Gold declines, markets rally. 6200 still to break and hold

Support 6165 6147 6137 6098
Resistance 6179 6190 6220 6279

Good morning.
Market Summary for Tuesday 22nd March 2016
The events in Brussels meant the FT100 opened sharply lower but then managed to recover back to break-even by the end of the day. Unfortunately these events lead to a market overreaction so the support at 6137 was breached. I think that level would have been fine had it not been for the attacks – especially as it then did bounce back to retest the 6200 level. However, it has added to making markets jittery on top of everything else.
In economic terms there was very little news that affected the markets.
The tourism sector was hit the hardest for obvious reasons but beyond that there were no stand out sector moves.

US & Asia Overnight from Bloomberg

  • Gold declines, wiping out gains made after Brussels attacks
  • Australian bonds fall after declines in U.S. Treasuries

Asian stocks declined as oil retreated from a three-month high amid a build-up of U.S. crude stockpiles. Precious metals declined as haven demand sparked by deadly terror attacks in Brussels proved fleeting.

Raw-materials producers and industrial companies led losses on the MSCI Asia Pacific Index, which slipped from its highest close since Jan. 1. Brent crude dropped before data that’s forecast to show American inventories, already at the highest level in more than eight decades, are still climbing. Gold sank as the Bloomberg Dollar Spot Index rallied for a fourth day. The British pound fell toward a one-week low after the explosions that killed at least 31 people in the Belgian capital stoked bets on the U.K. leaving the European Union. Malaysia’s ringgit strengthened versus all 31 major peers.

The weekly release of data on U.S. oil inventories is watched by the market as investors fret about oversupply issues and producers float the possibility of a freeze in output. Industry figures foreshadowed an increase of 8.8 million barrels in America, which is the world’s biggest consumer of crude. While the bomb attacks at the Brussels airport and a subway station initially hit equities and bolstered the yen, the impact dissipated in the U.S. trading day. Terrorist incidents including the one in France last year and the London bombings in 2005 spurred stock selloffs that were erased in the ensuing weeks.

“Usually such attacks will have only a short-term impact,” said Chris Green, an Auckland-based strategist at First NZ Capital Group Ltd., a brokerage and wealth management firm. “Investors focus remains on macro-economic fundamentals and we do need to see more signs of sustainability in the U.S. economy and some stability in the Chinese data. I’m somewhat cautious given the recent rally we’ve seen.”

German Finance Minister Wolfgang Schaeuble is due to outline his 2017 budget on Wednesday and a draft of the announcement showed plans to boost German defense and infrastructure spending as part of a proposed 2.7 percent increase in government outlays. Both Thailand and the Philippines are expected to keep benchmark interest rates on hold in reviews Wednesday.

Stocks
The MSCI Asia Pacific Index fell 0.7 percent as of 2:38 p.m. Tokyo time, poised for its biggest loss in a week. BHP Billiton Ltd., the world’s largest mining company, slid 1.7 percent in Sydney. Newcrest Mining Ltd., Australia’s biggest gold producer, sank 4.8 percent.

Australia’s S&P/ASX 200 Index fell 0.5 percent , while benchmark shares gauges in China, Hong Kong and Japan declined by at least 0.3 percent. Futures on the Standard & Poor’s 500 Index slipped 0.1 percent.

Commodities
Brent crude fell 0.9 percent to $41.40 a barrel, having rebounded over the past two months from a 12-year low of less than $28. U.S. stockpiles increased by 8.8 million barrels last week, the industry-funded American Petroleum Institute reported Tuesday, according to a document obtained by Bloomberg. Libya will skip a meeting between major oil exporters in Doha next month to freeze output, according to a person familiar with the situation.

“The large U.S. crude stockpiles will act as a headwind to price gains,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “If producers can agree to remove some incremental supply from the market at the Doha meeting, what they lose in production, they gain in a price rise and additional revenue. Just talking about a freeze has helped oil move higher.”

Gold for immediate delivery fell 1 percent, following a 0.4 percent advance in the last session. The metal jumped as much as 1.3 percent in intraday trading on Tuesday following the Brussels bombings. Platinum declined 1.1 percent and palladium lost 0.9 percent.

“We actually have quite a significant rally in the U.S. dollar over the last four days now,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “We’re seeing that flowing through the gold market and triggering some pre-emptive selling.”

Currencies
The Bloomberg Dollar Spot Index, a gauge of the greenback’s strength, rose to a one-week high after a usually dovish Federal Reserve official signaled his expectation of more interest-rate hikes than the market has priced in. Chicago Fed President Charles Evans on Tuesday said projections for two rate hikes this year were “a pretty good setting” for him. South Korea’s won dropped 0.6 percent, its biggest loss in two weeks.
Malaysia’s ringgit rose as much as 1.2 percent to a seven-month high of 3.9567 per dollar, before paring its advance to 0.3 percent as the greenback advanced. The currency of Asia’s only major net oil exporter has been boosted by the rebound in crude prices over the past two months.

