my thinking. 🙂
    Might take some time. 4 RSI signals so far this morning but sometimes these are expected between 7 and 8:20 am.

  3. Morning all.
    Pretty much exactly a 300 pt cash bounce, 5640/5940, seems to have got hit by reality now, might find a bit of support at fibs 23.6=5868, 38.2=5826, just testing the first one now.
    As Hugh says, short term rsi not in play up till now, I scraped a few points off extremes but a bit dangerous so far although that can be a signal in itself, ie don’t touch the long side till some sort of traction can bounce it meaningfully (ie 1min breaks 60) which atm looks like >5885/9760 DAX.
    V shaped day? Can’t see it, 6000 looms like a cloud, no need to chase the long side.

        1. Faint heart never won fair lady 🙁
          DAX is going for it too, initial reaction is to look for short @10+ would have taken out the long around here anyway

          1. Looking for uptrend @ 92 and DAX sideways support at 9750 to stop the slide or the pressure’s back on for a look at the lows.

          2. Well, it kissed it at 94 but couldn’t hold a 10 pt bounce (so far) so momentum pretty much gone short 900 15 pt stp

        2. I’ve taken my Longs off at 5904 – recovered the mess I made at 5862 (+8 thereabouts).
          Still in it’s trend but looks “flat” to me & we’re soon to hit midday when it always seems flat so going to sit this out and do some other stuff.

          1. Well recovered, shame about that 62 hedge.
            My 15 minutes is running on a bit but a break possibility again now, uptrend well and truly broken, a lower low would test the bulls but 760 DAX looks well defended.
            I’m leaving the short in and going for a walk in the lovely sunshine. 🙂

  4. That wasn’t a very pleasant visit below the pivot (5866) and bounce …
    (Took out a defensive S at 5862 – Stops 15 )
    Seems to have found some support – going to hang on to the Long side for a bit and hopefully recover some…

  5. RSI Trios roughly for reference at 5898 – 5886 – 5930 (7:27).
    I normally find RSI levels are like markers

  6. Morning All,

    Good I closed my longs on friday as I was expecting a dip. My long order on Dax at 730 below friday’s low is taken, adding at 850 and will wait for 9940.

    If it gets stopped out, I will wait for 630 to long again.

    1. So close to being stopped out b/e. I have closed that long now at 770 – 40 points on that. Will wait for the tests of 9600s.

  8. Morning all,Draghi is talking at the Stock Exchange in Germany tonight,18.00 uk time,the Dax is now above Fri close,maybe he will say more than last weeks willing to do anything comments.

  9. Morning all,I watched the open of the Dow last night at 11-till about 1 am, There was a lot of buying interest up to the 16120 area approx,my view is the Dow could quite possible regain the 16100 tday and I think this could take the Ftse to the 5920 area quite comfortable,with this in mind I’m long from 84 small stakes looking for 35 points.Got other thinks to do today now so have a great day’s trading and good luck all.

        1. Another go at 5875 maybe – Trio just fired off (5882) .
          (Knock it down a bit for a better entry 5875 would seem ideal).
          GBP/USD issued one at 14270 (now 14257) – glad to see they’re still working 🙂

          1. Hi tmfp,

            Do you think it will get to 669 or 630 ? I have just left a limit at 635 just in case of a sharp move.

          3. It looks a bit broken at the mo RJ, formed a bit of a top if it doesn’t rally off 600/630. Certainly not much support till then.
            The low 70’s long was ftse btw.
            Difficult for me around here, some technical reasons to short term long but big picture I don’t like it.

          4. Bit of a gamble on what the DOW will do here, dont want to do that so out for +9, although the sell off seems to have abated

    1. Depends on DOW Hugh, there’s upside potential to 82ish, DAX got temp respite off 9700 but…..I dumped my long.

    1. Yeah, good shout
      DOW might try to hold magic big number, apart from that, not much support anywhere really.

      1. I tell you what tmfp, as I was wandering aimlessly this morning with the dog I was thinking about your comment the other day – “If I was hedgie I’d get it down to 5200……”. It looks that fragile at the moment that I reckon if you and I clubbed together we’d get down to 5700!

    1. Not surprised, they all covered in snow up there in US, not all managed to get to work apparently.

  14. Coming up to the MHH then, 5865, DOW holding after three tries at 16000.
    I never really got with the program today, this choppiness not helping now, so can’t see a huge amount happening unless DOW breaks 16000/60 range.
    Naturally, I think downside looks more likely, but not shorting it atm.

        1. Well I got really pig headed about that, still selling, av now finally showing blue, want to see how the DOW finishes, would make a change to have a closing sell off and I think that’s likely

    2. Should really take 20 points now but it really looks like it could get a proper slap, so much so I almost fancy adding to it. Think I’ll keep an eye on it for the time being.

  18. Evening,not much going on for me today,well the Dow didn’t reach 16100 like i thought I’d would,luckily I caught that really big spike up and sold my long for +11pts,I had actually put another long on at 70 as well so I got 25 pts on that as well,Seems pretty lifeless at the moment but i have replaced a long at 65 and 70,good luck all.

