Looking rather bearish now, maybe bounce off 6760?

Good morning. Well that was entertaining yesterday – we climbed, reached the pivot and dropped as per the first 2 arrows, then the bulls just completely failed, 6810 broke and the US dragged the FTSE down with it. But not as much as it could have, considering the Dow was -230 at one point. I was wrong to be optimistic for yesterday though there is still a glimmer of hope, as the bottom of the daily channels (on FTSE) have held quite well. we are looking at around the 6770/80 area today with the Bianca ones. If the bulls can get above 6810 then then there is still some optimism, if not then we are in for the drops towards 6200. I see Mark Carney has scrapped forward guidance – no surprise there really as if they commit to a long term plan then they can’t change their minds!

If we do start to get bearish with the bulls failing to capture and hold 6810 today then once again it shows how the media can give the opposing view – they have been pretty bullish since the start of the year, however the chances for a push that much higher than where we started were slim. As you know with the 2014 outlook I did back in mid December, I only really had the 6850/6950 area as a possible target for the start of this year. It will be interesting to see the media slant over the next few weeks. As Warren Buffett says, be greedy when others are fearful and fearful when others are greedy!

Asia Overnight from Bloomberg

Daily Raff Channels
Daily Raff Channels

Asian stocks fell, with declines in Japanese and Hong Kong equities putting the regional index on track for its longest run of weekly losses in more than 18 months. Australia’s currency fell to a 3-1/2 year low as Asian credit risk headed for the highest in three months.

Global stocks have retreated this week as mixed company earnings and signs of weakness in China’s economy added to concern that cuts to U.S. Federal Reserve stimulus will destabilize emerging markets. China’s banking regulator was said to have ordered increased scrutiny of credit risks in the coal-mining industry, while money-market rates fell after the central bank injected funds for the first time this year. The Fed meets next week, while State Street Corp. and Procter & Gamble Co. report earnings today.

“A correction could occur,” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees $131 billion, said by e-mail. “We have to expect more volatility. Shares are no longer dirt cheap, meaning the easy gains are behind us and we are now more dependent on rising earnings coming through.”

More than three stocks fell for each that rose on the Asia-Pacific gauge, which hasn’t declined for four straight weeks since June 2012. The measure is down 1.7 percent since Jan. 17. The Topix (TPX) capped its longest streak of weekly declines since June, as exporters retreated after the yen gained the most in four months against the greenback yesterday.

The China Banking Regulatory Commission told regional offices to closely monitor credit risks from trust and wealth management products as well as among coal miners, said two people with knowledge of the matter. The CBRC order didn’t mention concerns that a 3 billion yuan trust product distributed by Industrial & Commercial Bank of China Ltd. may default after the coal miner that borrowed the funds collapsed, said the people, who asked not to be identified as the matter isn’t public.

“Weak data in China are strengthening demand for safety assets like the dollar while U.S. tapering expectations offer a continued boost for the greenback,” said Hong Seok Chan, a currency analyst at Daishin Economy Research in Seoul. Data this week on China’s gross domestic product, industrial production and manufacturing activity have pointed to a slowdown in the world’s second-largest economy.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

We might be on for a small bounce today but I  feel that the tide is turning for some bearishness now. If the bulls can get the price above 6780 today then 6810 become the major resistance (as it was support for so long) but I think it might try to reach 6818. Above that 6858 and 6885 are potential high spots. The Dow looks pretty ropey though for more downside to 16000 and possibly even 15660, which would obviously bring the FTSE down with it. That said, the FTSE is on its daily channel bottoms from the Bianca chart, and not far off the bottom of the Raffs at 6750/6760 for both the 10 and 20 day. hence why I think we might get a little bounce. If however the bulls we able to get above and hold 6810 then I think that chance the game a little and might actually put them back in charge – thus making yesterday a flushing exercise to kill some longs.  Overnight its held up pretty well, if it was really going to tank it would have done so with a big Asian sell off.

I still have a slight nagging feeling that the bulls aren’t just going to give up, and feel there is still a chance of 6900, however it feels a little bit more unlikely currently.

