Less rate rises from Fed, 6228 to break, 6170 support. Buy the dip!

Support 6168 6158 6148 6079 6056
Resistance 6221 6226 6228 6256 6305

Good morning.
Market Summary for Wednesday 16th March 2016
The main feature of the day was the UK Budget which saw some positives for the oil and housebuilding sectors.
The FT100 traded nervously in a narrow band before the budget started but then steadily moved up as the oil sector and housing sector moved higher. It traded as low as 6135 in the morning and then hit 6180 after the budget to settle at 6175 at the close.
The FED impacted at 6pm whereby they lowered projections for interest rate cuts this year. Markets and especially gold rallied on the news. to too bad a day int he end for the order trades – few got stopped out then the FTSE short and Gold long saved the day both with decent gains.

US & Asia Overnight from Bloomberg

  • Fed lowers projection for interest-rate increases this year
  • U.S, U.K. equity index futures gain; copper, aluminum advance

Asian shares rose the most in two weeks and the region’s emerging-market currencies strengthened after the Federal Reserve scaled back its projection for interest-rate hikes. Oil and copper advanced.

The MSCI Asia Pacific Index was headed for its highest close since early January and U.S. stock index futures advanced. Raw-material producers led gains as commodity prices rallied, with crude climbing above $39 a barrel in New York after data showed a drop in U.S. output. South Korea’s won jumped the most since 2011, while better-than-expected economic data gave a lift to the Australian and New Zealand dollars. The yen retreated with gold.

Fed officials predicted two quarter-point rate increases for this year at a Wednesday policy review, having forecast four in December when they boosted borrowing costs for the first time in almost a decade. In adopting a move dovish stance, the U.S. central bank cited risks to global economic growth that have spurred monetary easing in China, Europe and Japan over the past two months. The Bank of England will meet to decide on borrowing costs on Thursday, as will its counterparts in Indonesia and South Africa.

“The Fed’s stance is relatively friendly,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “The difference in the stance between the market and the authorities has shrunk, and we’ve managed to get through an important event without drama. Investor sentiment has returned to a neutral zone from a bearish zone that had priced in too much concern.”

Almost $9 trillion was wiped off the value of global stocks in the first six weeks of the year as a sliding oil price and concern about the state of China’s economy spurred a selloff in the securities. Crude has since rebounded to levels last seen in early December and equities have recouped some $5 trillion of their losses. Fed Chair Janet Yellen said last month that market turbulence had “significantly” tightened financial conditions by pushing down stock prices, strengthening the dollar and boosting some borrowing costs.

“The Fed has clearly been rattled by the nasty selloff seen at the start of 2016,” Angus Nicholson, a market analyst in Melbourne at IG Ltd., said in an e-mail to clients. Wednesday’s policy update “was far more dovish than markets had expected,” he wrote.

Stocks
The MSCI Asia Pacific Index jumped 2.1 percent as of 1:04 p.m. Tokyo time. BHP Billiton Ltd., the world’s biggest mining company, climbed 2.8 percent in Sydney. Cnooc Ltd., China’s biggest offshore oil and gas producer, surged more than 5 percent in Hong Kong. Benchmarks in Australia, Hong Kong and South Korea posted gains of at least 1 percent.

Standard & Poor’s 500 Index futures rose 0.3 percent, while contracts on the U.K.’s FTSE 100 Index added 0.7 percent.

Commodities
West Texas Intermediate crude climbed 1.6 percent to $39.09 a barrel, after surging 5.8 percent in the last session. U.S. output slid to the lowest level since November 2014 and inventories expanded by 1.3 million barrels, the smallest increase in five weeks, data showed Wednesday. Major producers plan to meet April 17 in Doha to discuss a commitment to freezing output, Qatar’s energy minister said.

Copper advanced 1.4 percent to about $5,000 a metric ton in London, while aluminum, zinc and lead all gained more than 1 percent. Copper is likely to retreat in the second half and average between $4,200 and $4,300 this year, according to the head of Xi’an Maike Metals International Group, one of China’s biggest traders of the metal.

Gold, regarded as a haven investment, dropped 0.5 percent. It surged 2.5 percent on Wednesday as the Fed announcement weakened the greenback.

Currencies
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was headed for its lowest close since October. Wednesday’s 1.1 percent slide in the gauge was the steepest in six weeks.

“Currency reaction suggests market expectations for the Fed’s rate outlook were slightly more bullish,” Hiroshi Kurihara, chief U.S. economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The dollar’s been sluggish despite some positive signs over growth, hinting that it’s sensitive to negative news and that its advance may not be strong even as a rate hike approaches.”

