Fed expected to keep interest rates on hold, 6145 support

Support 6150 6149 6147 6063 6046
Resistance 6183 6196 6207 6210 6284 6315

Good morning.
Market Summary for 15th March 2016
The FT100 retreated led by commodity shares, possibly due to the Bank of Japan presenting a bleaker view of the country’s economy.
Weak U.S. retail sales data also raised concerns about US growth prospects.
The Federal Reserve’s policy statement is today so this will be closely monitored for clues to future interest rate moves.
There is some nervousness of potentially hawkish remarks that would suggest a June rate rise is back on the table, however if
the Fed sounds more dovish than expected, shares are likely to stage a relief rally.
So the market is in a limbo state currently waiting for FED news and hovering around the centre of the recent range of 6100-6200.
In terms of sectors the commodity sector was very weak after poor figures from Antofagasta – one of the most volatile shares in the FT100 currently!

US & Asia Overnight from Bloomberg

  • S&P 500 Index posts first back-to-back declines this month
  • U.S. central bank expected to keep interest rates on hold

Asian stocks fell before a Federal Reserve policy decision as a selloff in commodities weighed on material shares and a stronger yen hit Japanese exporters.

The MSCI Asia Pacific Index declined 0.4 percent to 126.42 as of 9 a.m. in Tokyo. Japan’s Topix index lost 0.7 percent after the yen gained 0.6 percent against the dollar Tuesday, as global stocks retreated with crude and emerging-market assets. China’s National People’s Congress ends Wednesday, while the Fed is expected to keep interest rates unchanged at the conclusion of its two-day meeting.

“The market has potentially significant press conferences to assess in the next 24 hours from both China’s Premier Li Keqiang” and Fed Chair Janet Yellen, said Ric Spooner, chief market analyst at CMC Markets in Sydney. “These both have the potential to influence investor thinking and traders are likely remaining cautious beforehand.”

Australia’s S&P/ASX 200 Index added 0.2 percent. BHP Billiton Ltd. dropped 1.8 percent and was the one of the biggest drags on the regional equity gauge after the Bloomberg Commodity Index fell to a one-week low.

New Zealand’s S&P/NZX 50 Index fell 0.1 percent. South Korea’s Kospi index rose 0.2 percent.

Futures on Hong Kong’s Hang Seng Index slipped 0.2 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index lost 0.5 percent. Shanghai stocks eked out a gain in late trading Tuesday amid speculation state-backed funds intervened to support the market during annual policy meetings.

Futures on the Standard & Poor’s 500 Index added 0.1 percent after the underlying gauge slid 0.2 percent Tuesday, posting back-to-back declines for the first time this month. Valeant Pharmaceuticals International Inc. plunged 51 percent after cutting its profit forecast. Investors are monitoring races for the Democratic and Republican party nominations for U.S. president, with Florida and Ohio among the five states holding votes.

Oil advanced on Wednesday, rebounding from the biggest two-day slump in a month, before U.S. inventory data forecast to show that stockpiles expanded. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Today we have the UK budget, the Fed later who are expected to keep interest rates unchanged at the conclusion of its two-day meeting, and an 8.1 dividend to be applied. So, expect the calmness of the past two sessions to disappear! To start with there is some fairly decent looking support at the 6145 area, as we have the daily pivot, the 200ema on 30min and the coral trend line here. So, if we dip down to that area first thing then we could see the bulls appear for a bit of a buy the rumour morning, before a drop back later from the resistance at 6184. If the bulls push past this then the top of the 10 day Bianca channel is 6210, which is around the most recent high and the area that stubbornly refuses to break. However, the more it is tested then eventually it will. The key will be seeing if the bulls can break 6184 first though. As mentioned most of todays action will depend on the bits of news, mostly the Fed. The divi will also likely see some buyers appear between 4pm and the bell, so it can be worth going for a long at around 16:00 and aim to close just before the bell (or before the divi is applied on your platform). If the bulls can break through the 6210 area today then it will be worth flipping to a long to target the 6280 area, and then I think my wild thought of a rise to 6350 might be on the cards.

