Good morning, hope you had a good weekend. If anyone kept that short order for 6590 on Friday then it actually made a few points with a drop from 6600 to 6566 around mid-afternoon, but the drop was short lived, with the bulls taking things back up. There hasn’t been much bearishness off 6600 as yet really so it appears the bulls are in control. Fairly quiet on the financial news front over the weekend – Barclays have lost customer records, long term fixed rate mortgages are creeping up and the Eurozone banks face a £42bn black hole were just some of the headlines I read. Of course, the big news from Friday was NFP, coming in below expectation. Despite the initial dip, market soon shrugged that off, probably looking forward to QE being ramped back up as that’s 2 poor figures in a row Decembers was shocking!). I don’t think they will taper again for a couple of months anyway to let things settle down.
Asia Overnight from Bloomberg
Asian stocks rose, led by a jump in mainland Chinese shares, as the regional index headed for its longest streak of daily gains since December. Wheat slid and the South Korean won advanced.
Speculation that Lunar New Year sales were strong boosted mainland Chinese equity indexes, while losses by bank and casino shares restrained gains in Hong Kong after the central bank said investors will have to tolerate further volatility in money-market rates. Federal Reserve chairman Janet Yellen delivers her first semi-annual monetary-policy testimony tomorrow as markets weigh how mixed economic reports last week will affect the central bank’s plan for reducing stimulus.
“Things have bounced back but there’re not a lot of momentum behind that,” Matthew Sherwood, who helps manage about $25 billion as the Sydney-based head of investment markets research at Perpetual Ltd., said by phone. “Yellen is probably going to pause on tapering within the next few meetings following recent poor labor market reports. There’s still a lot of question marks on the Japanese economy. China’s economic growth is going to moderate as the government tries to tighten liquidity.”
China Crunch
The U.S. added 113,000 jobs in January, a Feb. 7 report showed, trailing the median estimate of 180,000 in a Bloomberg survey. The jobless rate dropped to 6.6 percent, the lowest since October 2008. The Fed said last month it will press on with a second reduction to its monthly bond buying, by $10 billion to $65 billion, citing an improvement in the labor market.
China’s central bank signaled volatility in money-market interest rates will persist and borrowing costs will rise, underscoring the risk of defaults that could weigh on confidence and drag down growth. One-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repurchase rate, added five basis points to 4.85 percent.
“When the valve of liquidity starts to tame and curb excessive credit expansion, money-market rates, or the cost of liquidity, will reflect that,” the People’s Bank of China said in its fourth-quarter monetary policy report.
FTSE Outlook
There is a bit of strength underlying the FTSE presently, and as long as 6550 area holds then it looks like we might test 6640/50, possibly even 6730. 6642 is the 50% retrace of the most recent high to the most recent low. 6695 is the 63% area – so these levels are ones to watch on the bigger picture.
For today, is the bulls can break and hold above 6597 then we should reach that 6640/55 area. A possible short at 6650, stop 6566 should be good for this. Initially there is a very good 10 minute channel in play with the channel bottom at 6687ish, resistance at 640, but for that channel to work, it needs to break through 6597 (the red line). For the moment, it has bullish momentum at least till 6650, so I would be looking to buy the dips for the moment, around the pivot at 6565, and possibly 6550 (stops below 6545). The slight spanner in the works for the bulls is the top of the 20 day Raff channel, though it does look like they are trying to break through it. Today will be fairly key for the bulls, as the Bianca channels for 10 and 20 day are both at 6590. I expect therefore we may see an initial dip, despite prices holding up since Friday.
I am thinking a dip to the daily pivot at 6565 then a rise, possibly as far as 6640/50.
… Personally I’m not buying this “all is rosy in the garden” talk, the jobs data was good, EM’s have recovered, China was a blip, etc, last time the the NFP came in with a low number the S&P 500 reaction was muted on the day, on the Monday it dropped more than 1% before a Tuesday recovery, could happen again, it always seems to take a couple of days to realise the effect of what is essentially bad news however you try to spin it 🙂 keep buyin
bought at 6585 (small)
buying 2x more at 6565
a close below 6565 (on 30mins chart then i wont buy)
Hubris
Tend to agree with you looking like a dead cat bounce Friday for me and thinking like you down today 515 would be nice.
there she is…. 6565…. will it bounce?
yes 🙂 lol hope so, ive added quiet a bit of long there now,
if the next 30 mins bar dont hold then will close some position.
im expecting a little doodle around 6570 level for a bit before shooting up.
been long from 6573 tight stop since the first dip there…slow boring day but we’ll see what happens now
Placed orders to buy at 6550/6555 stops at 6540 – Lets see.
