ECB measures make things look worse, 6145 resistance, 6080 support

Support 6092 6081 6057 6038 6013 5980
Resistance 6124 6134 6146 6176 6215

Good morning

Market Summary for Thursday 10th March 2016
In the morning the FT100 had dipped a bit then started to gradually rally into the ECB presentation at lunchtime.
There was a spike up above 6200 when the ECB announced a cut to its deposit rate deeper into negative territory and increased monthly asset buys to 80 billion euros from 60 billion euros, exceeding expectations for an increase to 70 billion.
Then European shares fell after the European Central Bank President Mario Draghi said more rate cuts were unlikely which pushed the FT100 down to 6036 at the close.
This gave an intraday swing of about 170 points or almost 3%.
The moves also mirrored a reciprocal of the Euro, which also had one of its biggest intraday volatility levels for a long time.
Banks and commodities were the biggest fallers with gold and insurance shares the biggest gainers.
Got the analysis spot on yesterday but just missed the short order at 6205 by 1 point before dropping 200 points so wasn’t ideal for the automated trades. Earlier in the day the 6116 10 day Bianca support level held well. A day of fairly wild swings with the ECB big guns being wheeled out but not convincing the market.

US & Asia Overnight from Bloomberg

  • China’s raises yuan onshore reference rate by most in 4 months
  • Asia-Pacific index erases loss, heads for 4th weekly advance

Asian stocks climbed for a second day, with the regional benchmark index heading for a fourth weekly gain, as investors reassessed fresh stimulus measures unleashed by the European Central Bank.

The MSCI Asia Pacific Index advanced 0.8 percent to 126.59 as of 12:56 p.m. in Hong Kong, erasing earlier losses of 0.6 percent and heading for a 0.2 percent increase this week. Mounting concern that central banks have lost the ability to jolt financial markets out of turmoil has threatened to derail a rally in global equities, with the MSCI All-Country World Index on track for its first weekly decline in a month. ECB President Mario Draghi’s indication that he doesn’t expect more rate cuts sparked stock declines in Europe and in early Asian trading. Asian investors reassessed the ECB move in the afternoon as focus now shifts to next week’s meetings of the Bank of Japan and the Federal Reserve.

“The market is trying to go back and re-digest that yesterday was an over-reaction and that that one statement was the wrong focus,” said Kay Van-Petersen, a strategist at Saxo Capital Markets in Singapore. “It was taken out of context. It said we don’t anticipate that it’ll be necessary to reduce rates further, but nothing could be further from the truth. It’s QE-for-life for the next four to five years in the euro zone.”

Regional Gauges
Japan’s Topix index added 0.8 percent, erasing morning losses of as much as 1.5 percent. South Korea’s Kospi index added 0.3 percent. Australia’s S&P/ASX 200 Index, Singapore’s Straits Times Index and Taiwan’s Taiex index each increased 0.4 percent. New Zealand’s S&P/NZX 50 Index gained 0.1 percent. Hong Kong’s Hang Seng Index jumped 0.8 percent.

The Shanghai Composite Index was little changed. China’s central bank raised its onshore daily reference rate for the yuan by the most in four months on Friday. The National People’s Congress continues, with reports on industrial production, retail sales and fixed assets scheduled for Saturday.

Futures on the Standard & Poor’s 500 Index added 0.7 percent. The underlying U.S. equity benchmark index closed little changed on Thursday after swinging between gains and losses amid tempered optimism on the ECB’s latest package of monetary stimulus.

The ECB cut all its interest rates and expanded the scope of its bond-buying program as Draghi strives to fend off the threat of euro-area deflation. The moves exceeded market expectations and initially spurred demand for risky assets.

Investors took less than 90 minutes to go from overwhelmed at the scale of his move to underwhelmed at the stimulus outlook, with the Stoxx Europe 600 Index retreating to close 1.7 percent lower. Draghi said at a press briefing that risks to the euro-area growth outlook are still to the downside, and the rate of inflation will remain negative before picking up later in the year. Still, he said he doesn’t anticipate more rate cuts. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Well we have had the dip down to 6000 as expected and bounced pretty well from there, so the bulls were keen to defend that. Watching it all unfold yesterday I had a pretty wild thought and that is a rise from that low at 6010 to 6350 before a bigger move down to sub 5500 (the most recent low). I’m in the camp that all those stimulus measures announced yesterday are actually a bad thing as it shows how screwed everything still is, coupled with the fact that the ECB now has nothing left to fight deflation. If they get it wrong its going to be messy. For today we have initial support at the pivot at 6092, and have held the rises from the 6010 low yesterday so I am expecting a rise towards the 6145 area to start with before a dip back. Its a Friday so liable to be weird, especially as the ECB news is further digested. If the bulls stay in control today then any dip back towards 6080 is likely to be bought up for a push back. Being a Friday I will reduce my stake size a bit as it can be odd. If that 6080 holds then we could get a push up later and bullish going into the weekend. We have the bottom of the 2 Bianca channels at 6057 and 6038, as well as both Raffs at 6006 so some decent daily supports still above the 6000 level. I don’t think “they” will want it to tank so soon after announcing all those measures as it makes them look a bit pointless!

