Fed raises rates | Outlook weakens | bearish FTSE | short the rallies

15th June 2017

The Fed hiked rates on Wednesday and maintained plans to go ahead with another increase by year-end. The central bank gave a fairly detailed update on its approach to balance sheet normalisation, which revealed a relatively aggressive path for a reduction in its bond holdings. Fed Chair Janet Yellen shrugged off soft inflation as “transitory,” and said an end to reinvestments could come “relatively soon.”

There wasn’t much of a dip to start the day yesterday, with the FTSE 100 finding support at the 7490 level and climbing to the fib level and top of the Bianca channel at 7545. Turned sharply there and fell right back down to our 7460 support before bouncing a little bit again. Usual buy the rumour, sell the news sort of day in the end.

FTSE 100 Outlook and Prediction

Daily FTSE 100 Trend Channels
Daily FTSE 100 Trend Channels

The bears still haven’t managed to break the 7460 support level and its held overnight also. Below this then we have support at the 7431 level which is just below the key fib level at 7438 and just above the 10 day Bianca at 7428. I am thinking that we will get a dip to that level this morning as the sell off from the 7545 level continues, though the proviso is that the bears break 7460. If the 7430 area holds this morning then we might well rise back up – I think the US will support a rise as they wont want the Fed decision to look like it started a sell off. All about appearances and what people think.

Gold has dropped off from its highs, and cable continues to hover around the mid 127 level. Despite the US rising rates I think the UK ones are going to stay lower for longer yet.

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127 Comments

  1. Morning Chaps got my work cut out here,let you know later how it goes…good luck guys…

          1. Just need some positive sentiment and the big boys might help out with some big institutional buying…Cable is only 22 above the 1.26’s……

            1. Thanks buddy. Today’s movements should bring me very close to understanding and predicting short term movements. It’s been a lot of hard work. Thanks to you!

  4. Still holding short from 7544, with the significant topping pattern and bearish breakdown I’m looking for the 7200s with the remaining 2/3rds of my position. It’s possible we hold 7380-400 area for a bounce given we’re getting oversold on the hourly already and we have options expiry tomorrow. However, I expect bounces, if they occur, to be short lived.

      1. Trailed down to 7495 now. Covered half at 7427 with 10 point stop on the cover given the oversold condition and possible basing on the 5 min.

    2. Take the money…

      Ask yourself is it likely to rise again? If yes sell and re enter higher up.

      Sell the rally’s – far more profitable IMO

      Gl

      2. Seeing this as my core position for the next few weeks so looking to hold. A downtrend looks on to me from both a technical perspective (top formation in 7500s) and in terms of the news flow that’s coming around Trump and Brexit. Therefore not expecting the rallies to be very substantial and it could get very messy if/when it takes out 7400 area given that’s held the previous two pullbacks.

    3. Reduce to 1/3, at least you will secure the whole position if it gets back to b/e. 7300 is possible, but 7200 mm.. doubt it and rises are most likely possible. And once the rises start, somebody may pick up and we’re at 7600 again.

      1. I already took a third off at 7495 last night just before it collapsed into the close. The rest I’m going to run looking for a 5%ish drop off the high. I’ll cover the trade on support levels where it looks like a bounce is coming. Otherwise it’s a short and hold type of market for now. I know we’ve become accustomed to a dip buy market but we’re due a proper pullback now.

  5. The dropped helped me cash in on the dax and Dow shorts.

    I am underwater with FTSE long.

    In heavy at 26 with tight stop to average out my b/e

  7. Morning all, kicking myself for not sticking with the belief it would drop. One day out. Short Dow 307.

  8. Closed my FTSE long from 530.

    I think a sell off is due. The Dow might fall hard and take FTSE with it.

    Will re assess tonight and buy long then – maybe

  9. It’s strange. When I was calling a sell off a few weeks back, I was called foolish.
    Now that I am long everyone is bearish!

    2. I’m not bearish but it’s not very comfortable at the moment….the hard trade is usually the right trade….

      1. And none of us are foolish….we just all have different views…I don’t think anyone who stays in this game for any length of time is foolish…..it’s very very hard and experience is the best teacher….let’s stick at it guys……no reason why we can’t compete in a big boys market….

