Dip from 6862? Support at pivot 6828 though

Good morning. A rather boring day yesterday as expected with the US closed, seemed like London took the day off too! However, we did get the slow drift up to the 6840 area, unfortunately not quite reaching the 6810 order level (stopped just shy at 6812). I took the risky short at 6840, but with the stop at 6847 as it was either going to dip a little from there or carry on rising, hence the tight stop. It was a fairly strong resistance but the bulls managed to break it overnight and the stop got hit. The rise was helped with China paring rates and adding funds. We are now testing the 6862 resistance which has held so far overnight. All things considered we are still looking fairly bullish, and even the IMF are revising their guess again and upgrading the UK outlook from 1.9% to 2.4% for 2014, the second time they have revised upwards in 3 months.

Anyway, today should be a bit more lively, with some Euro/German sentiment data out at 10am as well. a lot of the FTSE bullishness of recent days has been underpinned by a resurgence in the mining sector, which looks to be climbing out of the doldrums.

Asia Overnight from Bloomberg

Asian stocks climbed, driven by gains in Chinese and Japanese shares, as China’s money-market rates fell the most in four weeks and the yen weakened against all major peers. Oil slid.

The People’s Bank of China yesterday added funds and expanded access to a lending facility as money-market rates surged amid rising demand for cash before the Lunar New Year and concern that some wealth-management products may default. The Bank of Japan starts a two-day policy meeting today. Johnson & Johnson and Verizon Communications Inc. report earnings today as U.S. markets reopen after a national holiday.

“The PBOC knows it can’t afford any systemic risks even if it wishes to conduct stress tests on the banks,” said Hu Yifan, chief economist at Haitong International Securities Group Ltd. in Hong Kong. “It’s obvious that the market is still vulnerable, so the PBOC has to provide cash to ease the shortfall, at least before the Lunar New Year.” China breaks for a week-long national holiday on Jan. 31.

A Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics probably dropped to 50.3 this month from 50.5 in December, according to a Bloomberg News survey before data on Jan. 23. Chinese factory output slowed last month, government figures showed yesterday.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

The FTSE is hitting resistance at 6862 as I write this, but we can’t deny that it still looks bullish. Tuesdays have previously been fairly bullish days, and with the IMF likely to revise the UK growth outlook upwards there is still a lot of ammo for the bulls to use.  Today’s pivot is 6828, and we also have the bottom of a decent channel on the 30 minute chart at that area. As such, if there is an initial dip then I expect that area to act as support. 6810 has acted as support really well recently, but if that breaks then then 6793 (bottom of the 10 day Raff) and 6761 (bottom of the 20 day Bianca) are likely supports. Generally though I expect today to see a dip and rise, most likely off the pivot area as per the arrows below.

66 Comments

  2. That rise overnight stopped me out:( didnt see it coming…managed to grab some back this morning with the short from 6857…..currently long from 6737 as i think that areas held up pretty well so far gl guys

  5. I need to find out what type of Viagra the FTSE is taking…nothing is going to bring this one down it seems! Shame…still holding my shorts, but the average is getting further away now. Really didn’t envisage this level without a pullback personally.

      1. No its called bulshit! they will spin anything the way they want, FTSE suppose to be more like S&P but is it??

      1. Lagging?? with the £ so strong?!!… if we were £1 = $1.50 then you can talk about lagging. Just because the candles are telling you so it doesn’t make it so. Anyway, the value of each of the FTSE100 components suppose to be reflected in earnings, well in theory… I personally cant see them reporting such a strong numbers if all the big names around so far didn’t….just because the Dow, Dax, S&P wen up by 30% last year we should think that there is still value in those stocks

  8. What happens to gaps after a holiday?!?

    Obviously Dow will be opening with a big gap up. Friday range was 163755 – 16495 and today looks like an open 16550.

    Will the gap between 16495 and 16550 have to be filled. I am not sure how it works for holidays

  9. So for me the key is which side of 6860 this goes in the next 20 minutes. No position but considering short or long depending on price action as I suspect it will have meaning off the Dow open. It tested it once on the way down and then broke back down. Hopefully we can see some decent sustained movement soon….

  16. By the looks of this people are too bullish, the words cautiously bullish spring to mind. Good prediction today Nick

  22. dows abilty to shed pips in such a short time is incredible…maybe one day when i get some balls ill trade it..but for now ill pass lol

  24. Deez trust me DOW can move 30 points yet other indices move like 3. Too much stress involved…and you need large stops lol.

  27. Wow just checked in. Dow is an aggressive beast not to be disturbed. wiped a lot of my account the other week! Ftse so strong

  28. fed up trading against my indicator lol..indicator has been either slight bullish or dormant for 1 whole MONTH!
    Went long at 6840…holding till tomorrow unless we breach 6800

  29. has the feeling of a bear trapon the dow , i can sethis being back up above 550 by end of week poss 600 with ftse up over 6870 just placed a sell order at 6898 on ftse and a buy order on dow at 16250

    1. I agree with you slightly there…but more because I think a pullback/correction was/is needed before another leg-up.

  32. Still bullish but that DOW served as a good reminder not to get complacent so placing tight stops… can anyone enlighten as to why the sudden 160 point drop?

    1. The reason was for the 1850 and 16600 resistance in after hours.

      DOW and SPX are the indices most interesting right now, because they are still negative for the year

  33. Seems a tricky market in the smaller timeframes at the moment..
    As a matter of interest how did 2013 go you guys?
    Personally started off poorly then had a great run then gave a bit back to end +41% for the year.

  36. What trading platforms are people using? I was using plus500 but their rates are at least 50 pts below real time and I’m beginning to doubt their integrity.

    Thanks

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