165 Comments

  1. Insightful again as always went from 6773 for 10 pips but missed the short-currently long from 6755 though looking to test 6770

    1. Certainly seems to be. I tried reloging in but it won’t connect now. Advanced Charts are showing correctly though.

          1. … a massive call another 500pts over the nexxt 4-5 weeks phew … hope you’ve got your house on it 🙂

          2. OK – sorry i thought you were talking about today hence I assumed 6700. Yes quite possible in a few weeks if it carries on like this!

  6. Managed a lovely trade on Dax this morning. Shorted from 9663 down to 9585. Still think it will drop down to the 9550 area where I would be looking to go long, but not sure I want to due to it being a Friday.
    Have a good weekend people.

  8. If IG is down…which it is obviously…and you are losing money on trades, which you “probably” would have exited…should they refund?

    1. They say call the dealing line which is swamped. More a case of a short I was about to put on but couldnt. No way I am taking positions by phone!

  10. Broke through the raffs??

    I can see things go horribly wrong for the FTSE today and if the DOW plummets today I will be holding my breath for 6700 below…

  11. IG down – what a shambles! Obviously no backup for maintaining the service. Sheer incompetence – for which there is no excuse.

  12. so there will be a double gap on the DOW when it opens. I am still looking for a reason for the sell off….bulls just giviving up because aside for the chinese data i cant find any news to back up this drop

    1. What about overbought, overvalued market?
      We had a very very good year 2013, maybe long term correction?

      What goes up must come down…

  14. Just to let you lot know, if any of you guys on IG have an iPad, their app is still running smoothly.

    1. Its just like the days when it was going UP for no reason, when the sentiment changes then there is no stopping….nothing really matters

  23. DOW is heading for a bounce at 16056 area in or out afterhours.
    But I think we are going to stall in that area until next week FOMC. Then uptrend will resume.
    Is the all movie again. Going for the longs and then when everything is clean…

      1. That’s the 161,80% target for 16244 breakout of the ML downday and the bottom channel of the DEC 16 last start uptrend and also an important prior resistance

  25. You can only expect a freefall.
    Longs being stopped out, bears getting excited, shorts being added on even more. Uncertainty regarding uk interest rates like nick mentioned.
    Im expecting 6500 by next wednesday.

  29. NOt trading at all FTSE. I said earlier that it was very expensive in early starting year.
    US indices more interesting right now

    1. Maybe a bit earlier, but we never know. We are for a huge bounce next days so it only needs to wait.

      1. We are now at bottom of daily channel. SO we can stay here for a couple of days with some down moves in between but nothing out of this world.

        1. Just remember, when sentiment changes then there is no more daily, weekly e.t.c channels…the DOW went up almost 30% last year and I am afraid the economic numbers are just not there to justify those levels. One other thing to remember, last time the Fed slow the printers, its only after they did made the second cut the market reacted… I don’t think I need to tell you which direction it went… 🙂

          2. And bull market can change to bear trend and undergo 15% correction and still be a bull market…people usually get to trouble by being overconfident unless you have a crystal ball so do tell…lol

  31. Got my short in to catch some of that. But annoyed (with IG) as missed 20-30 points but still got similar and just closed off at 6998. Still only prepared to short but will let this recover a bit.

  32. Can anybody clarify to me? The indices called Wall Street Daily which is on 4 point spread at the moment, will it change its spread for smaller (in my case 2 or 1 point spread)? When does it happen? And why it’s 4 points now?

    1. Not sure who you use but my providers widen the spread outside core market hours so would expect this to narrow at 230 – there should be this information on the platform website somewhere

    2. Hi Jack, the spread varies depending on the time of the day. It will change to a 2 point spread (on IG) when the US opens at 2:30pm.

  35. Well, FTSE hitting major support at the 6700 mark. Dow is very close to a bottom of a daily trend. SPX is hitting a bottom of daily as well as DAX.

  39. Well it’s not exactly racing back up. I am still only willing to short but waiting to see if it breaks back below 6700. Was hoping for a higher reentry point if I can get it. So presently sitting on the sidelines and catching my breath. Assuming wall street will send this one way or the other this afternoon

    1. Americans are always more optimistic and I would not be surprised if they bought the market later today.

    1. #6760 ####i would say is a stronger resistance
      But has a couple of smaller ones to go through first in order to get to that point.