        1. Agreed i would never consider a bias foolish. I think MOST expect a sell off (of varying size and duration) at some point this summer but it can be heavily draining (emotionally and financially) trying to swim against the tide for fundamental reasons. Also agree experience is the best teacher. I’ve had great weeks where I’ve learned nothing new and actually gone against my rules but its paid off. They feel pretty good but are often followed by a costly reminder as to WHY I set certain rules in the first place…

  10. greetings… sat aside yesterday (fighting FOMO) as FOMC day has burned me in the past. once bitten and all that. ftse looks ‘cheap’ today but I can’t see much potential for upside, even with BOE later. selling rallies unless/until ftse gets above 7435 and holds. dow struggling to hold 21300 aint helping matters either.

      1. If Dow tanks they will all follow… The Dow has hardly fallen relatively.

        I’m short on it

        1. Good luck! I banned myself from trading DOW after doing so WAY too large last week after thinking I had the “feel” for it… LOL. It has a largeish gap to close above. Whether it does or not may depend on the job claims data at 1:30pm.

  11. Oil not moving but cable at 1.27. Held at 7420. Oversold and stabilised. In my humble opinion 7500 later or tomorrow looks likely.

  13. Trading under pressure……it’s the sharp end of trading….when your friends say people work all month for that….they don’t realise …..they wouldn’t last five minutes when the chips are down….

    1. No idea. Anythings possible….can’t control the market……just how we react to it…

      1. OMG. Didn’t see. What’s the reason? It doesn’t look it’s going to drop in a hurry. It may get down to 275 though.
        anstel, may I ask, how do you count Cable price? I don’t understand that’ why I never trade it. It says 1.27870. Which numbers are important for 1 usual point on FTSE for example? Is it 78-89? or 87-88, or the last 70-71? Or it’s actually 27-28? But it’s massive. I hope you understand what I am going on about. 🙂

        1. There’s no exact numerical correlation between Ftse and Cable…..but as the dollar gets stronger against the pound the exchange rate makes it cheaper for US traders to buy FTSE 100 companies…….For example ..if Cable was 1.2660/6 ….. It’s cheaper to buy Ftse shares outside UK than if cable was at 1.2770/6

          Ok so the important numbers to watch are the third and fourth decimal place…..so e.g. Now it’s 1.27……(73) and a little 7 to sell…….it’s the numbers in the brackets to watch initially.. Hope that helps….

          1. Now I got it, thanks. It was tricky for me. Basically between 1.275 and 1.280 is 50 points.

          2. Yes that’s it Jack…I didn’t understand it either when I started so I asked someone too :0)

          3. The official name on forex is “pips” same as points ….just a different name…..:0)

  21. Well in at 7383, again.

    Need a retrace

    Gold – can’t even talk about it. Still could be worse and long on bitcoin!

    What’s going on chaps any ideas?

          1. It’s crypto currencies ….tmfp was into it……I think all we need is a vehicle to trade…if we have a go at all of them we are putting ourselves at a further disadvantage….I belief it’s better to learn 1 market ….its little quirks etc…..I have a cable position but it’s relatively small…I’m trying to concentrate on Ftse…although the Dow teasers me sometimes :0)

  23. It’s like the battle for helms deep in lord of the ring…”we must hold 7383″

    I lie not this is how I visualise it.

      1. out of desperation I suppose, plus 623 is the last level. Below that is a free fall.

    2. It’s only 100 point drop on Dow but it is 300 points on Dax, it’s unfair I suppose. 165 drop on FTSE. Looks like Dow got yet to catch up??? or edging up???

      1. I think the Ftse and Dax are hesitant in case the Dow sells off further…..confidence is low….try to fade the short term trend into the long term trend…a Paul Tuder Jones and Tom Hougaard expression….great if you have dry powder….

        1. If I had no positions and had a small account I think i would put a long order on Dax at 30 for 1 euro and see if it hits…..