94 Comments

  1. Morning all,Dax seems to be making a point out of Wednesdays Close,9723 or so.Thinking about Bank shares based on what Mario said lol,if anyone has an opinion.

  2. Morning all, Dave is gone. Got stopped out at 080 last night whilst his master was at the pub.
    Really don’t know what this is all about and probably agree with Nick on the slightly longer term. Sit on my hands at the moment but have put a cheeky sell limit at 6150 just for fun. I think long weekend for me.

    1. fwiw that’s R1 Chippy,R2 is 100 points above it,dont think it will turn at R1 if the Dax decides to run past it’s Thurs close and ignore the gap it’s left today.

      1. Thanks wsf, pulled it and off for a long weekend. Good luck all, lets see what next week brings!

  3. Morning. Just like it never happened lol.
    Well done to bargain hunters last night (looking at you anstel) and sympathy to RJ who got his timing just slightly wrong.
    Now the dust has settled after the “What did he say?” stuff, the fact seems to remain that CB’s are ignoring G20 and IMF warnings about continuing their free money approach. The extra dosh will translate into equity buying either directly or indirectly for the foreseeable and it’s something we have to live with as a semi permanent tilt to the free market playing field.
    Yesterday’s visit to nearly 6000 can only be viewed as a false breakout (predicted by yours truly, just send money 🙂 ), it’s cooled off overbought readings and is neutral overall technically for me.
    6100/6200 the trading range again for the moment with 6200 a very big deal.
    Off out for most of the day soon, GL all.

    1. Morning tmfp,

      Yeah got the timing wrong lost 70 points yesterday part of the game. I managed to recover losses this morning with a long from 630. Just took half for 100 points and running the rest with stop at b/e.

      There is still more upside left and easily go over 10K looking at the daily charts depend on US finish. I’m not intending to hold this long over weekend. I will close this at whatever price at the end of US session and open a long position next week on any pullback.

  4. Morning all…….Jack left you a little post on last nights board regarding clock changes and Dow opening times…tmfp thanks…..just a few ramblings from me……well next week we have American retail sales on tues along with BoJ monetary policy statement and rate decision…..Weds another ECB meeting (non monetary) and FOMC economic projections……(well we need some humour in this game) and fed rate and policy statement.Then on Thursday we have the BOE info. For my money that’s plenty of excuses to keep the bike pump at a nice ambient temperature……might need some new seals soon though I reckon!……looking at the Bianca channel 20 day it looks to me like 6200 is about the middle and looking at Nicks chart above showing his thoughts I was really pleased to see him showing a climb to 6176 as I had thought about 6170 – 6190 would be my target for my Ftse long from 6023….. Watching and learning……good luck everyone.

      1. I’m not very good with Technical Analysis RJ as you know but I’m thinking about the 9830 area….any advice gratefully received.

        1. entry in 400s is a good one. Wish my 530 didn’t get stopped out. If I were you I would just hold it, 10200 possible next week. All thought there might be pullback but I don’t think it will get to 400s before 10K. GL

      1. I’m pretty practical actually WSF .”they” have asked me to be their pump repair man…….if I accept I will post the life expectancy of the seals I fit to the pumps on this board …. We can then make a new indicator to warn of market corrections…..The PSWI…….pump seal wear indicator :0)

        1. 🙂 You say that now,but you’ll be running out stops with “them” in the end.
          Your Dax target 11 below the Wed high and right on previous daily R seems ok to me,tbh I’d subtract a number that seemed significant from it,but I never make the most of stuff and by significant I just mean randomly “symbolic” 🙂

          1. LOL don’t think so……I’m going to learn how to mend things worse too :0)…… That Dax is a very sensitive market as we all know but the thought of free money seems to steady it’s nerves abit…..I certainly think 9800 is very achievable and I have held losing trades before so I think I will hold a winning one for abit longer and see what strength it actually has……this is a market that has been at 12000 as we know so it’s worth a shot holding I reckon.

