Japan refrains from more stimulus 6260 support 6305 6325 resistance

Support 6275 6263 6261 6219
Resistance 6307 6310 6325 6371
Good morning. Interesting day yesterday that saw pretty much all the trades work out on Dax, S&P, Gold and FTSE and saw the FTSE bulls defend the 6265 area, break through the 6300 resistance area and push up to 6340 after hours. However, Japan threw a spanner in the works for them overnight by refraining from more stimulus which was unexpected. The 8 point divi saw the buyers come in at 4pm and bring it up to the close, quite strongly for a relatively small dividend. Japan’s stimulus stance might unsettle the bulls a bit today though, and we also have the Fed reiterating that interest rate rises will be gradual.

US & Asia Overnight from Bloomberg
The yen jumped the most in eight months, Asian stocks reversed gains and U.S. equity index futures fell after the Bank of Japan unexpectedly refrained from adding to record stimulus. Crude oil held above $45 a barrel after the Federal Reserve reiterated that U.S. interest-rate increases will be gradual.
Japan’s currency rebounded from near this month’s low, while the MSCI Asia Pacific Index slid for a fifth day. New Zealand’s dollar appreciated versus the greenback after its central bank held off from lowering borrowing costs. Crude traded near a five-month high after data showed U.S. output slid to an 18-month low. The yuan swung to a gain following the BOJ’s announcement, and U.S. Treasuries rallied.

“It’s a total shock,” said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $120 billion. “From currencies to equities to everything — you can see the reaction in the markets. I can’t believe this. It’s very disappointing.”

The BOJ’s decision shattered the sense of relative calm that was evident in financial markets after Wednesday’s Fed meeting did little to shift expectations on the likely pace of U.S. interest-rate increases. Rebounds in stocks and commodities appear to be losing momentum as data indicate the world economy is expanding at a tepid pace amid what’s forecast to be the worst U.S. earnings season since the global financial crisis.

Hours before the BOJ announcement, Japanese economic data for March underlined the struggle policy makers are having as they seek to achieve a 2 percent inflation target. Consumer prices excluding fresh food dropped the most in three years, household spending slid and industrial production capped a soft rebound for the first quarter after declines in the second half of 2015.

Currencies
The yen surged 1.9 percent to 109.35 per dollar as of 1:15 p.m. Tokyo time. The BOJ left unchanged three key easing tools — the 80 trillion yen ($731 billion) target for expanding the monetary base, mostly through bond purchases, the 0.1 percent negative rate on a portion of the cash banks park at the BOJ, and a program to buy riskier assets including stocks. Policy makers also postponed their timeframe for reaching the 2 percent inflation target, the fourth delay in about a year.

“The consensus has been disappointed, so there’s been a reasonably strong rise in the yen,” said Sally Auld, the head of currency and fixed-income strategy for Australia at JPMorgan Chase & Co. “The accompanying outlook statement feels quite dovish, talking about downside risks to growth and pushing back the return to 2 percent inflation. That will keep expectations of easing from the Bank of Japan alive.”

Stocks
The MSCI Asia Pacific Index was 0.1 percent lower, with Japan’s Topix index sliding 2 percent. Futures on the Standard & Poor’s 500 Index fell 0.5 percent. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have the top of the Bianca 10 day channel at 6371 so if we were to get that high I feel that its a good spot for a short, however, prior to that we have resistance at the 6325 area that might be a bit tricky for the bulls to break through today, now that the markets have been brought down by the lack of further Japan stimulus. As such, I am thinking an initial rise for a bit of a gap close towards that area then further downside from there. We have support still at around the 6260/70 area from the daily channels but as mentioned yesterday the more that a support level is tested then the more likely it is to break – the 20day Raff at 6265 has been tested a few times now, and we have the 20 day Bianca now at 6261 as well. A break of this area will likely see a slide down towards 6200. So, I am back to feeling a bit bearish again again after yesterdays bullish (quite contrary aren’t I!) stance, and feel that once again shorting the rallies is a good plan for today. I don’t think we will reach the 6371 area today but if we do then its worth a short there too.

