Happy NFP Day! Some resistance at 6540 and 6560 today

Good morning. Well yesterday played out according to plan with the dip, rise, dip, but then the bulls fought back yet again to get the FTSE back above 6500. Today is NFP news day so expect it to get a little choppy at 13:30 as today’s figure will give a better clue as to whether the US will be tapering QE in September or later. I still think later so it will be interesting to see. For the moment it would seem that the market is still in the buy the rumour and buying the dips, kind of expecting tapering at a later date. Still have Syria simmering away and possible action there – sure it’s the hot topic at the G20 at the moment! With interest rates and UK QE remaining in situ yesterday, markets continue to put pressure on Mark Carney.  While the Bank signalled that there would no move in rates until late 2016, markets now believe the first rate rise will come in mid-2015 in light of the UK’s rapidly improving economic prospects.

Asia Overnight from Bloomberg

Asian stocks dropped, snapping a six-day advance and paring the regional benchmark index’s biggest weekly gain since July, as investors await the monthly American jobs report.

The MSCI Asia Pacific Index fell 0.1 percent to 133.08 as of 11:41 a.m. in Hong Kong, on course to rise 2.3 percent this week for the biggest advance since the week through July 12. U.S. payrolls figures today may add to signs of an improving jobs market ahead of the Federal Reserve’s Sept. 17-18 meeting, when it will gauge whether the world’s biggest economy can withstand a reduction in unprecedented stimulus.

The jobs data today “is a very important number because it is the number that Fed policy is benchmarked against,” Peter Esho, chief market analyst at Invast Securities Co., said by phone. “A discussion around employment is going to drive the outcome of the Fed’s meeting later this month.”

US

Futures on the Standard & Poor’s 500 Index fell 0.1 percent.  Speculation the Federal Open Market Committee will dial down bond purchases at its meeting this month has pushed up U.S. bond yields and contributed to the worst rout in the currencies of developing nations in five years.

Claims (INJCJC) for U.S. unemployment benefits declined by 9,000 to 323,000 in the week ended Aug. 31, less than the lowest estimate of economists surveyed by Bloomberg. Another report showed companies boosted employment by 176,000 workers in August, according to the ADP Research Institute.

Payrolls Forecast

The number of workers on nonfarm payrolls in the U.S. probably increased 180,000 in August, compared with a gain of 162,000 for July, according to the median of 94 economists’ estimates compiled by Bloomberg.

Dax

Further movement above 8258 remains with an expectation of 8313 next. Movement below 8167 could get very bearish for 8070 points!

S&P

Movement above 1660 remains with an expectation of 1664 possibly 1674 points. If it’s all getting bearish, movement below 1651 allows reversal toward 1643.

Gold

Further weakness below 1365 has a bottom target 1334. Below such a level kills the current growth trend. Above the 1374 level and movement toward 1383 is initially possible.

Outlook

ftse 100 prediction
ftse 100 prediction

Today is going to be interesting I feel, not least as its Friday but also with the FTSE closing yesterday quite strongly and NFP at 13:30. We have both the 10 and 20 day Raff channels coinciding at 6609 today, but that would see quite a bullish push today with a few key resistance levels in the way first. On the daily chart I do still have the coral indicating a bearish trend and resistance at around the 6550 level. I have circled the 2 key’ish areas in Red below that I am looking at, though bear in mind the more general support/resistance levels listed below. We could potentially test the top of the Bianca channels yet again, and with the Raff channels also both sitting at 6610, a swing short at say 6560, with a very wide stop, and a drop fuelled by NFP could be good. I must admit though, I feel a bit more confident shorting off the top of these daily channel lines than thinking that we are in for a bullish few weeks.

61 Comments

    1. From Wikipedia:

      The Bureau of Labor Statistics releases preliminary data on the third Friday after the conclusion of the reference week, i.e., the week which includes the 12th of the month, at 8:30 a.m. Eastern Time;[1] typically this date occurs on the first Friday of the month. Nonfarm payroll is included in the monthly Employment Situation or informally the jobs report and affects the US dollar, the Foreign exchange market, the bond market, and the stock market.