      1. Overnight up implies Asia up, WSF, and they’ve been getting their lead from the US close (apart from the JP CB QE nonsense).
        It’s a dead cat, day or night time. 😉

      2. Hi WSF I’m very surprised we haven’t hit 16100 today after that strength we saw on Friday and at Dow open last night.Its looking a little shaky at the moment as well, have to see how this pans out.i feel that trades on the long side at the moment are the way to go though,when it gathers upward momentum from here it can rise strongly.Do you agree on the long side from here?

    2. As usual we’re going in different directions anstel 🙂
      I’m looking for a closing sell off here so I can finally take a profit on my incredibly (for me) long term shorts, hoping for the 40’s for 4 hours now.

      2. Hi tmfp hope you have had a good day, it’s looking like it’s going your way at the moment tmfp,I’m not really tuned in to it today,not feeling 100% but I’m convinced this sneaky Dow is going to come out of the blocks like a scolded cat when we least expect it.(Theres me trading my opinions again like you mentioned bloody hell!!) Have a good night matey,and I will catch you later in the week.

        1. Thanks, actually it was shit and getting shittier when I started shorting near the close.
          Traded badly and out of character ran a largish minus selling into what was presumably the Draghi speak rally, but now in profit.
          The sneaky DOW has already done that, otherwise we’d be at 5600 now.
          Dont’ marry those longs, GL

        2. The Draghi time up and down earlier seems fair enough,Dax out of hours seems to be holding up better than it should,so might mean something.I dont see any reason for Asia to rise except the BOJ intervention expectation,but last week I think that there was a pattern of pushing the Dow up on low vol. after it closed,noticed a few people trading it for 100 odd points,took quite a few myself Thurs night buying a dip out of hours and selling a retreat from a high at about 8.15 a.m.Dont really like trading mkts that are closed though and cant remember what made me decide there was Support there.

          1. Sorry,that was a reply to anstel,from further up,not trying to offend anyone again and get the old exclamation marks flying again 🙂 🙂

          2. Lol you ‘ll never offend me mate. I adopt an engineering approach to opinion, stress it till it breaks!
            There were indeed crazy low volume +100’s last week, to be expected.
            We have wiped off up to 38% of a 6 year bull market in a few months, after all………….. 🙂

  19. Turned iPad on and saw it has started so I Just paid 45 to close short from earlier, not sure why though!!!

    1. Yeah I took some out there and the rest at 38.
      If Asia’s neutral/bad I think we may regret it in the morning.
      Catch you then
      🙂

          1. Actually the world’s economy has collapsed in the last 15 minutes, the Illuminati are managing to conceal it everywhere else, but City never got the e mail.

          2. 🙂 What you said earlier,”We have wiped off up to 38% of a 6 year bull market in a few months, after all…………..” really puts it in perspective though,I mean how little have I made this year out of all that movement,talk about always room to improve ..

          3. Don’t go there WSF, it’s a false argument and it puts the wrong sort of pressure on you, to start implying you’re doing something wrong because you didn’t catch the extremes of a crazy volatile market.

  21. I rang up city yes like you said WSF a glitch but then they said it was at 5782 or something but IG is showing 5832……… I’d like to know why they have different prices,Jesus I nearly choked on my tea!!!!

  22. Tell you what WSF City really should have a platform that works,the other day when it wasn’t showing the day’s high,and now this,I’m losing faith in their system.

    1. Sh*t happens with them all anstel, including IG, at least it was obvious and out of hours.
      Goodnight you hardcorers.

        1. Goodnight tmfp,thanks,you’re right about that whole missed opportunity thing too,might as well be saying the Mingus line,”Think of all the things you could have done by now,if Sigmund Freud’s wife was your mother” 🙂

  24. Yes ! I don’t know whats going on with oil WSF. re what you were saying earlier about missed opportunity,it’s always easy after the event to say why didn’t I do this or do that,but at the time of making a decision it is rarely clear cut.I think we have to realise it takes time to learn how to trade,probably some luck as well to help us through are early years,when we make errors,when I think about all the errors I have made I do tend to wonder why I made them but I think it all comes down to inexperience.

      1. Apart from that though everything else with their platform is the best it has been all day,it was really lagging earlier I thought.

    2. Yes I havent got any reason to complain,just have a big target I’d like to look back on not at,been plenty of times when just paying bills was an issue,so really no complaints.Dow is at an interesting level,15900 and ASX 200 at 4950 has shown s at 4800 and 4900 (again) recently so could be a decent move whichever way it goes.

      1. When you think about it the market is like a load of penguins……..when one jumps in,everyone jumps in……and when one jumps back onto the ice with cold feet they all follow him out of the water again.none of them want to stay on the ice forever,it’s just working out when they want to go swimming!!!!

  26. Hi Anstel, just checking about CityIndex too, and they are a joke of a company! Their platform is just not suitable for trading I think, always down at the most important times. IG may be down as well now and then but not that bad at all.

    1. Hi mali7,yes I’m very dissapointed with them to be honest,they got taken over by Gain Capital I think it was October 14 and to be honest I think they have been cutting corners all round,if you ring them from a mobile it’s close to 50p minute on their 0845 number.I don’t know maybe I should change to IG. I’d like to stay with them really but the problems are getting more frequent and the service from them seems not as good.we will see,maybe they are just having a bad run,happens to all of us I suppose.

  27. Should have given into the temptation to hold an overnight short, DAX looking to test 9540 support and us maybe 5740. China well on course to retest 2532 lows before their holidays.
    Bearbearbear.

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