  52. Jim if you still come on this, please could you post one of your linear regression charts you sometimes post for the FTSE. They are really good.

  57. Stop now at b/e 6765. Definitely want to hold this short as long as possible after seeing this weakness

  61. Still on sidelines for me 🙂
    Indicator becoming a decent strength bear (bet there will be a lot of people buying right now, prob see 6700 before a big drop down) and thats when i plan to jump in with a short.

  64. Need a weekend break after today. Started with a short view but didnt expect that. We are due a bit of a correction – reckon 6500 next week, maybe more. So i remain in short mode but now out on the sidelines. Made a bit of a mess of my share holdings though so going to survey the damage there now

  66. Huge decline in the FTSE over the last two day. What am I missing? What caused this? It seems very dramatic. Don’t we have a great buying long opportunity here?!

  67. … all the talk is of armageddon, should we be greedy while others are fearful? if reading this blog and the media tosh, its a bang on certainty that we are heading for 6200 or below in a matter of 3-4 weeks, it could be the market flexing its muscles and letting Big Ben an Jah wobble Janet not to even think about tapering, cause look at the damge we’ve causedtoday 🙂 but that would sound like manipulation 🙂 .. still long and mad

    1. Only go where the market takes us so no idea where it is going – Monday is a new day. So will reevaluate then but my instinct presently says down till the Fed meeting, but who knows. At least the market is moving now as it was a bit dull stuck in that range since start of year

        1. Interesting how we all have different approaches. I am after the big trends, say every 4-6 weeks rather than the intra day which I find very hard to gauge reliably and requires me to be stuck to a screen – although this has been the case today.

  70. Guys, is it only me and a few others that think the markets are overvalued?
    Look at the long term when day trading. If you look at the yearly gain in 2013, this fall is a drop in the ocean.

    I see this as a market correction long term. Growth is good, but good steady growth, not what we had in 2013. Is it too good to be true?

    With that said, I expect a gap close on Monday, but further drops on Tuesday before the FED meeting, then let’s see…

    2. … the ftse bears no resemblane to the rest of the markets , its 300pt of it best ever, some 14 years ago, and only climbed half of the other markets last year, i wouldnt call the ftse over valued, but of course its disconnected on the way up, but well connected on the way done if theres a 10% correction in the S&P then its quite possible that the FTSE falls the same or even more … madness of course, the ftse is still the best bet this year lets get going agan …buy the dips 🙂

      1. Agree the FTSE is the best bet for 2014. I still agree with Nick’s outlook for the year, but I disagree with the Tempo this is going. We need steady growth.

        I expect 6730 at least, where I will add to my shorts 🙂

        Just remember, this is my opinion.
        Gl all

    1. Yes u did…Lol

      Bagged a good profit on mine, keeping 50% stake and will add Monday if gap close…

  76. Will be looking for good long entries in a week or so sub 6500 hopefully. The sell off may be limited as money shifts to cash and not safe havens. It can come back strong. This move should help the move to 7000 medium term as the fear of a pullback falls away

  77. I have been trading since mid 09 but did anyone here survive the sub 4000 low in early 09? What I cannot work out is that we are quite a few years into the bull market. If ftse goes to 6000 this year or next or whenever what do you do at 5,500 or 5,000. When ftse was at 5,000 in the recession most must have thought this is the bottom?! Interested to hear if anyone was active in this time.

  79. well…huge sell off. Indicators starting to be overstressed. More than 500 points drop since the top. We may go down a deep further…300-400 points the most. Next obvious support 15670. We may see it ahead of FOMC, but we may stop here and reverse Monday. Who knows…TLT holding resistance at 107.30. So money is not shifting at least for now to treasuries

  80. This isn’t a bearish market… this is a crash.

    There is no support. Its now hitting 6610….

    Just glad I held my short from 6765… Luck more than anything, no one could have expected this

    1. 6566 is the only support left !!