          2. Yeah,it tested Jan R yet again yesterday before Draghi went from hero to zero and if that breaks it’ll really go.Like you said 10305 is a fair first target in that scenario and it would still be lagging the Dow.

    3. I hope you get your 6170 anstel, no skin in that game for me.
      As a matter of interest, what’s Plan B, say at 6100? Add?

          1. just looking at the Ftse chart now and I have decided to close my Ftse long at 6126.5…..for + 123 points…it looked like weakness was developing so a bird in the hand and all that.

          3. Also just closed my second Ftse long for + 50 points….still running the Dax longs….although I think I may just bank them very soon….

          4. Closed my Dax longs from 453 and a later one from 667 for +315 points and +101 points respectively… Maybe too early but a bird in the hand and all that.

          5. Well done on holding from last night and on getting the Entry.Nothing wrong with going in and out,could have moved the S/L up to 9750 area on 15 min chart that would be a breach of EMA’s below 10 on 15 min.Nice trade though.You deserved it for sure.

          7. Thanks WSF I needed a few good trades after getting quite disillusioned with all the BS a few weeks back,feel a bit more positive now that we can play on this sloping playing field and have some success…..best of luck to you if you are trading today.

          9. Thanks,yes,CT Fletcher on You Tube ISYMFS,still the motivation 🙂 hoping to hit target and get a break at the end of this year.A few weeks back it was a different type of mkt,My Jan was brilliant,Feb was ok,missed the raised expectations I had from Jan.We want consistency,but some techs just work better in some mkts than others.I noticed Stops getting hit on a Monday morning usually means a good week,wakes me up maybe,before I noticed that it was depressing.Now I trust the average,you might find it easier to keep motivated if you work out some averages for days and weeks.It was a big thing for me.Makes it easier to sit and do nothing waiting for a trade too.I mean no fomo on momentum on wed morning when you know you’ll see stuff you like 6 times before you finish the day.

          10. Thanks RJ coming from a Dax specialist like yourself that means a lot. I remember you advising me on an awful R/R I had on a trade a few months back…..I came out luckily in the blue but I’m starting to ask myself if a trade is worth getting into more than I ever did. tmfps advice about entry is very important.Good luck with your trades today RJ.

          12. I can always get in again RJ if we get a decent drop below my 68 exit price……I’ve learnt that there is a fine line between holding for a big move and getting too greedy….I keep reminding myself we are trading contracts for difference. and when we get a big difference might as well bank it.

          13. Just read your article RJ….I’m a very optimistic person by nature and a natural bull…………however I think the bull market is nearing the end of its cycle.sure we may get one last push up….I have been saying that since last May but I think it’s days are getting numbered now.Not enough reasons to keep it going up that I can see.i think we will see a drop down again to below 5500 on Ftse next time.

  5. Managed to catch 45 with a short, took +5 on half using that to finance a free stop at 50, off out now, limit 5500.
    Not really, 6122.

  6. On a serious note I forgot to add earlier…… in February when oil hit its $26 dollar low T Boone Pickens estimated oil would hit $52 this year………WTI is around $38 at present if I’m not mistaken and so if T Boone is correct it only leaves $14 upside with summer coming and lots of oil stockpiled……as I have mentioned before I think oil is a big player here..I tend to agree with Nick I think some more rises then maybe a trip back down in summer when the market goes traditionally abit quieter anyway and if it’s a hot summer oil could drop depending on how much of demand for oil is from heating and not transport which i don’t really know…..only blot on this landscape is it’s an election year.

    1. Good ole boy T Boone, is he still alive? must be about 120 by now.
      Only another $14? Doesn’t sound much but its ~37%, like saying FTSE might pop up to 8400…. 🙂
      Laters.

    2. Yesterday there were some stories about cancelling Opec meetings and Iran not cooperating etc etc released around the time of that fall,sort of jumping on the momentum.

  12. Hi guys,

    I usually just get to look in momentarily on this game when I get a lull at work. So thats why I have to do longer term trades. But I’ve been trying to learn a little from you lot about short term trades. Looked in at bedtime and, given the strength of the american indices, I rather fancied a punt on a test of 6100 overnight, so opened at 6060. Closed this morning at 6125 as I was going to be too busy at work to keep an eye on it. Quite chuffed. Had tinkered in and out of a few trades this week in ftse, gold and eurgbp, losing a fiver, gaining a fiver, sort of thing.