87 Comments

  1. Hello all.
    After a couple of days testing the upper end of the range (and hitting my 6330 target whilst I was tucked up), looks like a day of testing support around 6250/10200, hanging on at the mo but not looking good.
    This afternoon will be the cash US markets first session, post a minorly hawkish Janet, and continued pressure over here might just convince them to have a go at that shaky support around 850 then 800.
    Should you buy it? You either BTDs or you don’t, I’m selling the bounces myself, like that lovely dead cat at 0830.
    All square atm. Maybe a spec long at 40, but if DAX loses 200 decisively then there’s a bit of a hole underneath to the Big Number.

    Question: Exactly what happens at 04.00 our time? I’ve always vaguely written off the frequent big moves then as “asian”, but can’t correlate that time with an open/close of any exchange.
    tyvm.

      1. Yeah I got that today Nick, but I’ve noticed 0400 is a busy time frequently.
        0400 is noon in Tokyo and the TSE is shut for lunch then…

        1. Talking of TSE, the 225 down 1300 pts since 0400. That’s ftse equivalent about 450 points %wise.
          Sword sharpening time…..

  2. Morning all,that German unemployment number showed up just in time to give yesterdays low a chance at being a support area.

  3. Re short term entry points on rsi divergence, a good example on the 1min DAX and less so on ftse from 0825 to 0832.
    Draw an upward line on the price and a downward line on the 1min 10 rsi. Confirms are morning star candle at 0832 and brief failed blip at 08.35. Good entry point with a stop just above the highs.

    Looks like I might see my 40 soon, will only be small if I long at all. DAX needs closely watching now 200 looks like it could be history, although I doubt it will be one way traffic, so looking for how strong any bounce is.

    2. It’s clear on the 4hr on Dax,support at around 61.8 at the moment I think on last weeks move,if it turns will be a decent run.

  4. wow, so the market is not getting any stimulus help and its spitting out its dodie
    like a spoiled toddler, man!

      1. out for +12.. I am following your style TMpf the only time you can have it (profit) when you have it & rest all in mind.. 😛

          2. I don’t know about a turn round but may be some quick long points off dips, basically like you’re doing, but as I said, I can’t see any real support here abouts, so don’t marry it.

  6. Trying to put together a bit of a base around 10140/6225 but its a bit the middle of nowhere technically for me. DAX attempting its first higher high since 0830 but we’re having none of it.
    Still feels brittle, but it always looks worst at the extremes. Sideways drift until 10200 rebroken or 6250 on the ftse.
    Walk in the sunshine for half an hour I think.

      1. Excellent 🙂
        Just missed the short there, but a nice walk, lovely blossom on the trees.
        It’s cherry blossom time in Japan, would love to see that. Today the spectacle would be slightly marred by stopped out longs swinging gently in the breeze though.

          1. Possibly, but it was a support area so should now be resistance. 30+ points through is more than an overshoot.
            DAX is feeble.
            Maybe wait to 60’s and give it a poke.

        2. Ahahahaha classic

          And good morning all. Or afternoon I suppose.
          Been killing it with your rsi magic tmfp! Erased the losses of yesterday’s lessons and made today’s target (50 quid lol).

    1. Hiya WSF, yeah flirting with that fib isn’t it? Going nowhere upside till it regains 200 and holds for me, same with ftse and 80.

        1. Cheers,yes working at home means you are always available.I’m minding a Kitten with an eye infection,dont even know the owner,poor thing throws up all sorts of stuff that doesnt help the mood.Got a B/E stop at 10150 low stake ,probably having the day off apart from that,hit 20 trades yesterday so 0 or a rally later.A close back over 10200 in the weeks range wouldnt surprise me,Jpn not paying Banks to borrow doesnt change the Yellen path to new highs.

          1. Back. lol yeah working at home isn’t reeealy working is it?
            See we nearly reached my limit twice, unsure what to do now.
            I was looking for something like 35 by 13.00 then a bounce then a 14.00 sell off. Bounce maybe a bit early and can’t see DAX to 10100 so out at 48 rather reluctantly.

            Re Yellen and yanks, if I think about the US market medium term all I see is a big triple top and <15000 on the back of a huge systemic failure probably originating in collapsing oil and then credit derivatives again, with Yellen even more reviled than Bernake.
            Too much Zerohedge reading. Another reason I only day trade. 🙂

          3. 🙂 Polemic thinks it could be,a “trend towards rotating from shiney codey things to old fashioned lumpy things”
            I’d like to believe that,but I dont see Paddy Power going back to the lower leagues.
            http://polemics-pains.blogspot.co.uk/2016/04/the-widow-maker.html
            I’m still with this as consolidation,sell in May as cancelled this year and next year as a new game.Looked at some charts on You Tube over the Weekend and they were all Bearish,so seems bullish,wall of worry 🙂 lets see how they take U.S GDP and Jobless at 13.30.