  2. Typically over the last year the NFP has beaten expectations – only had a couple of blips in January and March. However the survey median is relatively high this month 180k v an average of 140k during the period. Payrolls have come in at an average of 165k over this time with recent months being stronger. If this continues then expect the NFP to come in at 180-200k. Data has been good recently and that is normally a pretty accurate guide. So not expecting a miss today.

    1. Hi Javed, what are your latest thoughts on FTSE? It’s in a bit of no mans land at the moment. I would like it to fall back over the next two months into October when the usual Xmas rally begins.

      1. Hi James,

        Yes it is really tough at present to work out direction. It has shown good strength recently to bounce from 6390 right upto 6545. An improving economy and greater M&A activity are good positive signs. Personally I too would like a drop right down to the 6200 level at least before going bullish in the final quarter. The NFP may provide some direction but it may be difficult to trade given good news is deemed bad for the market but what is bad news? Even if we get a prolonged 2 day drop after the NFP and Syria vote it may only take us back to 6390 – ie the bottom of the current range. On the upside we can expect 6650.

        As mentioned previously we need the key support of 6338 to break which at present is looking increasingly unlikely but within an hour and a hour we should know more.

        2. Thanks Javed. Everyone knows the market does the opposite of what most people expect. On that subject, I read an artlicle where the author mentioned that everyone is currently expecting a correction after a huge rally. Therefore, that is unlikely to happen. So instead we will either move higher or crash!

  7. I hate these people at CityIndex. When it spiked I pressed sell at 6560 and it starting rolling it rolling it and then said Trade failed when it was already on 6550, that’s unfair. I waited all day for it.

    1. That’s why you should use a good platform with good execution and not just the one with the smallest spreads!
      I tried CityIndex years ago, and these issues, moved to IG and execution is way way better.

    2. I had the same experience with Finspreads a few years back. In addition, frequently I wasn’t able to close bets when I wanted to – pretty desperate when losses are mounting. Like Al, I moved to IG and have found execution to be first rate.
      In my opinion the behaviour you describe is potentially fraudulent. Perhaps the FCA (Financial Conduct Authority UK: 0800 111 6768) would be interested to hear about it.

  9. Latest Headlines: (From Reuters at 14:05 – timely what?)
    Markets on hold as U.S. jobs data draws closer

  12. And now comes the dip. Managed to get 30 points on my short from 6565. Also closed my short the previous day on the Dow from 14925 at 14860.
    Obviously should have had guts to hold out for more….but those cognitive biases kick in……

    1. Yes I was out. When the first spike happened, I pressed sell 6560 and it failed. They I made a mistake and took too early at 6546 and it shooted up. I was praying for it to at least come to 6546 swearing I am going to close it. Finally with all the troubles it happened and I happily closed it. And well, you know the rest. I have a rule – if I entered badly I need to make the loss a minimum and get out. When I was on the top, I have seen a good entry but well, I was bound with a losing trade. So I am not getting anywhere, very frustrated this week, made a loss of a total of 3 points (considering I was ahead 20 points at some point). So basically I lost those 20 points and really hoped for NFP. But nothing again.

  15. I phoned them, basically they said if the price after I pressed the button moved more than 2 points it may not accept the trade. And at that time it did move to 54 or something. She said something about 2 points tolerance. Well, just had a horrendous week. All wins lost and even a bit on top. Completely struggling with patience, time, judgement and confidence.

  17. The DOW in freefall – 200points from peak to trough with the power add more – perhaps to test the recent lows at 14765 by the close.
    The FTSE has support at 6502 and 6475. Will it test 6475 today?

    1. FTSE seems to be in a world of its own. Given the drop on the Dow it should be a lot lower by now. Nearer 6400 imo.

      1. Yes even on a relatively medium term basis , Dow is flat this quarter, S&P is up about 2.5%,- FTSE close to 5%!. On that basis FTSE should be at least 1-2% lower – as you say closer to 6400 right now.

  18. For now ftse will just follow the DOW on the rebound, but i find it ridiculous how its only down so little?

  19. No new territory this week just up and down, next week should be interesting. Regardless still expecting a huge retrace in the coming months, ftse up far too high this year.

