Getting a bit bearish, 6712 to hold?

Good morning. It was a bit more bearish yesterday from the off than I was expecting and though the long at 6736 had a little bounce it was short lived and the stop got hit. Sorry about that. it dropped during the day (twice) as far as that bottom support level at 6715 mentioned yesterday (a little bit further on the second dip) but then that has held so far. Its still all eye on the payroll news tomorrow in the US to give a better clue as to the direction over the next few weeks. That 6712 area is the line in the sand and I think weakness below that will see 6682 and possibly lower. chebscanIf it holds then a move above 6732 could lead to 6767 again. That said, it does look rather weak and the www.chebscan.com channel is saying a sell at this level as you can see below. Asia was a bit weak overnight, but FTSE futures prices have held up pretty well, hovering around the 6725 area. Either way, be cautiously long if 6712 holds but expect a break lower. Down to 6680 possibly even 6630.

Asia Overnight from Bloomberg

Asian stocks fell as China’s factory-gate prices extended the longest streak of declines since the Asian financial crisis and Federal Reserve minutes showed officials saw diminishing benefits from bond buying.

The MSCI Asia Pacific Index lost 0.6 percent to 139.03 as of 1:10 p.m. in Tokyo, with about three stocks falling for every two that rose. The measure gained 1 percent yesterday, the biggest advance since Nov. 18. The index maintained losses as data showed China’s inflation rate slowed last month by more than economists forecast and an index of producer prices recorded its 22nd straight drop from a year earlier.

Bianca Trends
Bianca Trends

China’s “producer prices have been a huge concern,” Jackson Wong, vice president of Tanrich Securities in Hong Kong, said by telephone. “At industrial levels, no one is making money in a negative environment.”

China’s consumer-price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said in Beijing. That compares with a 2.7 percent median estimate of analysts surveyed by Bloomberg News and a 3 percent increase in November. The producer-price index fell 1.4 percent from a year earlier to record its longest series of losses since the Asian financial crisis in 1997.

USA

Futures on the Standard & Poor’s 500 Index were little changed today. The equity gauge closed little changed yesterday. Fed officials saw diminishing economic benefits from their bond-buying program and voiced concern about future risks to financial stability during their last meeting, when they began to cut the pace of purchases.

Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of bond buying as the economy strengthens. The minutes didn’t describe a set schedule for reductions, although “a few” officials mentioned the need for a “more deterministic path.”

Companies in the U.S. boosted payrolls by 238,000 in December, figures from ADP Research Institute in Roseland, New Jersey, showed yesterday. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.

The Labor Department will announce tomorrow figures for new hiring and the unemployment rate for last month.

FTSE 100 prediction
FTSE 100 prediction

FTSE Outlook

Oh FTSE bulls, don’t give up just yet, we want the weekly chart to play out with the rise to 6850! Crucial level today is 6712 (yesterday’s low) which as long as that holds then could get the top of the 10 day Raff at 6777. Unfortunately if it doesn’t hold then 6670 and 6627 look possible supports next. Assuming it does hold then 6730ish (pivot area and channel top on 30 minute) will need to break to target 6760 and 6777.  The EMAs are  bearish for the start as I write this, and we are within a fairly tight declining 30 minute channel. I have put a fairly zig-zaggy arrow scenario below, basically based on the 6712 area holding. I think it will, as I think NFP will be ok tomorrow, there will be a test of the top of the 10 day channel top. The 10 day Bianca channel top has dropped down to 6787 now as well so its definitely turning bearish and that weekly scenario below might play out a bit earlier, failing to reach the 6850/950 top of the weekly channel. I am still thinking a decline to 6000 during the first half of 2014.

127 Comments

  8. Just brought my stop up to 6736 to ensure a very good profit. I was panicking this morning so I will take this reversal. Took my limit off and will keep increasing my stop.

  10. Definitely agree with that drop to 6000
    At some point, unexpected interest rate rises and the us debt crisis debacle will ultimately have a resounding impact across all major indexes
    Was looking to go long at 6720 but didnt place the order. Not happy.