108 Comments

  1. Morning, another quiet session probably.
    DAX shows no momentum to hold over 10000 and go for new highs, and the FTSE is in a clear down channel, not reaching Nick’s 6184, currently capped on the 1 min by rsi 60 for the last hour. May turn round at 45 support, will probably see soon.

    A possible inverted H&S forming on the FTSE, only really confirming on a break into the 200’s and then onto this years high of 6324.
    Downside nothing to go for until 6100 breaks. Same old.

      2. Hi Rick.
        Yeah I sold at 58 too, but only taking a little profit off a 51 long.
        DAX has broken out and if it holds 10000/10ish then might knock on to us.
        Holding 50 as a temp low would be about right with the 45 support not quite being reached but, grasping at straws a bit.

        1. Hi tmfp,
          I have bought some at 48 S7 looking for 5 or 10pts.
          And will short again around 60.
          Not much going since Monday and I am pretty tired with this 10pt range, hopefully we will have some decent movement this afternoon around budget time!

          1. Yeah, a bit boring but these +5 and +7’s all add up.
            Don’t know whether there will be much on the budget to create waves, said yesterday that any big infrastructure project financing might give a kick to the construction sector, otherwise pretty neutral for me.
            Looks like 45/50 holding coincides with DAX holding 10000. Downchannel still intact as is 60 rsi.

          3. I think the only thing that would get us up to the 70’s never mind 80’s would be a strong DOW and they see to be marking time till the Fed stuff tonight, so no I don’t see it really.
            BTW Jack, you know that for the next two weeks the DOW opens at 13.30 our time?

          4. Oh no, I didn’t know. Why does it open at 13.30 for 2 weeks only? Is it because our change to summer time is delayed?

          5. Jack I explained all this to you last week……..regarding EST changing to DST in America on 13th march and GMT changing to BST on the 27th March in UK,those two late night posts I did for you??….thought I’d answered your question!

  3. Well, from all hope is lost at 36 we are now testing the mornings downtrend at 49, 60 rsi broken, that 45-36 could be an exhaustion move in hindsight.
    Got to get in the 50’s and stay there for it to be so.

        1. If you type into Google…Economic Calander…..there is one there I like to use…..it’s FX street.all times are GMT.

          4. Yeah, next direction/momentum may come from the DOW but that’s just in waiting mode.
            I can’t see them wanting to be more than maybe 50 down against their close, put us around 45.

  6. It’s not your fault, anstel, you explained all perfectly well. However I was happy to be reminded about it by tmfp who knows (probably) I forget things sometimes.

    1. Don’t mention memory Jack, I just went to put the rubbish out, got to the bin…no bag, still in the kitchen 🙁

        1. Can’t do anymore trading today I’m studying the dictionary so I can learn to spell…….think it should be called the economic diary…..it’s easier to spell :0)

  7. Afternoon all, still very range-bound and George doesn’t seem to be saying anything particularly positive. Talking my own book, again, I think he has dressed up a not very good situation. Anyway, as the Dow opens (any minute) I’ve got a limit short at 70 (on the FTSE) and have put a limit sell at 250 on the Dow. Will pull the Dow limit in half an hour.

          1. yep, stopped at 70. Note to self, stop mucking about with the Dow! Yesterday I saw +100 points, didn’t take it, stopped out for nothing, today chucked 20 points at someone who is cleverer than me!
            Am still short FTSE at average of 74, basically my “Will it break out of the range – downwards – bet”. Stop on that at 6230.

    2. I’m bored too, because I see no sigh on weakness of dax. But I am out of my short, are you?

    1. As if by magic…stop at 89.
      If this micro weakness does continue, would look to be out by 15.30 for a rally, then maybe a dip and some divi up action near the close.
      Even that 10 pts of weakness got bought…..feels very fomo, but sellers have been burnt recently and aren’t interested it seems, at least until the Fed’s out of the way.

      1. I think you are right that there are too many shorts that have been burnt and until they’ve got something they can get their teeth into they are sitting on the sidelines. Probably also slightly nervous following last week’s Mario swing. Let’s see whether lovely Janet can mess up the party.

  10. Have lost interested this week, if I traded the opposites i would be rich, really want too see a good dip before I go long, for the moment I will not short as it just seem to want to go up up up…. really hope yelled throws a spanner into the works!!