  20. Pinned to weekly swing point. a close above 518 will be very bullish making 387 important support. would be looking for daily next week to get long off 20dma area

  21. Just another crazy September day……enough to want to pull your hair out whether you’re long or short!

  22. As i said a few weeks ago i expected sideways chop through the summer. no point trading until we get some volume and direction. very few good trades on the ftse. smallcaps are where its at right now.

  24. Right now, the FTSE is up 190 pts from the daily low of August 22 (6351), so that’s a recovery of 3.0% from then until now; not spectacular, but clear enough. Otherwise, the values seen today are on a par with those of Mar 15, May 03, Jun 05 and Jul 09 – the FTSE has fluctuated around a zero-gradient trend since mid-March of this year. Are we about to break out of this pattern – up or down? – 🙂

    1. Instead of testing the lows it may be testing the highs at the close. What a crazy day to cap a crazy week!

  26. Your lucky your brain only hurts Ahwab….my wallet hurts :-)Absolute joke today on NFP data. CNBC idiots were like deer in headlights when dow rallied some 80…they tried in vain to explain it to no avail. Then the 80 point rally evaporated faster than you could blink and we were down 135…a 215 point move down. Then CNBC idiots tried to attribute this fall down to Putin’s comments that he supports Syria and will continue to do so…..is this new news?? Everyone knows Putin’s position…..so then why the rally up from -135 to +45?? It’s got zilch to do with any economic, or political news. Simple manipulation to make markets volatile and make money.

    From next week done with ALL charts. Even candlesticks! They complicate trades and make you enter false signal trades. Too many of these lately. Am just going to trade based on the best indicator of all…simple PRICE action! Looking back my trades were far more profitable when I did not use ANY technical analysis or charts. I just used price action…

  27. What a nast day this was had afew shorts at various levels up to 6542 from yesterday. kept a close eye on them last night until dosing off . Iwas intending closeing them at 6510 mised left today thinking it was going up at 6565 missed 4910 so looking at these over week end done verry well this week cant complain

  29. Some 500 point move in the Dow today Jack….looks like will be a September to remember’ 🙂 Next week? Lol

  30. A volatile day and week comes to an end in appropriate fashion with a 90 point sell off on the DOW. At least that is understandable given the uncertainities about Syria which caused the 200 point fall earlier still persist.

  31. Jack – there certainly have been worse days as anyone who was trading in 2007 and 2008 will testify. Then of course there was the flash crash in 2010……..which would have cleared a lot of people out who didn’t have stops. Those things are always like the way buttered toast falls……..you are never on the right side and suddenly make a fortune in seconds.

    But yes hopefully this will be a September to remember……….but can our nerves take it?

    1. I think you are right. I think my nerves were tested yesterday and failed. I am reading Trading in the Zone again trying to understand why I am again avoiding the risk. I hope to sort it out.
      P.S. I looked at Daily to find out what it the crash of 2010 you are talking about. Luckily I didn’t start trading then so I missed it. I wonder how it happened: 700 point drop in one day or something?

  32. ……..oh and remember BSDs like Dola are trading 140ppt in these very markets. He must just bought himself another supercar with his 70k today.

  33. Javed..you got the maths about right….super Dola trading at £140 pp on the Dow- 500 point move today is indeed 70k in monopoly money..:-)

  34. Wasn’t Dola trading 1k a point? He’s half way to a million if he traded the Dow to its potential yesterday! Either that or he traded the wrong direction at £2 a point, or he was sleeping.

  35. http://en.m.wikipedia.org/wiki/2010_Flash_Crash

    Has been blamed on high frequency trading…….and more scary it can happen again anytime. Enough for anyone to always stay short and set very large tp targets with a buy looking for a reversal.

    The other thing to note is that the Dow has frequently moved more than 200 to 300 points during times of volatility. So although Friday’s move was maddening it wasn’t unique by any means. It may even be common in the coming weeks.

  37. Oh, guys, that was scary!!! Now I will definitely always put my stop losses.
    I also watched some videos on Youtube about that day. That was epic.

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