  11. Look at the major sectors in the FTSE – miners have been VERY weak recently, if that changes, we could start to motor.

    1. Marco – where is that rumour from? I cant find anything -infact the only comment I can find today talks the opposite of raising interest rates sooner…

  13. Back from month long break. Was going through posts/comments and markets from past few weeks and dont know where to start now! I think I wait till monday before jumping in. Too volatile this week without any clear direction.

  14. Interesting morning. Seems to be flatlining around the 6740 area. Anyone’s views as to the next move. I think up

  15. David heard it this morning on Bbc news. Unemployment dropped much faster than they anticipated so to keep interest rates low it was rumoured carney might drop threshold from 7.5 to 6.5.

  16. Carney is as clueless as the rest of them, they kid themselves that they have control but they are just observing the market cycles, as ever

  17. But MPC members have hinted at rises two months in a row. That was before these latest figures. Maybe something formal today?

  18. Thinking drop to 30 then up. Have closed my longs from this morning waiting for drop back before going long dependant on news..

  24. Despite Igor’s elegant polynomial above, I haven’t given up yet on a rise to ≈6850 within the next 10 days or so. In fact, as time goes on and the tramlining persists, I think this becomes increasingly likely. Does that make any sense? 🙂

  30. I scalped 6 on the FTSE on that little rally but more effort than it’s worth to be honest…

    1. Yes quite – 70 point range so far this year. I am sure it will move one way or the other soon! I am more relaxed having a small short at the moment as I anticipate jitters as we approach tomorrows NFPs

      1. Yep payrolls are always fun.

        Bear in mind that some traders will have the info early, as with all econ data.

          1. The only hope I have is spike tomorrow. And you are right, holding on hope is distressing thing to do. Do you have s/l?

          4. Im seeing a slight upward movement, looks like hope could possibly pro-vale. Add me on skype bro i wannt to suffer with someone else lol.

            Skype: SEOstyx

  37. One thing you rely on… the markets will move before payrolls in order to extract the max £££ from punters….

    Be careful

  40. New chart in twitter, since the start of the year, rangebound.
    I see a similar swing from the first week, after topping.

    1. Saying that, then we should see a higher low starting today or tomorrow.
      If we deep below today’s low, than all this will be gone and we will see new lows and a start of a downtrend.

        1. My indicator turned bearish yesterday with close below T-line and starting a negative slope. It could be short-term or a longer term. This are still on the cards

  41. Well we have the Dax hovering above 9500 and the DOW 16500 – think key for the rest of the afternoon as far as the FTSE concerned is whether this hold or not.

    1. personally id s/l at 6706 if it brakes that. I feel it will follow through. Otherwise i’m holding

  42. I feel I was lucky today. Need to have more patience. Waiting for a lower long entry but at 6680 / 6650 say it will feel like the start of a larger pull back rather than a point to go long. Maybe 6700 / 6710 long with a stop at 6675

      1. I mean they will be running the stops, and all the other usual tricks they use to extract £££ from the public…

  54. 6,685 positions closed. I am going to await the news from china tonight and then the news from US tomorrow before entering again.

    1. Nice trading. I only scalped the FTSE today but did take a few £ off STAN & RIO.

      Tomorrow should be fun

  55. Hi all i know I might be a bit dam here but what happend that the ftse dropped so much, I missed all this

  57. Bear raid before big rise tomorrow in my opinion 400 on Dow is good support so long fir me on Dow for and big push up tomorrow through 16600 and 6800 on ftse

    1. In my opinion, if the NFP is good tomorrow then it will be bad for the market as the Fed will taper faster then they anticipate.The minutes yesterday show how devised they are in the comity! What more, only now they starting to think if the QE actually works??!!Daaa!!