South Korea’s won led gains in Asia, surging 1.7 percent as the Malaysian ringgit jumped 1.2 percent. Australia’s dollar advanced to an eight-month high after the nation’s jobless rate unexpectedly declined, while New Zealand’s currency rose to its strongest level in more than a week after fourth-quarter economic growth beat projections. Indonesia’s rupiah gained 1 percent before a forecast cut in interest rates at a central bank policy meeting on Thursday.

“Emerging-market and Asian currencies should do well because at least for the next month or two the Fed is likely to remain dovish unless data picks up really strongly,” said Binay Chandgothia, a Hong Kong-based fund manager at Principal Global Investors, which manages $331 billion, told Bloomberg TV.

The yen was little changed near its strongest level in more than a week versus the dollar and the British pound was also steady. The Bank of England is forecast to leave interest rates unchanged on Thursday and maintain current stimulus levels.

Bonds
The Fed’s lowering of its projected path for interest-rate increases fueled gains in fixed-income securities across most of Asia. Australia’s 10-year bond yield fell six basis points to 2.57 percent and Singapore’s dropped nine basis points to 2.09 percent. Rates on similar-maturity U.S. Treasuries fell one basis point to 1.90 percent following a six basis-point drop on Wednesday.

Japan’s 10-year bonds yielded minus 0.05 percent. The government sold 20-year debt today at an average yield of 0.427 percent, a record low. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

As you would expect the Fed reduced the likelihood of 3 rate rises, as the rest of the world is doing the opposite, and it looks likely that my wild thought of a rally to 6350 is coming to pass. Which also means that we are going to have a bigger down leg from higher up instead. For today we have the pivot at 6168 for the main support area, and whilst the bulls managed to pop above 6200 overnight it dropped back from the most recent high area at 6220. I expect us to have another go at that level in hours and then if we drop back to the pivot I feel that a long there will be worth a go. The more times that the 6200 area is tested then we will break through and if it holds then it will become support for a push higher. Just above this there is a PRT resistance line at 6226 and the 10 day Bianca at 6228, so a couple of hurdles for the bulls to break, but if they do then i expect we will be looking at 6300 pretty quickly, and 6326 for the top of the 20 day Bianca. Generally then today I am still feeling bullish, with a buy the dips stance. That said, a short off those daily resistance levels at 6226 for a dip to the pivot is also worth a go I think first thing.

186 Comments

  2. Morning all,feels like Summertime…and the living etc etc ,got to love an open Bar,unless you have children I suppose,or have to drive later,that’s milked that metaphor 🙂

  3. In my wild youth, I came into contact with the Drug Scene.
    The behaviour of the markets and their relationship to CB stimulus is analogous to that between a junkie and their dealer/drug of choice.

    Extreme agitation and plummet to the depth of depression when deprived of their fix or the latest batch isn’t very good (drop to 5500)

    New high when they score, but less and less intense (e.g. today)

    Periods of lethargy and random behaviour increase as the addiction deepens (recent price activity)

    Onlookers (us) nervously agreeing with them/enabling them, but realising its going to end badly at some point (BTFD)

    The ability to delay the day of reckoning by use of wealth and technology (Keith Richards new nose and blood transfusions)

    Reluctant acceptance that the situation could continue indefinitely (BTFD=enabling behaviour leading to the inevitable: (BTFATH, Google it)

    #sellthebounces

    1. That’s great!
      For me, I’m certain that there is a slap here somewhere but, having watched it stay over 6200, looking over its shoulder like a naughty child, I’ve chopped my short at 6207 and wait to see if I can sell some higher.

      1. Looking at the Day charts,all those wicks,FTSE,Dax and Dow,does seem to be a book profits in the morning and buy in the afternoon pattern trying to build.

          4. Added to my long at 59,below pivot , and seems to be increasing in strength. I can see this back above 6200 later on..IMO.This mornings drop just goes to show how nervous the market is though…..I think we might see 5500 again In the coming weeks…..not before a push up though I don’t think,good luck all…WSF you were right earlier I went long much too early ……got blindsided by the BS…..this may be one of my “wish I’d stayed in bed days ” :0)

          6. Hi WSF,,,,yeah it kissed 201 …..I’m not done yet ,still holding from 59 and 67……have a couple of other positions I’m still running as well….good luck with your trades this evening…..

          7. Closed Ftse from 59 at 210 for +51pts and Ftse from 67 at 211…….+44 – 27 loss earlier =+17 points…….also closed two more Ftse longs from 188 and 187.5 at 212 and 211.8 respectively for +24 and +23.8……. Still running a Dax long from 9914 Thats still in red ink.

