FTSE 100 resistance 7025 7055 | support 6975 | Bulls back | Asia bounces

FTSE 100 Support 6989 6981 6973 6955 6942 6925 6912
FTSE 100 Resistance 7020 7025 7050 7058 7101 7159

Good morning. The bears charge was short lived yesterday as the bulls came roaring back from the 6925 area where we had the 25ema on the daily chart, and also a rising trend line following the Brexit low, to regain the 7000 level (just). Didn’t feel like it was going to bounce 80 points at the time though! The 2 hour chart is still bearish with resistance at 7020 today, so the bulls will need to break that early on to push higher. The Bianca channels are starting to look a little more bearish too, with the 10 day channel sneaking below the 20 day.

As you saw, I have set up that WhatsApp group as another method for issuing the trade updates in addition to sending out the emails once a trade is running. Might be a bit more instant for some you and will see how it works out.

US & Asia Overnight from Bloomberg

Emerging stocks pared their weekly drop, most base metals rose and the yen slipped as signs of stabilization in China’s economy boosted investor appetite for riskier assets. Thai stocks surged with the baht on prospects of a smooth transition of power after the king’s death.

The MSCI Emerging Markets Index snapped a three-day losing streak as data showed China’s producer prices rose for the first time since 2012. Thai equities surged the most since 2013. The yen extended a weekly decline while Singapore’s currency slipped as the city state’s central bank left policy unchanged and growth slowed. Copper rebounded and U.S. crude extended gains back above $50 a barrel.

The inflation report contrasts with data from China on Thursday that showed the steepest drop in exports since February and spurred a regional equity selloff. The figures come after minutes of the Federal Reserve’s last meeting signaled policy makers are leaning toward raising rates in December. India also issues data on wholesale prices Friday.

“Once China’s economy improves, that will lead the rebound in growth in other Asian markets, especially Southeast Asia,” said Danny Wong Teck Meng, chief executive officer at Areca Capital Sdn. in Kuala Lumpur, who oversees the equivalent of $170 million. “Oil hovering at this level is conducive for global growth, if prices are stable and not too volatile.”

Stocks

The emerging market gauge was up 0.3 percent as of 12:26 p.m. in Hong Kong. The broader MSCI Asia Pacific Index rose less than 0.1 percent, heading for the biggest weekly decline in almost a month.

Thailand’s SET Index jumped 4.1 percent and the Hang Sang Index added 0.6 percent.

Japan’s Topix index rose 0.1 percent while futures on the S&P 500 were little changed after the U.S. benchmark retreated 0.3 percent Thursday, trimming an earlier slump of as much as 1.1 percent.

The Kospi index jumped 0.6 percent in Seoul as Samsung Electronics Co. climbed for a second day. South Korea’s largest company said it expects a total profit impact of $5.3 billion through March 2017 after ending production of its fire-prone Galaxy Note 7 smartphones.

Currencies

The baht gained 0.4 percent, rising a second day to pare its weekly decline to 1.1 percent. Financial markets in the Southeast Asian nation are open as usual Friday as the government hasn’t requested that they close following the death of King Bhumibol Adulyadej on Thursday.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.2 percent after snapping a three-day climb to fall 0.3 percent on Thursday. Singapore’s dollar lost 0.6 percent. The yen lost 0.3 percent at 104.05 per dollar after strengthening 0.5 percent last session.

Commodities

Oil headed for a fourth weekly advance after a decline in U.S. fuel supplies and crude stockpiles at the delivery point for New York futures offset an increase in nationwide inventories. West Texas Intermediate rose 0.5 percent, up 1.8 percent for the week.
Zinc in London added 0.6 percent, rebounding from the lowest level in a month, while copper in New York rose 0.2 percent. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

For today awe might see a bit of yesterday bullishness continue, though there is resistance on the 2 hour chart still in play at 7020 and 7058 – shorts off these levels are worth a go I feel, ahead of the weekend. We are going into earnings season in the US and markets are jittery as we saw yesterday. A break below 6940 now will be bearish as thats the 20 day Raff channel (which held yesterday) and could lead back down to 6800. However, a close above 7000 today (we closed at 6980 yesterday) would keep the bulls alive and we will test 7130 again and as its the third test, probably break through. They will be keen to break 7060 today if they are going to regain the advantage from the bears.

For today I am thinking that shorting off the 2 hour resistance levels is worth a go, and also a long off the 30minute coral at 6973 – this long would tally with a drop back to go for the gap close with yesterday closing price. We have the Retail sales in the US at 13:30 and then a confidence report at 15:00, then Yellen speaking at 17:00 – so a few bits of market moving news around today. So fairly simple plan really, looking at 6975 for support, 7020 and 7060 for resistance.