      That breaks, and defo a crash, with the volume of drops today it should open up on the futures lower !!!
      as for 8am start monday, best guess,
      But as the price is in no mans land at the moment with strength to the downside,
      Then maybe good to stay in or step aside..

      For me, 6566 or there about’s I will be looking to set up trades around that figure ready for Fed action/direction…

  83. We’re going to get there tonight at current rate. We’ve fallen nearly 1/2% since US close. Don’t buy this – can’t see ftse opening 70 points lower than today’s close at the open

    1. So we touched 6569.8 and risen 25 points between 9-50 and 10-10. How do they calculate this stuff – is there a man with a slider moving it up and down to set the price out of hours. I’d be mightly peeved had I been stopped out at 6570, say

      1. David,
        FTSE:
        I see the FTSE with Good Support 6550 area (6566) to be exact! but to be spot on would be amazing…

        DAX:
        I see the DAX with good support around 9400 area, the complete bottom floor at 9000

        DOW:
        I see the DOW with support around 15650 with an extraordinarily supportive support at 14800

        US SP 500:
        I see SP500 support at around 1770 with plenty of other supports very close below..

        I believe the markets will continue to see a pull back with further declines, the support areas above is where i will be looking for myself to start trading, you have to bear in mind that despite the falls, WE are in an up trend market, so the trades I’m looking for are supportive areas to start buying again. Hope this has been of some assistance, James

  84. This is the biggest loss for all markets in a while, so. We need to decide what we mKe of it.
    Economy growth is good, so don’t see resection etc, but a correction. I would be long for the next couple of weeks with more downside to come, but then good growth.
    Steady growth 🙂
    Gl all

  85. Expected some kind of sell off this year but not as early as this ! Nobody expected this , not even the so called experts ! Spoilt my weekend good and proper !

  86. IG Index still showing FTSE dropping after the market close at 9.15pm, it lost 30 points…. were they tradedable prices ????

  87. Like I said, 6300 is my target.
    Nick’s target is even lower, but just keep in mind that not expected so early.
    That’s why I think there will be a bounce on Monday, but some more downtime.

    For now, forget the charts and the indicators, this is a different beast…

    1. not to be an ass..but nicks forecast above says ftse to be around 6780…i believe ftse right now is around 6596…
      so how is the forecast good?
      or am i missing something?

      1. I know Nick cannot predict falls (nobody can really) but this is not a big issue here. Supports or resistances do break. But the point here is that when the actual falls or rises do happen and break those supports or resistances, for some reason Nick cannot encourage people to get on those falls or rises and we silently witness the money making moments pass away. Or even worse, watching in agony our money disappearing hoping for some other support/resistance in hope for bounce etc.
        He explains it easy: do not try to catch a falling knife. What’s that? If the knife is falling why not fall with the knife?
        What is more likely to happen: the price suddenly starts bouncing or keep falling if the sentiment for the day was falling? Of course falling.
        We don’t know what goes on behind the scenes and maybe he advices his members to enter those falls cos these falls are money making opps.
        There’s only way to find out is to become his member.
        What now? Wait and hope for some bounce? Off some support or resistance, risk again for a possible clumsy retrace? When the easy moment of getting money is already gone.

  89. Long term uptrend from 2011 intact until about 6450 fails, so will probably bounce around there ish. Where exactly is anyones guess…..

    1. Last Thursday and Friday we were treated by the FTSE to a mindless mimicking of Wall Street idiocy. A detailed breakdown of the sell-off would be interesting – who is the stupidest of them all? For the FTSE, 2013 was choppy, but the modestly rising trend held intact. Other observers have pointed out that the FTSE’s version of growth last year was relatively lethargic. The FTSE is still within that rising channel, but I agree, a fall below 6450-500 would augur ill.

      http://imagizer.imageshack.us/v2/800x600q90/46/607i.png

      1. You bet. That prediction for FTSE around 6000-6200 are for a bear market and anticipating bad things coming in next years.
        The economy is improving and markets anticipate always.
        So going to 6000-6200 would mean the opposite of what is going on.
        The only reason to talk about those values would be the tapering, as I’ve read recently a 50% drop in SPX because of the QE end.
        Next wednesday we will see how markets react to start of tapering

      2. I am expecting ftse to drop to and bounce off 6450/6500 before fed meeting, not expecting any significant upside before then. While equity markets dropped gold gained, all these might reverse after that meeting. As usual, expect stop hunt before big bounce after meeting.