“The market has been caught short ringgit and as a result of that we’re seeing continued short-covering,” said Divya Devesh, the Singapore-based foreign-exchange strategist for Asia at Standard Chartered Plc, who predicts the currency could appreciate to 3.90 a dollar in one to two months. “Oil has been supportive as well recently, it’s still above the $41 level, so that helps as well.”

The pound weakened 0.2 percent to $1.4186, having slid 1.1 percent on Tuesday amid speculation the Brussels terror attacks will boost the case of campaigners who want to see Britain out of the European Union. Pro-“Brexit” politicians argued that migration leaves the nation vulnerable to attack, while figures in the opposing camp, including Prime Minister David Cameron, have said that being part of the economic and political union aids security.

Bonds
The yield on U.S. Treasuries due in a decade held steady at a one-week high of 1.94 percent, after increasing by two basis points on Tuesday. The rate on similar-maturity debt in Australia rose by five basis points to 2.65 percent and New Zealand’s increased six basis points to 3.05 percent. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have had some overnight weakness to dip down and test the pivot at 6165 which has held as support. Looking at the 30min chart we have initial resistance at the 6179 area, with a declining channel showing 6190 resistance and support at 6150 then 6110 (yesterdays low also). I have gone for a dip off this channel to test the 6147 Bianca 10 day support first and we will either bounce here and rise back or fall down to 6110. The 2 hour chart is still bearish, with 6192 resistance so this area is the key for the bulls to break to yet again try and hold above 6200. For the moment, its looking like the 6237 recent high is the short term top as we have weakened since testing that. As an alternative plan, a break of 6192 might be worth going long on to target 6237 or higher, however, my preferred plan is a short from this area. We have a 4.35 divi today, so nothing too exciting, but bear it in mind for later as it will affect open positions. No major news is due, just home sales and oil inventories later at 13:30. Generally, the daily trends are still poise, with the bottom of the 10 day Bianca channel steadily rising to 6147 today (versus 6137 yesterday) so the trend is still up though we have stalled in this no mans land area around 6200. It feels like its not totally sure if it should be rising or falling, and its being blamed on Brexit fears. If the 6165 pivot break today then we should see 6147, and if that goes then 6110 and 6098.

124 Comments

  1. I was at the train station yesterday and my shoes looked a little grubby, so I sat down in the chair and, while he was polishing away, I asked the Shoeshine boy what was new with him.
    He looked around and said “Buy the dips….”
    😉

          1. Just read the cointelegraph article,I bet The Charitable Foundation part of that business (Laptops for 3rd world children 🙂 ) was the idea of the 2 English guys.I miss the days when the U.K exported Football hooliganism as a model,these fake Charities we are filling the planet with are really nauseating.

          2. That’s just window dressing WSF.
            The main mover behind this scam is Bulgarian, a ‘Dr.’ Ruja Ignatova, who bears a striking resemblance to Miss Piggy from the Muppets.
            The main Brit involved is a serial pyramid promoter Sebastian Greenwood, but there’s loads of EuroTrash promoting it in the Third World.
            I think its quite amazing that Teresa May bans politically controversial people from entering the UK at the drop of a hat, but when a huge fraud like this wants to sign up new mugs they are welcomed with open arms.

          3. Morning tmfp…..don’t know anything about Bitcoin TBH….might have a shufty on the Internet over the coming few days…..best of luck matey.

          4. One coin is a closed system pyramid, trading off peoples’ ignorance of crypto stuff. There’s only one exchange you can trade it on and that’s owned by the coin management. They just closed it for two weeks for “maintenance” so everyone’s locked in with their worthless tokens.
            The new kid on the decentralised block is Ethereum, gone from a market cap of $20m to $1billion this year.
            All good fun…

          5. Oh so it’s another alternative to Bitcoin…..onecoin…..just another bit of pre programming us to accept alternative types of currency so we accept a single global currency when the dollar collapses. I was walking down a road recently and a young boy on a mountain bike rode past me with a small handheld radio which was playing some rap music…..the young boy was rapping along with all the words………I thought that’s how easy it is to put ideas into people’s heads…..we need to think for ourselves and two fingers to TV….Pop music etc…..its all b@llocks …….watch the left hand do tricks……while the right hand is having us over………opposite world for me!

          6. I’ve noticed an odd thing with U.K immigration a few times too,relatives of “Important” people kill a few nobodies driving stoned,get a Prison Sentence,suspended,and serve it as Students in the U.K.I can think of 3 examples from the same country,definitely a service the Home Office is offering in Emerging Mkts.
            Mavrodi was running his Pyramid in India last i heard,targetting the illiterate and taking everything from them.Only the Chinese seem to do more than fine these people.