126 Comments

  1. How many points stop would be recommended for a speculative short from 7020 resistance? Would a tight stop be say 10 or 5 points?

    1. Hiya.
      Stops should be at very least 1:1 ratio with targets, better 3:1.
      5 is a bit tight (4 in reality) unless it’s a specific very short term set up you’re seeing.

    2. Short term I would say just above the high of today…
      Better if you position a 1/3rd stake and see how it goes, you can always add…
      If your in full in, dont add to losing position

  2. I’m there with Nick today 100%.
    As I said last night, that was a bullish hammer candle in the end on the DOW and I think it could continue up for technical and other reasons (which I will bore you with later).
    BTFD.

    1. The weekly candle tells a different story.. Its had 3 weeks forming a bear flag, this is 4th week and looks like its breaking down…

      1. That’s why TA is fun George, and today is crucial.
        I see a weekly engulfing candle, with a close over 250 today being v bullish.
        GL, we pays our money and makes our choice..

  4. Morning All – Initially I thought this was going for a GAP fill 7006 – 7038 from 12/13th . Few peeps looking at this as a 50% retracement (7129/6927 approx – 50% = 7028) set up for move lower – but can’t see it myself just at the moment..

    1. We filled that 7024-7000 gap nicely though, Hugh.
      Could retrace to 7000 support then onto 40/70 imo.
      If we collapse, I lose money. Simple. 🙂

        1. But I agree, the 50% retrace will be a bit of an obstacle. 7067 next Fib tgt at 31.8.
          Having a go as I type…?

  5. Ok, reasons to be Bullish Pt 1……
    Technical
    Look back through recent longer term charts, especially on the DOW, and what do you see? This bull market is built on stilts, aka bull hammer candles.
    Selloffs have been bought and turned into bear traps.
    This is a valid indicator, and it’s why I’m bullish today, although as Chris Weston points out on IG, these levels are crucial.

    Political

    There’s less than a month to go before the Presidential election and, despite her brain damage both interior and Trump, Hilary looks like extending Democrat rule to 19 out of the last 27 years.
    The FED has grown hugely in influence under them, especially with Obama, and is nice and cosy with the Democrats. The idea that Repugs are the party of business is outmoded, while deficit financing allows Big Biz to get rich and play its buyback games with free money, they’re quite happy with whoever in power.
    I can’t see that these PTB will allow a stock crash that may give Trump bullets to fire in the closing stages of campaigning.

    Fundamentals

    Don’t mean Jack any more. Those catastrophic (in a real world) Chinese figures triggered that sell off, probably forgotten next week.
    Yes I know the world economy is probably in terminal mode and, yes, I like reading ZeroHedge. Just don’t play the markets based on their Doomsday Scenarios, you’d have gone broke many times over.

    BTFD.

  6. It’s all happening in slow motion.
    O/B DAX 10540 & CAC 4465…
    …Both have filled their 12/13 GAPS
    So breaking these we’ll get some Bull flags and some more O/B signals higher up

  7. I’m caught in a large negative short on the DOW and foolishly didn’t apply stops! Do you think I’m better off cutting my losses now?

    1. You’ve got some resistance areas at this level 18173 & then another at 18194.
      The brealout point was 18137 (that’s where stop should have been perhaps).
      Last night’s close was 18114 (as I see it on IG).
      RSI on 15 Min = 78
      RSI on 5 Min = 85
      (Flippin’ shame to dump stuff at these levels – great if you’re closing – but it’s all a bit back to front)
      I think I’d be tempted to hold on to it but put some stops in 18200 (all depends on your position size though dunnit’) & perhaps have a look at what messed up

  9. What do you guys think about use of trailing stops. I haven’t used them yet but am considering.

  10. the annoying thing is that I was using those all week and had made significant returns until I entered this stupid trade!

    They are good in a falling market as you need to leave quite large stops so you don’t get closed to early.

    1. Cheers ngunter. Think I will give them a go next time I go short. I normally move my stop to break even once at least 40 points in profit but sometimes end up with nothing if market turns temporarily

  12. There’s two types of stop positioning, one based purely on technical reasons and one based purely on financial protection, it’s good if they coincide.
    The problem with trailing stops is they’re linear, not exponential.

    1. I use stops mainly for account preservation but tend to keep them wide based on account size and position sizing. Tricky for sure

      1. Cheapened the longs by 10 on that reversal, it keeps chugging along.
        Not taking a continued rise for granted though, stops at 30 and 24.
        Will look to dump quite a bit before the DOW if we make newer highs 60ish before then.
        Although I think the DOW could finish the week strong, some early weakness is well possible.