          9. Had a proper good haul of points today at decent position sizes……for anyone who is struggling today….I have had more than my fair share of failure….and today is great…..but I’m staying completely grounded because I know it can all be taken away again easily through overconfidence……Stay strong all and rewards will come to you……. Good luck everyone.

        1. So much for your Bears Anonymous Meetings, thats not working the steps 😉 Just one for the longer term is how it always starts.

    3. Btfath just googled it tmfp…….set a buy order at 7100 Ftse…..it’s a momentum trade lol.

    5. Morning All,
      Shorted DAX first thing in the morning at 10060 and than again at 10030 and again at 10010 and again at 10000
      Took +180
      Shorted FTSE at 6220 and 6215 and just now at 6200
      #sellthebounces

          1. Lol I am just recovering from my +3/+5 or -3/-5 trades from Monday this week 🙂
            All out from FTSE at 6188 and all square for now 🙂

  4. Heavy weighting in Ftse for commodity shares which are up big today but this feels stretched. Dax struggling. 6300 or 6100. Up to the Americans I guess

          1. and a long at 38 another at 25, stop at 12 only small.
            Switched to my other account to stop being tempted by looking at mounting blue ink on short (and finally on my VIX long).

          2. I shorted 50 and 40 instead and Dax at 9800, out from everything now and looking for a bounce again.

  9. Acid test now, what have the bulls got? A bit early to call oversold lows, but looking to pick a bit of a long here, 45/800 DAX.
    Has the makings of a rout if the yanks join in later, but r/r getting a bit out of kilter to short around here anticipating that.

  11. Absolutely typical: I opened terminal at 9.24. All previous days I could do something in the morning except today when my son had an assembly at school. Just arrived from the performance and here we go: the opportunity is gone. Absolutely gutted. And please don’t tell me that you are expecting some long later. I’m not even considering it. What’s gone is gone (I mean the price).

    1. Sorry, I opened at 10.34 (at 9.34 I was at the assembly. What’s the matter, now I don’t even know what time is it. I need a break.

    2. Yes definitely catch falling knives situation at the moment Jack. (Says he, just longed for a purely arbitrary guess at a low).

    4. this if my first full trading week on the FTSE and realizing how much
      of this trading is pure a thing thats in your head.
      Place that order, cancel that order….fascinating stuff.

      1. 🙂 You probably saw this,but if not.
        https://www.rt.com/uk/334570-london-property-crash-rmbs/

        Residential backed Mortgage securities for GLA money if Boris approves apparently.I reckon half my Council Tax is plugging a Pension fund hole and paying off debt from Schools that dodged it by changing their status,so I can imagine Mortgage products slotting into local gov Portfoloios.

        1. Read somewhere that the TBTF banks are gagging to restart the bundled resale of MBS in the States.

          So many acronyms these days for greed 🙂

          3. Youre right a proven 1000 to 100000 in her first 10 mths, and she didnt write a book on Tech 🙁 that’s mean 🙂

  13. what happen??? all down.. still buy the dip..? Long FTSE @ 40, 20pt stop, will it go back to 6200+

    2. Yeah Senu, the old story of sell the news.
      40 looks “cheap” and there’s some support around here, but don’t marry it GL

      1. Yes, heavy selling seems to have abated, probably drift sideways now till the DOW, then see if they want to play.
        Short term 6150/9820 are the first obstacles.

        1. This can be a bit bullish for us today
          12pm – Bank of England monetary policy decision: as with the Fed, no policy changes are likely, but with the BoE looking increasingly dovish there is the possibility we may get more talk of interest rate cuts rather than increases

          1. Possibly but today’s dip caused by the race to the bottom in rates by the central banks in Norway and Switzerland. More likely any references to greater threat of deflation will be a cue for weakness.

          2. If we are doing Macro trading only manufacturing is iffy,nothing else is an the state you’d expect for a Recession to be starting so still looking for Long entry.

  16. Looks like the dip is too deep today so I have no intention to buying it at this stage. I’d see where it lands.
    However squeezed 20 points full stake just now on Dax but it looks like it leveled right now and may try to break for some upside.

    2. Too early to say,Dow out of hrs is still above their Tues close and only 55 below yesterday close.

  20. Brrrr, sun’s nice but 100 mph wind is a bit fresh!

    Yeah, the DOW….tricky one, depends if the sentiment of our fall is carried on with some “sell the news” action. Their steep daily uptrend is still very much intact but they’re getting a bit overbought in the 17300’s.
    BTD to 200 if you feel so inclined, and see how it goes from there.

