FTSE 100 Resistance 6867 6886 | Support 6836 6766 | Asia drops | Draghi speaks

FTSE 100 Support 6836 6834 6831 6766 6736
FTSE 100 Resistance 6862 6867 6886 6898 6925 6955

Good morning. Bit of a flat directionless day on the FTSE 100 yesterday, with no real control from either the bears or the bulls. The S&P only managed an 8 point range all day as well, and didn’t quite manage 2189 for the short (2188 for the high instead). They are probably coiling up ready for another rise or just don’t know what to do! The bears are usually stronger when its like this, but with all the stimulus and central bank intervention probably don’t want to be caught holding underwater shorts I suspect.

US & Asia Overnight from Bloomberg

Asian stocks retreated from a 13-month high and South Korea’s won weakened, while oil rallied on signs a U.S. glut is easing. Yuan borrowing costs surged in Hong Kong amid speculation China is tying up supplies to deter bearish bets against the currency.

The MSCI Asia Pacific Index fell for the first time in four days as Australian shares dropped the most in five weeks and Japan’s Topix index extended Wednesday’s decline from a three-month high. The won slipped, following its biggest gain in three months, and China’s currency weakened. An offshore rate for overnight yuan loans jumped to the highest level since February, while domestic rates were steady. Crude rose above $46 a barrel after industry data showed U.S. supplies tumbled last week.

While there are pockets of excitement in financial markets, volatility is generally subdued as investors mull the outlook for monetary policy in some of the world’s biggest economies. The European Central Bank is seen maintaining unprecedented stimulus after a review on Thursday as President Mario Draghi updates growth and inflation projections. Prospects for a U.S. interest-rate increase faded this week after data showed slowdowns in hiring and business activity. Japan raised its estimate of second-quarter gross domestic product before the central bank decides whether to add to record stimulus on Sept. 21.“With the Federal Reserve and Bank of Japan meetings ahead of us, investors can’t make any out-sized moves before the major events are over,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “We have a lack of reasons to move, and have been seeing a directionless market for some time.”

The Bank of America Merrill Lynch GFSI Market Risk Index, a measure of future price swings implied by options trading on global equities, interest rates, currencies and commodities, fell this week to its lowest level since Jan. 1. The probability of the Fed boosting benchmark interest rates at its meeting this month has dropped 10 percentage points this week to 22 percent, futures prices indicate.

Stocks

The MSCI Asia Pacific Index was down 0.4 percent as of 1:42 p.m. Tokyo time. Its 14-day relative strength gauge climbed above 70 this week, a threshold that indicates to some traders a pullback is likely. Australia’s S&P/ASX 200 Index fell toward its lowest level since July and Thailand’s benchmark slid to a two-month low.

Hong Kong’s Hang Seng Index rose to a one-year high and the Shanghai Composite Index was little changed after Chinese trade data showed export declines moderated in dollar terms last month and imports unexpectedly grew. Daily moves in the Shanghai gauge have been less than 1 percent for 17 days in a row, a phenomenon that last occurred in 2001.

The Topix fell 0.5 percent, trimming this month’s gain to 1 percent. Japan’s GDP expanded by an annualized 0.7 percent in the three months ended June 30, more than the initial reading of 0.2 percent. Nintendo Co. jumped as much as 18 percent in Tokyo after the company announced plans to make its Super Mario Run game available on Apple Inc.’s iPhones from December.

As investors assess the outlook for both U.S. and Japanese monetary policy, “it’s difficult to make a definitive move in either direction,” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd.

Futures on the S&P 500 Index were little changed after the gauge barely moved in the last session. The benchmark has held in a band of 1.5 percent for 39 days, the narrowest ever for that length of time, and has gone 42 sessions without a 1 percent move in either direction, the longest run since 2014.

Currencies

The Bloomberg Dollar Spot Index fell to a two-week low. The yen led gains among 16 major currencies with a 0.2 percent advance and the won was the worst performer with a 0.2 percent loss. South Korea’s currency jumped 1.4 percent on Wednesday.