  11. Re: Yellen, it seems the only spanner there is to chuck is micro analysing every word to see what the likelihood is of a June rate rise.
    I’d have thought that’s pretty much a non starter, they’ve got a strong dollar by default, so why bother to raise rates?
    Goldman Sachs disagree though, so who am I to argue (if it does follow their prediction I’d think US equities would see selling)

    “We expect the Fed to signal that it wants to continue normalizing policy, which means three hikes this year and four in 2017, with the statement referring to the risks as “nearly balanced,” reverting to phraseology used in October, just before December lift-off. Overall, our sense is that the outcome will be more hawkish than market pricing.”

    1. Well, thanks for the +5 Nick, I guess a long is in order on any further weakness before about 16.10.

        1. Yeah 8.1 should be attractive, doesn’t really matter what the price is if you’re going to dump it soon after.
          I’ve been meaning to get some data together about post divi price moves but never got round to it.

          1. And it’s a bit of a self fulfilling prophecy too, why should someone short in the last half hour, knowing
            a) there’s going to be buyers about
            b) they’ll have to pay if they get it wrong

          3. In my youth, divi rule of thumb was always buy it for the divi and mark it down half the divi after it went ex.

          5. Yeah chippy, slightly different with these indexes, I usually do the 16.29.45 out unless there’s a prevailing trend at the time, or if whole divi – dumps it back on support, then I might hold.

    1. I don’t have one Senu, I’ll see what’s what when the dust settles tmrw, not trading tonight.
      I wouldn’t long it. Shorting it requires pre judging what she’s going to say/do, i.e. be hawkish, with definite 2 or 3 more rises planned for this year and the market reacting negatively to that.
      Too many big guns pointed, easy to get shot.

    1. Good lad, brave call! I’m not sure the Fed announcement will change anything but as tmfp says above the devil will be in the detail. It really depends on whether the bears come out to play after 3 weeks of licking their wounds or whether they are just happy to let the bulls run the show. Simply, who knows which is half the fun.

      1. Not before the close and sub 17000 is a big ask but I’m definitely with you thinking we are due a correction. For me, every time I even look at the Dow I lose money so running my ftse short for the time being. Good luck matey and if you see a profit don’t forget to take it, like I didn’t yesterday!

  29. The key to what happens next is the last 5 minutes. If the Dow holds then momentum will be up, if it sells off 20 or 30 in the last minutes then this is a spike without much further to go.

    1. I don’t think 20 or 30 on the Dow is an indication either way…..just traders taking up their desired positions into the close to be honest Argyle.

  30. FTSE has effectively done very little in after hours trading. Will probably more or less hold onto these gains going into the US close. Firms up the rally without getting it out of the 6100 – 6200 range. Tomorrow will be interesting as always as investors digest the news.

    Also interesting to see how Asian markets react to a weaker dollar especially Japan who have reached the end of monetary easing.

  31. Hello night shift.
    Not all that spectacular is it?
    Still up but a full 50 off the high coming up to the close..
    Now all the big news is in, if we can’t have a go at getting through 6200 tomorrow there’s going to be a few disappointed bulls about.
    I was half expecting us to be up around there by now, and the DAX isn’t even back in four figures…..

    1. Evening – Gold spiked pretty hard this evening, maybe investors were expecting some high volatility.
      I am heavy big short on Gold at 60, stop 1320. Will short again at 80/85
      Tgt 1200 / 1180 by April – May.
      FTSE will try 6350 or perhaps 6400 within next two weeks I think.
      Goodnight all 🙂

      1. I believe you could be right Rick 6350 Ftse is my take on it. …..It’s all a complete load of cobblers though Lol!

      2. Gold (and other commodities) spiked because of the weaker dollar and expected lower inflationary environment rather than any uptick in volatility.

  34. As expected the Nikkei falls because of the weaker Dollar but these days the FTSE doesn’t follow the Nikkei……instead wants to keep going up.

    1. The power of the Feds and central banks Javed that why I stopped trading last year as was fed up of the manipulation, started back this year as thing were looking more realistic within the market but now see same old rubbish.

      1. I had the same problem…..I don’t look at the reality anymore….I treat it like a computer game..it’s all a load of b@llocks just don’t try and make any sense out of it and things get better.

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