          7. Sergei Mavrodi’s still going strong WSF, now has MMMGlobal operating in Bitcoin only, offering 100% a month.
            That’s on top of the national schemes, big in South Africa, Philippines, Vietnam right now.

          8. He has one formula,sell/issue “paper”,set its value,produce more and run an exchange for it,take a percentage from buyers and sellers whilst fixing the price and holding their money,then drop the price and walk away blaming outside forces.Always a few people who come out ahead and say he’s a persecuted Saint.He’s always targeted the poor in places where there is no free health care or unemployment benefit.I suppose there are plenty of guys on AIM who would be small versions of him if they’d started in Russia during the Yeltsin yrs too.

  2. Mr Pumps European Tour……Roll up Roll up get your tickets before the crash BTFATH. But buyer beware!

  4. Morning all, not so much good news from me this morning, still short, average ~88. Dow couldn’t hold 17,600 despite many tries, FTSE making hard work at 6200. That said, it is quiet and if the IG-ometer is correct there are many shorts out there to be squeezed (me included). Plan for today is watch and wait, if it does run to ~6240 I’ll sell more, if it drops to ~6150 I’ll cover some. Good luck all.

  5. The odds say that we are flogging a dead horse to expect any major moves this side of the holiday weekend.
    I’m just pottering along with my rsi, currently long at 98 dumping soon for +10 or more.
    Re rsi, we’ve mentioned that IG’s charts are playing up recently, anyone tried to enter 10 in the standard chart rsi box? It won’t have it for me, I’m now on 9 lol.

        1. Weird, I’ve cleared cookies etc. but it won’t have it. 9’s probably better anyway on a quiet day like today.

  6. Out of my big heavy Gold short from 1260 at 1234 from last week.
    I thought I will hold this for a while but blue ink is very tempting 🙂

    1. Yes, Senu – Not my buyers or sellers in European Indices since last three weeks!
      Hopefully, we will have some volatility after Easter.

          1. Closed it for +5 for now, will wait for a extreme high or low RSI.
            Will go short around 10170 and long around 10050 before DOW.

        2. Hey Rick,forgot it was you that checked the Almanac,thought it was Hugh,there is an astro cycle date today too,so around this period for a significant chart point,could have been yesterday to be fair if you accept it.Last one was on the 9th which was interesting,re the 10th.Whatever,seen this topic brought up before and I know people dont like it for some reason so I’ll shut up 🙂

          3. Sure,short version,I can accept Fibonacci and Fractals and so Cycles make sense to me.I think there is something in Elliott Wave but I cant really apply it.I think Martin Armstrong and the 7yr thing has something in it so I can believe the stories about Gann and his ability to multiply accounts.Gann was influenced by astronomy,people talk about the 144,square,secret Freemason teaching stuff,but at a basic level Inflexion points seem to occur around eclipses.9th was a Solar Eclipse and tonight is a Lunar Eclipse of a full moon.Lunar calendar seems to influence people as well as the tide etc etc we are mostly water and so on.I think there are enough chart events close to Eclipses to make it worth noting the date,but I dont do Financial astrology.Its a well payed mkt though and Jack Schwager says people pay for it and dont talk about,if you search that term or WD Gann technical analysis,there is a lot there.Think it is more a big picture factor.
            Re Astrology tmfp tell me this isnt obviously a Fire Monkey yr like 1956 🙂

          4. Lol WSF, Financial Astrology is way over me.
            My aunt is actually a professional astrologer for over 40 years and she is almost right on most of the occasions. I will stick with RSI for now 🙂

  9. No, Senu, it went the other way, the level was sitting on DAX above previous resistance and all that rise on 30 min suggested that the upside is more likely to come. But it was tricky to call.

    2. Yep, 15 point trading range since 9 am, not really that exciting. Wonder whether our friends from across the pond will do their daily run to 17650 and back again first thing or save that treat for a bit later?

    1. Have you not being paying attention Senu……BTFDs!!! What are you thinking…..shorting…..madness……BTFDs!!!!!! Either that or it is a conspiracy.

  13. Short on the Dow starting to look good after almost 2.5 hours. Good, I have a day job to keep myself busy. Tempted to take half profit or should I wait till 475 ??

        1. Another amazing entry. Was it because of the pivot or 68.2% retrace to yesterday’s fall?

          2. Hi Jack,

            retrace plus R/R. My risk was 15 points on that trade with a potential 100 points profit. I had to take it and it was a long wait before it started showing some good profit.

            The key is to holding when it shows a profit. I might lose some profit here and there but when I win, I win big. I don’t need action to be in the trade all the time, I only need money. Still waiting for 475.

            I think with the way its going if 530 breaks it will fall to 480, I would expect 530 to become resistance, if it does will short more.