The Philippine peso sank to a four-week low after foreigners pulled $153 million from the nation’s stocks since the end of August, on track for the heaviest monthly net sales since November. China’s yuan weakened less than 0.1 percent in the onshore and offshore markets, declining for the first time this week.

Fixed Income

The overnight rate for yuan loans between banks in Hong Kong jumped 3.88 percentage points to 5.45 percent, a daily fixing shows. The equivalent rate in Shanghai increased by one basis point to 2.10 percent.

The People’s Bank of China may have tightened liquidity in the offshore market, as it did in January, to make it prohibitively expensive for foreign speculators to short the yuan in the wake of a Group of 20 summit that ended Monday, according to Mizuho Bank Ltd.

“The authorities may be repeating January’s trick — tighten the liquidity and crack down on bearish speculation on the yuan,” said Ken Cheung, a foreign-exchange strategist at Mizuho Bank in Hong Kong. “Everyone was talking about depreciation after the G20 meeting, and China could be reacting to that.”

U.S. Treasuries due in a decade rose, pushing their yield down by one basis point to 1.53 percent. The rate on similar-maturity bonds in Japan was little changed at minus 0.065 percent.

Commodities

West Texas Intermediate crude climbed 1.5 percent to $46.20 a barrel, set for its highest close in more than a week. It’s risen about 7 percent in the past week amid optimismmajor producers will agree measures to support prices.

U.S. crude inventories fell by 12.1 million barrels last week, the industry-funded American Petroleum Institute was said to have reported. A similar drop in official data due Thursday, which is forecast to show an expansion, would be the largest since 1999.

Gold rose 0.1 percent, nearing a three-week high. Copper advanced to a two-week high in London and tin retreated from its best close since January 2015. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Once again its not overly clear so we may get another drifting day. However, we have support at the 6834 area where we have the daily pivot, and the 30min coral just below that at 6831. Funnily enough that is showing a bullish trend at the moment, so we may well get a rise towards the 2 hour resistance area at 6865. I have gone for a short here for a drop down to the pivot and then possibly S1 at 6813. If the bulls manage to break through the 6867 resistance area then the top of the 20 day Bianca channel (still heading down at the moment) at 6886 looks likely. Above this then the bulls will be trying for 6925 and the recent high of 6950. As mentioned above it could be coiling up for a push higher at the moment, though overnight Asia and the ASX200 (Australia) both dropped down.

So, while the 2 hour chart is bearish, I am still thinking that we will see a bit more of a drop, though there doesn’t seem to be much bear power around at the moment. Certainly a bit of a funny week this one!

55 Comments

  1. promised myself – no more wine mid-week
    anyway managed to get long 6861 to 6874
    not good at all – was not able to analyse last night
    but – heck day has only begun.
    1. s&p held its 2179/80 – so up breakout was the only way
    2. 6860 was critical and was a foregone conclusion with s&p holding
    3. breakout has occured and got to respect that
    4. so how much more to go – well we are not over yet – right now 6900+ is where i see it – ( well high 6890’s )
    5. not in a trade – so now have to wait – a re-test of the breakout 6860 area is probably where we will be before eu rate decision
    ———————-
    anybody with their analysis
    it’ll be good to hear others views

    1. As we are above the high of yesterday, we are now in short term uptrend…
      Not worth trying to guess the top of the leg, best to buy the pullbacks…

      1. Hi george
        no i am not trying to guess the top. that is a mugs game . i have tried that for years – and i am living proof it does not work – i can show you with my huge losses.
        every breakout has its limit in terms of movement – and i find it helpful in terms of working out the next breakout
        this breakout should not get above 6908 – otherwise we are going to get serious velocity
        but i was not ready this morning so really could not take advantage of it