          2. That Dax is like driving a Ferrari..on ice…with lead boots on…..and the traction control off :0). Jack I salute you :0)

          4. It fell through 30 to 23 in my pretend Dax long :0) im in at 30 pretend for interest only..

      2. Took the rest of the day off sick. I will cash my today’s profits to punish myself for bad trading today. I should have been short.
        I am definitely not getting into bitcoin after your explanation. It is hard to cope with Dax along (and occasionally Dow). Dax is all right as long as you respect the stops. It gives you fast scalps and that’s what I like it for. I remember someone on this board he was trading Dax and I didn’t understand why but when I’ve seen how much points he was making comparing to FTSE which I was trading actively, that blew my mind so I tried Dow (too stressful) then Dax. Are you holding longs on FTSE, anstel?

          1. Had a good run this last month though. Shouldn’t complain….and it’s not over yet…it’s not doin my indigestion much good though :0)

          5. Not sure about 7600 today. It couldn’t go up without downthrust in Dax, could it? Touched 20 to trigger some stops.

          7. No not today but I think it could reach close to 7500 possibly today or tomorrow first….then maybe a second push…. Who’s knows though? It’s all just guesswork….

  25. I think Mcgcapital has called it best…..Icarus a close second…just rambling on fellas sorry..not much else to do trading wise…sat on hands..

  27. Went in on dax at 12625 at 5pp and FTSE at 5pp at 7389

    How will this retrace. I’m in profit but should I let iit run. I always close too early …..aghh

  28. Closed. And now it’s falling again so may renter left.

    Take a little and don’t risk it for greed!

      1. On the other hand they say let your winners run……,it’s finding the middle ground….it’s very very difficult…

    2. You are right, after a drop like this you are more likely to get a retrace rather than a straight line back up to the top.

  29. I think Sod’s law has a lot to do with it.

    I’m tempted to say this is going to rocket later

  31. Somebody tell the Dow it’s over…. time to accept that The Trump trade was a nonsense from the moment it started

  32. Good day thus far.

    So that in mind I am treating myself to a fun trade.

    Put a long on oil, only 2pp but it’s at 47 and has held it throughout today’s turmoil. I have a 10pt stop

    The oil data does show slowing production so this could be a good

    1. Hey Icarus ive gone mobile,the pressure was getting to me so I went for a walk in the sunshine………well I do have a plan……but I don’t want to public announce my strategy…I know you will understand..I really don’t want to elaborate but first part is survive the night…..all the best buddy…

  34. I hate to say this but I think tomorrow will be bearish too.

    Why…well I think the Dow will fall to close gap and people will profit take, this along with interest hike risk in UK and the political situation eased will lift cable.

    I might be wrong – I hope so to be honest as I still have some FTSE longs

    1. Agree with this. If you look at the weekly chart of sterling it looks like a consolidation base followed by a break up followed by a backtest of 1.26s. Then you have the BoE turning more hawkish and prominent members of the Conservative party talking softer Brexit. Hammond speaks tonight so that could move things. But all in all looks like a supportive technical picture plus improving fundamentals against negative sentiment, which usually means rally medium term. FTSE we have 3 pivots to watch – today’s low at 7380, the March high at 7440-50 and the support area from earlier this week at 7480-500. It’s monthly options expiry at 10am tomorrow which usually sees a pop up of about 20 points. So my guess is we trade sideways overnight, burning off the oversold on the hourly chart then possibly a rally to 7440-50 before selling off. The trend is now strongly down so not sure why so many people are looking for an immediate return to 7500-600. At the very least there is likely to be some sort of base building before a move back up. FWIW personally I wouldn’t be looking at swing longs until 7100-200 area as it’s a seasonally weak period and we’re due a dip. As always price is king so got to just follow their lead and see how the market reacts at key inflection points.

  37. I’ve been short for three days…. came within points of going blue today and shot back right up again….. stupid index

  38. I only have one short in Dow, closed the others out when it dropped.

    I wanted a good re entry but may wait now.

  39. Closed out all Dax and FTSE positions with good profit so a stressful but good day.

    Just need gold to rise!

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