  20. It’s 36 hours before a four day weekend, barring a Black Swan nothing’s going anywhere much. I think I’ll sell some puts and calls.

  21. LOL I have been waiting for Gold to drop to 1220/1215 since last week and only closed my positions this morning at 1234 from 1260!
    Anyways profit is profit.
    Will short again at 1260 / 1280

    1. RSI is down now so I am still BTFD on extreme RSI but also shorting bounces.
      DAX long at 970 S20

  24. Looks like Mr Pump can’t handle all three at once…….what a lightweight :0)…. Come on show us what your made of !!!!

  25. Bought my 95’s back at 77. Watching the 81’s. Almost fancy buying a little bit of Dow if it gets to 500, they are bound to give it a run later – anstel’s pump!

    1. Not from where I’m watching from …..once chippy starts buying the Dow it will fly up :0)

      2. Call me cynical but I bet it’s the old …….jump up after the Ftse closes routine……..only so many ways you can skin a cat!

        1. I was never really into computer games before I started trading but I quite like this one……once you understand you are having your leg pulled you only have to figure out one more thing and that’s how hard will they pull it.

      3. Thanks for your confidence anstel, saw the move, didn’t do anything about it – bugger! Anyway, looks like the anstel pump is operating nicely, will they make 17600….again!

        1. Yes it will exceed 17600 and take FTSE and Dow with it……..DISCLAIMER…….this is just my opinion on this BS based on 2.5 yrs of watching how it sometimes behaves….not a dead cert by any stretch of the imagination.but I’ve backed it with my money.

          2. Hey Mr Pump if you are watching if you have any ideas of pumping it down just remember I like hedging :0)

  28. Thank you for reply, RJ, it was very helpful in terms of approach to trading and what the priorities are (r/r, etc.)

  30. This steady range bound market has yielded my most successful run in 7 years! In with a long on gold at 1228. Anyone else bought the decline?

    1. Hi anstel, that was then this is now! At the time I was looking at the strength of Ftse vs Dow that had shanked so buying a bit of Dow at 500 vs short ftse at 90 odd made sense. I was gambling on which tail was wagging which dog

  32. Evening chaps, got a message from Central Market Stockbrokers, any one heard of them? Been on their website and they have a link through to IG?
    Anstel, looks tricky now to get the pump up to 17600. Seems that Bulls have run out of steam, still watching ftse 81 short, going to chase it with a manual trail. I reckon next week could get a bit messy if the Bears get filled in.

    1. Reckon the seals have probably gone……..maybe they have a backup airline while they get some replacements. :0)

      1. Tell you what have you seen how many Bar those commercial garage airlines operate at.bloody 17600 might be just for starters!

        1. To be quite honest chippy its a bit sad that this market bears no resemblance to true market value…….but it’s the only market we have so we have to play the game I suppose.It is totally mental though……but what can we do?

          2. Anstel, no one knows what true market value is. Unless you get all the FDs from all the ftse companies in one room and telling the truth you will never know. Simply, though, when talking about the ftse, there are 100 companies, one fails it is replaced by another so self fulfilling and therefore clearly can’t go down to 0. Pretty much everyone has a pension of some sort and that money has to be invested in something. At, give or take a bit, the ftse offer a yield of around 4% is good-ish value. You’ve just got to have the ammo to run it. For us as gamblers it offers an opportunity to beat the 4%.

    1. Hey don’t call our chippy a wazzock it’s understandable to be unsure , this drop is a confidence trick IMO

          2. It’s interesting to me that this morning the Ftse was all set to push well past 6200 in my view and yet for the first time in a few days the Dow broke 550 to the downside…….I sold the Dax last night at 9967 only to see it around 10100 today….so in my mind if the Dow can get North of 17620 ish we should get the Dax in the 10050 area and Ftse around 6210 I reckon……any thoughts WSF?

    1. Well Si I don’t know mate……….it’s cnbc so I think I will add to my Dow long !……….seriously though Si it is a bear market……..just one where the prices are going up lol!…….I think it is going to drop again to at least 15500 level Dow and 5500 Ftse …….but it’s just how long they want to keep pretending….I think we will get a drop to these levels before the election but I think it will bounce back again to 17000 17500 area…..the area we are at now…….what did he say on that video….we can’t live without Google……..that’s a laugh…..you can’t eat a search engine! …..just more propaganda IMO….do the opposite :0)

      1. definitely a great video Si!
        I actually mentioned in my comments earlier that we will have a drop next week or 1st week of April.
        I am holding a triple digit DOW short from 17640 (21st March), target is 17000 and then second target is 16500.
        GL

        1. How can somebody predict a peak on March 23 after lunch….on 15th February ……unless they know something we don’t….ummn maybe it will drop just to dispel the opposite world theory…..I’m starting to get the,,,, ive had enough of the BS feeling again…

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