I personally hope you don’t hit that for a while as I want my 10-15 points from 6567!
dow futures recovering too
My worry is that FTSE already retraced 61.8 but Dow only 23% which means it may drop on open and drag FTSE with it a bit and then a proper buy. So I feel cautious about this long now. Fed up of their spikes lately.
dont think too much, if it drops, close ur position…the more u worry now, the more u gna f**k urself up
I am not long yet, that’s why I am waiting for a possibly drop at Dow open for a possible long if that happens.
oh right, i hope u dont get ur entry hahah, otherwise ill be in a pickle!!!!
Or you suggest actually to enter long now in case it goes up without me on board?
… personally i think if your going long today be out be 3pm it’s gonna drop 🙂
Im not a big fan of this long today….im looking for an intraday profit and looking to be out hopefully at 6600..i was trading upon thinking my strategy will reverse…but it doesnt look like the case, its becoming more bearish…so im hoping for 6600 AND THATS IT IM GONNA BE OUT LONG…
I need to go back to being stingy with my trades….Feb is a down month for me and im still trying to get my account to same level. Thats my rule, put on trades and atleast BE everymonth
Jack, given your previous posts about the market moving in the opposite direction to your trades, could you please place a huge short at current levels?
Thanks in advance….
I just think of the repeat of Friday for today – drop to the bottom of the channel and buy buy buy. But in reality the drop may be slow take all day and all longs today could be stopped out. Or, like hashmash said “it’s becoming more bearish” this drop could become more intense and break out of the uprising channel. Don’t forget the previous impulse down broke the previous support and all this rise could be just a pullback of that impulse. Currently it’s pushing to 50% at 6630ish so it can reverse at any time.
This is just my thinking on the situation. Please don’t take it as a guide to action. You know how great I am at taking trades. 🙂
In regards on placing short at the moment I would say: I am looking for a short as I think it is a pullback but not now as I need a confirmation of crossed MA, and at least one lower high to enter. Because if this rising channel will continue I will be f…d up.
So presently I am looking for long intraday opps.
how will Dows opening affect ftse today? pull it up?
Great call once again nick!
Cheers Deez
… dont we need 6640 first?
Looks like a drop from 87
A, that’s it, the drop
i think the opposite jack, i think it testing the 6575 line
Sure it did. That was the whole point: buy the dip and close your eyes.
Have to go, so +58 points not bad for today.
Taken 2 longs: 15753 and 15759.5 closed 15785. Short scalp intended to be.
Taken based on Fibs mostly to test the top 791. Seems to be breaking. But you know me holding. hehehe
GLA
Plus it was a bounce of red line there.
Now it’s a real drop, seems like tops are failing.
Will i get my 6555 in this drop? 🙂
Hope you get that 🙂
dont think so, I missed the boat! 🙁
Expect the unexpected 🙂 i am also waiting.
Good to know am not alone 🙂
To be honest it looks like sideways atm.
… it will come down, the miners taking it up at the moment and they are the yo yo stocks, expect it to reverse later 🙂
515 coming
what is this 515?
Anybody into trading ‘Exotic’ currencies (like South African Rand or Major Asian or South American currencies) against GBP or USD?
USD or GBP / BRIC or MINT curriences.
FTSE lost momentum last Friday 7 June, and regained none today, so we have a rather flat episode. There’s certainly the risk of bumping back to ≤ 6400, but on balance, I think it will resume its upward meander – tomorrow – daily high ≈ 6625.
http://imageshack.com/a/img811/4015/whnz.png
… what about Nicks prediction of approx 6200 in the next 3 weeks or so, does anyone think thats still in play?
That’s a doomsday scenario – in which case the current status would be a mini-peak, and the FTSE about to collapse. Marvellous shorting for sure! 🙂
We are still testing the top of the daily channels so I think that might temper any major rises. I think this is a recovery of the Jan fall, and then maybe a bit more downside to hit that 6200 in March?
Looking for further drops personally, today was good day for binaries, moving so slow… If we struggle to break 6600 tomorrow which I can’t see I will be inclined to go bearish.
Also on the fence as I don’t want to commit to downside as I am fixated on the long term 7000 ftse mark.
Today, was a day for the divined hunters…FTSE will pay 10,2 tomorrow so there you have it…
I see, so it did come down below my entry point (I thought it was going to sell further) and then picked up from double b. It didn’t suit me as I was out of markets. So glad I took my profits then when I could. However nice leg rose on Dow.
im beginning to look for shorts now.