      1. Sometimes tmfp but not very often. Like to be all done and dusted by late afternoon ideally. Don’t do as much swing trading as I used to

  9. Looking forward to the DOW and its effect on us for the last two hours of our cash: recently they’ve shrugged off foreign weakness at the opening if it meant much more than 80 down for them from previous close.
    Today has the potential to be different, because the negative possible interpretation of Yellens comparative hawkishness since last night’s close, Japan AND Europe combining, with a possible catalyst being their 13.30 jobs figures.
    No melt down or change of trend, but an early look at 17800 is a distinct possibility which would obviously mean our lows being tested, so selling any bounces seems to be a good idea.

        2. Ouch 🙁
          Looks like the yanks are even more insular than I thought.
          Grind up time all round.

  10. And here we are back at 300, I think I’ll give up and play golf or something…
    Can’t resist a bit of good money after bad with a top pick at 04.

    1. Gave it some more at 09 too, took half out at 02, running the rest stop 08.
      What a strange day…

        1. Hi Argyle, how’s tricks?
          I’m thinking that way too, but I’m only looking at the next hour till our close.
          I see no reason to cover yet, but shorting the DOW’s not been particularly fruitful recently.

          1. No it hasn’t. With the $ down The Dow is attractive to buy, however at some stage it will turn downwards and when it does it could go quickly pulling the rest of the indices with it. Thought it may have gone once they opened, but fairly confident it will go sometime today.

  11. So, here we are agin BTD wins the day, 6300+, 10300+ and 18000+.
    Considering, that after a good start that I misread things so badly, I’ll be quite happy to escape with some minor blue ink. Top picking is obviously fruitless logically, but when ever I think that, it’s the top lol.
    So, one last try at 12 for a bit of profit taking into our close. Or should it be a short squeeze long?

    2. lol It was supposed to be ironic. I’ve been looking for a test of 800 on the DOW for a few days now, why can’t they do it at a civilised time of day?.
      Hope you had a short on it Argyle, it owes you a bit.
      Wonder where we’ll open if this doesn’t get bounced into the close?

        1. Should be stronger than that really, can’t see another overnight Japanese collapse. Around 70 now is “true value”, so 30 either way I suppose, easy to forget we had two week lows less than 12 hours ago.

  15. I’m sure I left a message here which miraculousely disappeared. At the time I entered short and wanted to know if anybody was shorting too.
    Lost 85 on that one and had another short 10315 which I left at 4.00, 2 hour later noticed it did drop to +15 where I basically closed for 30 q which brought me to -55 today. It is sad as I gained 35 yesterday.
    It didn’t go according to plan, I thought it would drop at 50%, then at 61% but it didn’t. EMA and MACD are terrible now for short, well, admitted a loss today. Sure now it will start dropping as usual in this cases.
    Terrible trading from me today.

      1. No, not today. Now looking at this: it was a weird rise off 10115 area (April 14 top). Don’t know why I didn’t spot that.

    2. Why didn’t I hold that 315 I have no idea. They totally p. m off today. What was the point of shooting that high?

  16. Evening all, just back from windy walk with the dog. Stupid bet but I’ve bought Dow to finish up at 3.9, know your downside!!! Looking for a ‘authentic’ rally or chucking some hard earned away!

    1. Well that didn’t go well! Worth every penny to watch this and should have listened to the Sage that is argyle. Let’s hope the Bears get filled in and we can get back to a bit of ‘normality’. Good luck chaps

  17. Jeez that was erm exciting. I may have too much adrenaline in my system right now. That rsi was oversold for 100 points haha. If you wondered who was buying when you were selling, it was me. I picked the bottom almost correctly at least 7 times. Turns out it’s easy to be crazy – just keep doubling up the stake and on the 7th try at bottom picking you can just about break even!
    And breathe….
    (and I know, the worst trading discipline ever!)

  18. So the Dow dropped over 200 points in an unbroken run of red 15min candles. You’d really think I should have been on the right side of that for at least 100 points!
    Think I might have to start putting trades on the not watching them.

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