  90. Hi quick question. If holding short on shares in a company on IG, for example 1000 shares short on BP, when the dividend payments occur, will I be deducted an amount? and how much if so?

    Thanks

    1. Yes you will if you are running a short on a CFD share, I think it applies to normal shares too. The amount depends on how much you have staked and what the dividend is (usually a percentage of the amount on the ex-dividend date if I remember correctly).

  91. dow and dax at btm of 90 day rising trend line any more downside and down trend line would come into play……… both dow and dax look ready to pop up posible dow 16120…… dax9545………ftse6655….GL

  92. People moaning at the past few days and wanting more ‘trendiness’. Deary me, what more of a trend than straight down do people want or need?

    DOWN DOWN DOWN

    Anyone even thinking of going long before there are clear CLEAR signals is an idiot who is going to lose their money.

  94. What are you guys on about ??????

    ARE YOU A LONG TERM TRADER ?
    ARE YOU A SHORT TERM TRADER ?
    ARE YOU A DAY TRADER ?

    LONG TERM TRADER = Market is still in an up trend
    SHORT TERM TRADER = Market is still in an up trend
    DAY TRADER = Previous Days trade, Trending down

    Mondays Trading Day:
    LONG TERM TRADER- Looking for opportunities to Buy into
    SHORT TERM TRADER – Looking for opportunities to Buy into
    DAY TRADER – Continuing to follow day down trend.

    Over all Market position:
    In an up trend, still with in up trending channels, falling back a little on Friday towards bottom channel
    FTSE SUPPORT AREAS : 6550 area ….6480-50 area
    DAX SUPPORT AREAS : 9400 area (broke) 9250 area 9000 line in the sand
    DOW Support AREAS : 15650 area, Line in the sand 14800
    US SP 500 Support AREAS 1774 (small) 1770

    1. … Certainly different to Nicks view that we will be at 6200 or thereabouts in the next 3-4 weeks! However I think your probably nearer the mark, can’t see any reason for a fall to 6200, 🙂

      1. Nick’s system that he uses is very good,
        His DAILY trade figures are sometimes spot on, on the numbers.
        when he suggests his three trades for the day and is wrong, his system actually actually gets it right.
        everyone can have their own predictions of the markets, I DO NOT PREDICT THE MARKET, I just follow what the markets are doing.
        I’m here to gauge what Nick is trading on a daily basis, I am interested in maybe day trading, just for a gap fill.
        so bottom line, I trade up/Long term, any correction or drop in the markets is good for me, allows me to wait for support to buy the markets.
        Nicks thoughts on where it MAY go, is just a line of thought!
        My advise would be to trade what the market is telling you!
        Be clear on what you are trading, either Day trader or longer term.
        if you sit and watch the screen all day your not only get confused but your loose more when you should not.
        Best advise: Only enter a trade if you have an exit point!
        Nicks daily trades he does from the system he uses, is fairly good, when he shows you the 3 zig zag trades for the day but they do not happen, look at the break points, he got the direction correct!
        so you have two choices,
        1, follow Nicks advice only
        But be mindful that instead of turning it may continue in the direction he first suggested.
        or
        2, Follow what the markets are doing
        For this you can not be a day trader, as the markets always move in a channel, the best positions to take are from the top or the bottom, or a break of those channels. this requires patients.

        1. Agree, but some people DO NOT SEE like you say what the market is telling them. He should encourage to take the trades that market is telling. If I tried several times from supports and they failed I just sit on my losses and do not act in the opposite direction. Oh well, long didn’t happen, let’s wait for another support and try again. What the crap?

  97. I just bagged 40 points on Dow, I went risky long 10 seconds before closure on Friday 15872. It could have gone any direction, but I was pleasantly surprised.

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