  13. Thanks for your reply Jack and good luck…….WSF re your bank shares question……..only thing I would say is……why are there so many little cards in banks saying FSCS protect your deposit up to 75K…….if the bank fails…..it used to be 85K last year……in December I was driving and heard an FSCS advert on the radio stating the new 75K limit and……you’ll probably never need us….George Constanza :0)..thing is I got the leaflet….it’s says your deposit is safe if the bank fails……..it doesn’t say the government can’t help themselves if they get a bit short of readys……only place there is any money that represents labour expended,products sold,and services given is in the banks accounts of the savers….why else would a cash ISA limit go from 3k to 5k to 15k last year and the NSAndI let you put another 10 k in premium bonds….nah bollocks I’m not buying it’s for our benefit……what’s the point in having a cash ISA anyway,what’s the tax you save on 0.5% or whatever pittance the interest is…..nah bollocks shares in banks is like buying shares in BS if you ask me.Its like buying shares in thin air…….now on the other hand everybody needs to drink water………that’s a necessity and with an increasing number of people in the UK the infrastructure is getting stretched…..United Utilities have a captive market and I think they pay a decent divi…….T Boone said on a YT video I watched few yrs back ……water is the new oil……..

    1. Cheers Anstel,no I did it this morning BKIR,best econ in Europe 🙂 ,there were a few people thinking the same way,so not a great price compared to yesterday, but I’m guessing the rise will run longer and get a boost from Sunday papers,going to see what happens on Monday.It was only a small trade,but I have prices above and below it so worse case is it just moves my average a bit.The Water business is ugly,dominated by the same people who own the drinks with Sugar in,working a captive market in the 3rd world.

      1. Not to mention a lot of the water from the Great Lakes is finding its way over the Pacific to China……I think the Milky Bar Kid has got something to do with it….Yep and last time I looked China had 70% of the U.S. debt followed by Japan….then pension company’s and the like then the UK yep we are holding 4th position……Check out how they move the water to China……look up Terry Spragg.

        1. Yeah,used to hear that theory about Israeli land buying in europe although when the british were doing it it was just about fiddling the EU subsidies,the East Anglia business model if I remember it right.

  15. Just wondering if we will get a substantial push up on the Dow above 200 ……..if we do it could be after Ftse close I’m thinking.

    1. I reckon the shorts all closed yesterday,that first lot of buying waves last night was probably buying from the people who were short with S/L’s around here,so buying here would have to be money that isnt already in on the buy side and that doesnt mind the China numbers tomorrow morning as a factor.Reckon you are probably right just dont think it will be as big as it normally would be with Stops being hit too.

  16. Back just in time for not very MHH by the look of it, greeted by a nice +23 on that short I left.
    Very much an after the Lord Mayor’s Show feel about it, slap bang in the middle of the range, anyone got any ideas/positions?

    1. Welcome back, I am +12 total for today lol for 5 trades.
      Should have taken a day off or something – atleast I have already been to gym so that’s not too bad 🙂
      All square at the moment and waiting for a bounce to short.
      DOW is pretty overbought at the moment on 1 min!!!

      1. Bounce – Is it coming…. Is it coming lol?
        I am off now, can’t be bothered with this. Good weekend all 🙂

        1. Yes there is always some push from Yankies but DOW might go and kiss 60s again before heading north.
          GL

      3. And making new highs for the move, looks a bit tired now though but will probably keep chugging along.
        That’s all from me folks, have a great weekend.

  18. Out of my Dax long at 839. +209. It could have been more if not for that early long yesterday evening. Have a good weekend all.

    1. Out of my Ftse long at 6146.5 from 117 for + 29.5 points…..typical I missed that spike luckily I have two more……..too many buttons and not enough fingers

      1. well done there,guess today is a mkt that suits you too,that 17210 area was great scalping whilst it lasted.

        1. Yeah some market conditions I can do well in but others…..I’m bloody useless in……I’m hoping I will become better in the areas I fail in……… Listening to yourself and the guys on here really helps.Im really hoping I can pull it all together and find consistency. Anyway let’s see how I do with my last two longs…… Come on 6170 :0) I’m thinking I might dump them my patience is wearing a little thin …..and I’m very patient…..Anyway how have you done today WSF…..I hope you have gained some points?