  21. Weekly unemployment claims slightly beat forecasts which should be gently bullish.However we know the US employment situation is strong as Yellen mentioned this. The key now is inflation data.
    No one can tell what the US will do when they get out of bed but may decide a time to track down a bit.

    1. Greater threat of deflation. 11 Countries in deflation now in the Eurozone – up from 6. Throw in comments from central banks in Norway, Switzerland and UK.

  26. Dow up to 17,500-550 area then big short? Showing it in a long-term downward channel on the daily, RSI overbought, moving averages converging etc. This would be in-line with Brent rising to 42 mark then pulling back due to continued over-supply.

        1. On it’s way….
          Initially would hope to see it return to 17,000 lvl, but potentially longer term hold (2-3 months) in hope of 15,500 levels again…

          2. Probably 100 north, so 17650 ish. Looking at the longer term and not dealing in massive amounts so able to take on wilder positions 😀

      1. Hi Senu, no its worse than that, I was covering a short from a couple of days ago (at around 74 less a bit for divi), had I run it would have been laughing! Anyway, now looks like afternoon rally has caught hold again, is there no holding the Americans back!

  31. Well after fruitlessly selling into this a couple of times, I got with the program and longed that dip to 40 rsi at 75. Instant blue ink.
    Can’t think why I didn’t think of it sooner, BTFD…..

    Took +15 and short lol

      1. Yes indeedy.
        took 12 on that 90 short anyway with MHH coming up. Can’t see a lot to go for either way atm.

        2. Although it’s stalled in 17420’s that DOW’s looking bulletproof today, don’t know what timescale your 50 target is but colour me purple if we get there by 16.30.

          1. lol colour you purple haha 🙂
            I am out now, I though we will have some weakness by 4.00! Anyways last trade of the day and looking for pennies or +10

          3. No it’s not, that’s puzzled me.
            Usually, day traders would be book squaring then and there would be a few fireworks, I wonder what’s changed?

            Third try for DOW at over 20 now, what’s the bet there’s a breakthrough cunningly coinciding with our close?

          4. Not sure what has changed recently with MHH, I will dig deep this and see what’s going really from last one week!
            DOW is just steady in 20s and I normally don’t pay attention to it during FTSE MHH.

        3. Lizard men probably have a Friday close as their priority,Dow + 17400/500 for the Sunday Papers,somewhere near Dec high and a still healthy looking double bottom on the weekly Chart, they know how to manage The Ides of March nowadays 🙂

          1. You should watch The Ides of March movie with Clooney and Gosling, Excellent Drama.
            Thanks for the link btw WSF from this morning 🙂

          2. Thanks Rick I’ll look for it,I thought Clooney was ok in Michael Clayton,apart fom the ending not being true to life.

  32. As I thought, short didn’t restart. Must be Nick’s arrows. It should fall tomorrow, I suppose. I didn’t try more shorts today.

    1. Hard to tell today Senu, we are hardly moving 5pts here and there during MHH!!!
      But I would love to short 200 though.

  38. Dow could be good for 600 plus in my opinion.i remember shorting the Dow at 16850 18 months or so ago after it recovered from a sell off down to 15800……..thought I had nailed it……..think again….it went up to 18000 before it dropped back.I have the utmost respect for the Dow……shorting it can bite you on the @rse Bigtime when it looks like the right choice to open a short position after it has experienced strong gains…… Beware of Mr Pump.

    1. Yes all this money has to go somewhere,I dont think Ray Dalio was just talking his book,guy has about 150 Billion under mgmt,10% of it is his and he’s best known for a short trade.
      Oil just cleared 40 on my screen lol

      1. Hey WSF…..had a stonking day ….. It’s really encouraging when you get a string of successful trades…but….. I have learnt that this is the time I am at my most vulnerable…..I’m a lot calmer now after some really good results……I’d like to think I’m pretty much the same in composure as if I had lost a few trades……I believe it is vitally important to maintain a grounded mentality……it has burnt me BIGTIME before when you get a feeling of euphoria after big gains.you think you are good and the reality is in my case I’m anything but good but I am improving…..For anyone who is new……Tiberius……this is for you……I can only give you one piece of advice……..the rest of the guys on here are very good in the main and have more experience than me…..what I can say is this…….If you are fortunate to have a really good winning trade……..turn the computer off,walk away,and have a think about how hard trading actually is……..maybe leave it then till you see a really good opportunity and if not wait for one….I have an old green pound note in front of my laptop to remind me what one pound actually is…sometimes you loose the sense of reality and the value of money.Good luck everyone.