      1. What I have noticed over the last few weeks is we have been getting a really strong trending bull day followed by consolidation then a 170-200 pt pullback then that’s followed by a new high…..yesterday’s sell off got down to about 6930 from that peak of about 7128…that’s give or take a 200 pt reversal which kills confidence….everybody gets into the short mindset meanwhile the market makes new yearly highs….It’s Friday ,no one wants longs over weekend……..I think we will get a steady climb later in excess of 7100 at least…….just my 2 cents….good luck all :0)

        1. Plus cable hit 1.2262 so a decline again there coupled with a strong Dow could put fuel on the fire……

        2. You say no-one wants longs over the weekend, does anyone really want shorts?
          A fly in the ointment could be some bad megacorp figures now we’re in earnings season.

          Just bounced off new highs, a bit hot on the RSI. Third time lucky? Just before a +100+ DOW?

          1. I would have thought most day traders would prefer to be flat over weekend…….you taught me the benefit of that….and so less people would profit out of going long due to an adversity to enter and hold longs on Friday in case they get stuck and face either liquidating at a loss or running the risk of a gap down at open on Sunday evening…..just my thoughts on it……anyway so far so good….:0) good luck…

          2. Day traders don’t affect the market much net anstel, they just oil the wheels (and get dumped on at the top and stopped at the bottom).

  15. Glad I got stopped out yesterday. After my big wins, I went small short on dow and ftse, stopped out on both. Thought they’d be long term money spinners, but nope! Waiting for a good level to come back in short on either/both.

    1. Just my two cents Si, but I’d hang fire on any big short until the US election’s out of the way, for the “feelgood” voter factor I mention above.
      Could be a good ‘sell the news’ if they run it up in the meantime.
      Now watch, 17500 this afternoon… 😉

      1. I have the same feeling about them not letting it drop until after, but I wonder if there’s a limit to the level of manipulation they can perform when the bond market is heading south with such conviction.

          2. Hey ive got a spare tin foil hat tmfp …….yours for the asking……..we will make a convert out of you yet lol :0)

  16. So – some good numbers out of the US I see… Not looked into the detail of them, but at face value, its dollar positive.
    So are we in a good news == good news mode or a good news == bad news mode ?
    Strong dollar doesn’t seem to have dented things very definitively lately so I think good news might actually be good news.
    Tempted to go long.

        1. Back to 18240… Hopefully a move downwards from here. Morko said it would go down today, so I’ll hold him accountable if it doesn’t. 🙂

  19. Hey tmfp,
    Whats your take on the rsi on the Dow post open – ie is it worth watching, or since its been out of hours, should it be ignored for 10 / 14 periods ?

    1. Always ignore the rsi on any opening market until it’s completed at least one cycle is the way I do it, i.e. 10 mins on 1min 10, and then bear in mind the starting level.
      That’s on 24/7 markets, on cash charts I watch from the get go.

  20. Looking a bit tired now, dumped most at 45, looking to the close now, still think there’s some scalping upside then.

  21. Think I’ll call it a day – its all moving so erratically I don’t think I have an edge.
    Scraped my target for the day and don’t want to give it back!
    GL all, see you monday (unless it starts motoring, in which case might get tempted back :))

  22. Cheers all, leaving that little 10 long to run, stop 95 limit 40 (ya never know).
    Be very interesting to see where the DOW ends up but I won’t be watching, it’s non alcoholic party time! 🙂

  23. Hi chaps, I too did well out of that drop but am annoyed I didn’t go heavier!

    Still have a few in, I did say yesterday a big drop in Dow today, fingers crossed !

          15. We appear to have some slight technical difficulties actually leaving the launch pad…… Go fly:0)

          21. Probably……everyone’s finished work anyway might as well have a laugh…..let’s crack another few tinnies :0)

          1. I won’t be stayin in Si I’m long from 60 and 81 just thought it might get a push higher before close…in retrospect I should have come out at 50 or so….Just a bit of fun these comments ……it gets a bit tedious doing this all day….so it’s nice to have a laugh….:0) good luck mate….:0)

  27. Bear is the new bull, l hear IG are even going to remove the buy option as no one is going to use it 🙂

  29. It’s a fall fall situation…Good news equals strong economy equals rate hike equals a fall.

    Bad news equals weak economy and there’s a fall.

    Now FFS FALL!!!!!!

        1. Looks like the 21 yr old is going to be out of your price range this evening……..:0)…… I think Del Boy might have some old stock that you could get cheap that would come in handy if it’s not perished :0)

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