          2. 🙂 Thanks,yes banked a fair few today,if the Dow pushes much higher than it has done I dont have any real levels left,so I’ll call it a day and pay myself.Not going to go through Charts tonight.I expect we’ll see the Dax pass yesterdays high on Monday.Expected a bit more from the Dax and the Ftse today.I’ll owe Chippy a Beer if it hits 6150 and comes back down 🙁
            Are your totals ok ? I have a different number to City yet again,less than the psychological cost of phoning them,but more than a couple of Beers.

  21. closed my Dax from yesterday for 200 points just looked now and its up 350 points, that some rise. fuse has not really followed it neither.

  22. I’ve not checked my totals yet WSF…..they look in the ball park to me at first glance…..just looking to close out these last two longs and then that’s me done till Sunday evening…..I’m thinking it might just close up a little from here though.

    2. Sorry Anstel,just noticed my reply is waiting moderation,couple of news links in it,just said might be my math 🙂 and U.S probably wants + 17200 in the Weekend papers lol.

      1. No Worries WSF……this Ftse level might look quite cheap on Monday morning…….with the Dax pretty much rock solid at the moment…..decisions…decisions…Saying that the Dow usually takes a dip before any Fed meetings…..The SMAs on the 1 min FTSE are pointing up….might hang on a bit longer.

          1. Oh I can just feel the Ftse wanting to pop….it’s almost palpable……tmfp would go mad…..me and my metaphysics lol :0)

          2. Talking about that I had that on 15min Dow,suggesting up and clear down on 5 min,think there are more false signals on 5 or I min lately than last yr.

          3. Well at last out of first long at 56.5 and second one at 57.3…..for 2.5 tanks of diesel nice……that’s me for this week WSF……all the best mate…have a great weekend and catch you Sunday night or Monday…..Good luck……..best of luck to you too Smokin……have a good weekend…. anstel out :0)

    1. Thanks Anstel,have a good Weekend,Sunday night all new levels,ASX at 5219 lol.
      Good night Smokin’ have a good weekend,congrats on the Long from Thurs.

  26. what will be interesting is to see what the chinese data tomorrow morning comes out at, strong data and monday going to be super bullish bad data and will still be bullish more stimulus lol

  27. See the article this morning before I went too work WSF, so out of 5 piece data from China this week 1 was good the other 4 missed, just think that the markets are taking little notice of China these days as they believe the problems will be sorted with more stimulus.
    Don’t think that the news will make much difference to next week all look rather bullish, might even see a rally in the ftse.

  28. Yeh that could be a good point, and expecting it to call off a little Monday the 2 markets I watch is the Ftse which will go though the 6280 and the Dax which is going to blow 10000 next week. Maybe a run up in March and April for the to sell off in the may go away.
    What ever happens I do believe the feds will get to there target interested rates by the end of 2016. Also see something earlier that money is flowing from the bond market back into stocks, at the highest level in the last 2 years. Not sure if thats a good thing or bad thing.

  29. Hi WSF,and Smokin,hey WSF have a look on you tube for “Gregory Manorino”.He has a website called traders choice.net I think it is……Have a look at his last video……about 2 days ago I think…..Greg Manorino reckons it can go a bit more short term but then a drop……see what you think chaps…..When we were staying up for the A50 open at 1am in January WSF the Dow and Ftse were really moving up and mainly down in relation to China……Be interesting to see if this further poor China data weakens this bullish run on Friday. The Dax was rock solid Friday so it does look like it could be bullish on Monday but there’s so much BS we’ll just have to wait and see what we get.

    1. Hi Anstel I watched that,maybe he’s right,but on the other hand I watched Ray Dalio earlier and he’s not Bearish on the stock mkt at the moment because where else is money going to go and stuff can take a long time to happen.The line of least resistance isnt down at the moment anyway,not with Dow 17213 up 400 points from where it was pushed Thursday,if Australia can get above a downtrend line anything can go up.

  30. Hi Anstel, hope your having a good weekend? with the Chinese data it had already been written down and still missed I am not too sure how important the data was, but I do know that the Dax is very sensitive to data from China, maybe this is because German is a export country and a lot of there export head to China not really sure but I know the Dax takes bad news from China badly. Will see on Monday morning, 60 point gap too fill so maybe a small drop then up and away till the fed meeting.

  31. Hi Smokin …..having a nice relaxing day thanks…..hope your weekend is going well too…..I really need to get a few jobs done but it’s going to have to wait till tomorrow now……..have a great evening…..

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