  58. Well Nick, the new year hasn’t started to good for you. You seam to be more wrong then right this days…lol

  60. Well we have broken out (downwards) of the 2014 range so I shall likely be shorting any rises tomorrow, as I started to do from earlier today – but I closed out when it got to 6710 as I didnt expect it to keep going down! I might just hang on till the NFP though, but if the market is already telling us who is to argue – it turned 2 days before the taper outcome so the question is how brave/risky to be to catch the new trend back (assuming that is what happens)

  61. Whoa I’ve had some big swings in my account today. Closed a large profit today at 6736. Now long from 6703. Scary!

  62. Can anybody advice if there’s any chance that we may see 6760-70 or even 6800 tomorrow before it goes below 6675 or it is more an illusion now? Please recommend. I got long 6729.8. Will I be possible be able to reach that for any kind of b/e? Not sure what to do with this position. Second day and I am in big trouble now.

  63. Lovely shooting star on BP today, I went short at 496. Looking for a retracement to 470 in next couple of weeks

  64. PS, FTSE definitely showing patterns that emerged early November. Especially as Hashmash is now heavily short lol 😛

    1. You were right another day…FTSE is starting a slowdown drift as last Nov 😀

  65. Some comments at Nick popping up. I think he does a marvellous job and if you don’t like his opinion you should look elsewhere and dyor. Thanks Nick I like many others appreciate your views!!!

    1. Yes agreed – i find it a really helpful site and always take note of the daily view but hopefully people dont trade it literally every day. I also see this as a %ages game so some days it can be horribly wrong, but with good stop loss management you dont need to win everything to win overall

  66. Got stopped out 2 days ago on my long, just opened short with a price limit 6620 I just don’t think buyers are willing to come back in till we see a pullback there was a big spike in volume last month 1 billion shares traded the bars top is 6616 could be where we will see the reversal

  67. Good call today Nick,
    Tied in well with your 6670 area and December’s 6678 as support level…
    Guess we are looking for 6718 to start to break to upside with 6730 as the break through upwards and onwards.. with the 6670 as the catalyst for more downside..

  69. Bearish view :
    Downtrend channel in 30 minute chart since NOV.7
    Broke today 21/55 EMA in 1 hour chart
    T-Line above and negative slope

    Bullish view :
    All intact in one month period, which could lead for another leg up to activate bearish divergence.

  71. The pattern just looks very similar to what happened end of October – start of November I would guess there were so many shares bought in the uptrend when they get between the 6700 -6800 level the buyers dry up so shares have to be unloaded over a longer period to stop a sudden sell off downwards and the bigger traders can’t get the profit they are after?

  73. Just to let people know,
    I am not heavily short!
    i have closed my short at 6688.
    I HAVE 0 Position

  74. i am thinking of shorting at around 6694 tomorrow if it is hit as this would indicate support at around 6704 from mid nov is breached. been sitting on the sidelines for a few days.

  75. I agree with Nick, I don’t expect the NFP data to be negitive and believe the market will react positively. However, it will be extremely volitile. I have a buy order set at 6680 and won’t hold it much above 6725. Good luck all.

  76. I hate an out of hours trade but just closed my long for a nice profit. It will certainly dip towards 6710 before payrolls but I expect a spike up after. Not worth risking a decent profit though.

      1. Actually there is choice, I am out of the position. -21 points, not a big deal, better to take the right entry.

  79. “City sources predict the FTSE 100 will open 25 points higher than yesterday’s close of 6,691.34. “

  80. I think today will determine whether we put 6700 behind us to the upside for good or whether it is time to short the rallies. I expect good news and a spike but all depends on whether that fades. If the bulls don’t come out today then the pullback is probably on. Just my ramblings!

  82. This feels like a good short entry for a few points but I’m not going to be able to watch today so can’t get in. There’ll be some cautiousness pre jobs news

    1. Yep – incredible that it has regained 45 points. Havent gone short yet but that would be my only entry today – all the measures I use show the recent upward trend has broken. If it breaks below 6723 Ill likely add a short but hold back mostly for after NFP

  84. Good NFPs priced in to all markets. China, France and Alcoa are interesting. Mkt showing no sign of strength right now.Until we see buyers scooping up the bargains at these levels what’s the rationale for going long?

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