        1. Hi anstel,congratulations,good days make up for bad for sure 🙂 ,as long as the bad days dont get out of control anyway.
          Pretty good for me too 🙂 some double stakes last night.When I get my targets this yr it’ll be interesting to see if I start to get emotional again.Taking it out,paying it out and putting in lots of hours definitely reduces pleasure and pain with Trades.Have a good day tomorrow too,even if there are fewer opportunities Friday.

  41. There wasnt much European solidarity in that 08.00 Dax move.Visit Lidl is off my Saturday ToDo list.

  42. Dax is very cautious………..I’m keeping my powder dry might be a bit of a confidence trick this.If it isn’t i will wait till we get a new range forming and try some scalping.

    1. Managed a +3 and a +10 from 192 and 197 but out too early …..still that’s me paid for the day.

  43. Probably sideways until the yanks wake up. Consumer sentiment out at 2 which will probably be used as a cue for more buying regardless of data. Good news is good news – bad news is good news again.

    The only data that can matter now is inflation – both factory and consumer. Any signs of inflation is the only thing that pull back the US at present. Even deflation in Europe and Japan or poor productivity in China is shrugged off.

    1. Everything’s wonderful….I Think they have done a sterling job getting the economy back on track just in time for the election………Bloody Marvelous…….

  45. BTD is working though, even if its a bit muted and pretty quiet there’s a nice little grinder uptrend on both already.
    It could be just a stealth break of that big 6220 area and at 6240 we’ll be going “What happened there, no selling?”
    I’m sticking long until very overbought rsi or uptrend breaks.
    #getwiththeprogram

    1. That was me tmfp,I got Mr Bridger to email Angela about the Dax 8a.m move,told her what an Inverted Head and Shoulders on a day chart is supposed to mean.I think he made himself clear.

      1. Einige Gemutliche Verzumfkeit Bulltag Spielen Wurden were the exact words at this morning’s Party meeting I think.

        2. 🙂 Yeah,figures that the Germans need a Meeting to have a Party,an italian like Draghi probably thought Free Money and an Invitation should be enough.

  46. I think the Dow could spit it’s dummy out today…….just when we get a false sense of security……..blimey the yanks are clever…..they have even got you long tmfp !

    1. Dumped my Dax long at 17 for +3……. Watching for a bit……too much BS I can smell it from here.

        1. I mean that’s my approach atm for v short term trading.
          There was no long in the 90’s in the great scheme of things, but it shouted buy me in the context of my take on today.
          I’ve completely given up any pretensions to longer term stuff, just a tabla rosa every morning, trade it on its merits..

          1. To my mind with all the BS if the yanks pull that Dow down it will kill the very fragile confidence in FTSE and Dax ……they are going to need the Dow at 18000 to get the Ftse and Dax confidence levels up……and then if they blow on the cards it’ll drop like a stone……I’m a Bull but I think it’s a confidence trick…….It’s a Bear Market if it corrects to True Market Value as we all know.Very very dangerous times in my opinion …..but it’s only my take on it.

    1. Lol, one of the Nigerian Carney’s then.
      Nearly all out now at 33, they can have the rest at 45.
      #youknowitmakessense.

      1. I still fancy 10050 area,just think I’ll wait for +9930,which coincidentally is the 50 sma on Dax 60 min.

        1. Yeah you’re prob right, all I can see on the DAX so far today is a 50% retrace to 75 and a need to get through the 20’s pdq to get momentum.

          1. Yes,60min Dax seems to be the easiest chart at the moment,assuming this bar closes up around where it is now or higher.I’d like to see it clear the two wick tops around 30 .

  48. So it must have been true what that bloke told me about seeing someone who looked like Nick at Terminal 4 early this morning in an Hawaiian shirt…..

    1. LOL! Got a bit sidetracked with a few things this morning so apologies for the delay in updating the page

  50. Morning All, been a bit tied up this morning and not feeling too comfortable. Seem to be chucking money away recently so just having a little rest. If this grinder does get up to “Nick’s Dream” of 6350 then I think I’ll step back into the breach! That said, we are give or take where we were on Jan 1 now with not a lot of change to “macro” stuff so I’m struggling to resist shorting it…lots!
    Good luck all!

  51. Off out now, stop at 20 limit 45 on small balance of long.
    I am an “Angel Investor” in a small local start up, which basically means I have to go in once a week to do the books and make sure they haven’t run away/had and breakdown.
    Later.

    1. Cheers tmfp,speaking from experience,run away isnt something to assume wont happen though 🙁 🙁

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