  2. Morning all.
    Looks like a volumeless grind up – though the level on ftse at 86 seems like it could repel advance – at least for 5mins lol.
    All very slow going. The dax is moving inverse to the ftse and is looking weak – essentially moving inline with USDJPY.
    USD weakening prior to ECB – perhaps preparing for a big switcheroo when the news is out.
    I’m short dax at 10750 – 10 either way. (low conviction)

  3. Morning Gang
    All flat here, closed my short @ 6830 for -45 points, off set by +100 on DOW long…
    Having a day off today…

  4. Oil – stockpile data is driving a lift on bullish expectation.

    That’s it from me. Added another short at 887, stop at 905

  5. Long time bear, I never go long. I’ve just gone long, big, at 6883. One last throw of the dice! 6873 stop.

    1. Morning all !! Nice and early points on ftse with that rise ! I am looking to short only but around or > 6900. Si good luck .. In my understadning you have come out of that short from 6300 right ?

    2. Hi Si, that’s a curious move at that level, the fact I’m short means it will rise but just wondered if you are on a punt or have some solid thinking about it rising.

      GL

  8. Hi george
    from your earlier staement – ref. pullback
    where do you see the pullback to be ?
    6872 ?
    just curious – isnt this like a ” sort of picking the tops”

  9. switched to short on dax @33 (even though I have channel bottom) – ftse and USD look like going to break levels..

    1. sooo sloooowwwww.
      not much to go on – dax seems weak, but the fact that its running into a channel bottom could cause it to bounce, but at the moment its a low volume grind down..
      Could we be looking at a grind up prior to the ecb meeting ? Might hurt a few shorts, so might happen…

      1. Ok, managed to pull some small bits and bobs of profit together by averaging into those wee moves on the dax…
        EUR launching into stratosphere at the moment (might sell it, though I do get burnt a lot hitting fx).

    1. Ah I’m also on Intertrader 🙂
      Did you manage to get raff’s and bianca’s on the charts (MetaTrader)?

      1. Still use PRT for the charts, manually have to draw the riffs on. Bianca one are just stand alone. You could plot the lines on manually each day too though

    2. will call it a day unless I see some good moves .. no point threading the water in still pond I guess .. good luck Jsft

      1. thnks sharmbee
        i should be ok
        the add areas to my positions – i may have to adjust
        as i said before 6908 – target or are we going to blast throuhg it
        being ecb and his q and a

        1. closed 6864
          lesson learnt
          wait for proper breakout – stupid!!!!
          trying to get into morning trade – stupid!!!

  14. The ECB press conference is at 13:30. Maybe dear Mario will explain that he has purchased around €1 trillion’s worth of bonds etc. and is now running out of options, i.e., eligible assets to acquire. That could spook the markets! 🙁

  16. Closed DAX short taking 55 pts

    I think we are heading south but have other shorts to benefit if we do. Also I don’t know how the ECB will go.

  17. with all that bear sentiments i have put 68 short for long tme holding ! stop 7000 all hail! good luck all thats my last trascation for the week for not month hopefully ! come on bears ..

  24. Why we’re bad at decision making

    Professionals, including doctors, project managers and judges are lousy at making consistent decisions, according to this article in Harvard Business Review. It is authored by some heavyweight researchers including psychologist Kaniel Kahneman.

    It says: “The unavoidable conclusion is that professionals often make decisions that deviate significantly from those of their peers, from their own prior decisions, and from rules that they themselves claim to follow.”

    ———————-
    some bloody consolation

  25. Afternoon all,I’m starting to feel a bit bearish,can see some profit taking in shares and the btd Dow rate of return is shrinking and 500 seems to be becoming an area with issues and this 450 touch doesnt feel like it did earlier in the week.I might just be tired and seeing what I want to see re first two weeks of Sept offering up a decent buy further down,but thats a good reason to take a day off too.Have a good weekend,see you next week.

  26. Good day for me, pulled 234 pts, not massive stakes but Rome wasn’t built in day.

    Still in FTSE short and added to SP ( now in at a record high stake for me ) but in profit. Looking for 70, then 60,

    Catch you tomorrow, GL as always.

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