Looking weak with 6330 resistance then 6370. Bull hold 6290?

Support 6307 6303 6300 6285 6275
Resistance 6328 6348 6362 6368 6380
Good morning I hope you had a good weekend. The FTSE has come off the 6430 level quite nicely now and if it can break 6300 looks set to test 6260 soon, and probably lower this week. We are at the bottom of various daily channels at 6300 so its a fairly key level to watch this morning. Friday saw the FTSE struggle to break the 200ema at 6365, and it didn’t manage to reach that 6390 level before dropping for most of the day. A weak Asia on Monday has dragged it down to 6300 again out of hours. Looks like the end of BHS as well with unfortunately 11000 jobs at risk as it may go into administration today.

US & Asia Overnight from Bloomberg
Asian shares were set for the first back-to-back declines in a month as commodities prices retreated and the yen strengthened, reflecting investor caution before central bank meetings this week in the U.S. and Japan.

All 10 industry groups lost ground on the MSCI Asia Pacific Index, which reached a four-month high last week. The yen climbed more than twice as much as any other major currency, after tumbling on Friday by the most since 2014. The British pound rose to a one-month high after U.S. President Barack Obama urged U.K. citizens to vote to remain part of the European Union in a June referendum. Crude dropped for the first time in a week and industrial metals declined. China’s interest-rate swaps climbed to a one-year high as improving economic data make monetary easing less likely.

While the Federal Reserve is expected to refrain from raising borrowing costs on Wednesday, investors will be on the lookout for any shifts in its guidance on the likely trajectory of increases. The Bank of Japan’s meeting concludes the following day and most economists predict monetary stimulus will be stepped up in Asia’s second-biggest economy. The U.S. and the euro area will report their first-quarter gross domestic products this week and earnings are due from companies including Apple Inc. as well as China’s largest banks.

“Market participants are looking for new drivers for risk this week,” Bernard Aw, a market strategist at IG Asia Pte. in Singapore, said by phone. “With the barrage of economic data and two major central meetings, there will not be a shortage of catalysts.”

The U.S. will release details of March new home sales on Monday, while gauges of business sentiment are due in the U.K. and Germany. Saudi Arabia is scheduled to unveil a plan to diversify its economy and shore up government finances after a slump in oil prices over the last two years. Financial markets in Australia and New Zealand are closed for the Anzac Day holiday.

Stocks
The MSCI Asia Pacific Index dropped 0.3 percent as of 2:07 p.m. Tokyo time, after sliding 0.8 percent on Friday. Japan’s Topix Index fell 0.5 percent, retreating from its highest close since early February, and benchmarks in Hong Kong, Shanghai and Singapore declined by at least 0.6 percent.
Sony Corp. slumped as much as 6.5 percent in Tokyo after the electronics maker said it won’t announce full-year forecasts when it reports earnings on Thursday as it is still assessing the damage from an earthquake that shut its main plant for camera sensors. Hanjin Shipping Co. plunged by a record 30 percent in Seoul after South Korea’s largest container carrier said it would seek to restructure its debt.

Futures on the Standard & Poor’s 500 Index fell 0.2 percent, while contracts on the U.K.’s FTSE 100 Index were little changed. Royal Philips NV reported first-quarter earnings.

Currencies
The yen strengthened 0.6 percent to 111.09, after sliding 2.1 percent on Friday as Bloomberg reported the Bank of Japan may consider helping banks lend by offering a negative rate on some loans. Goldman Sachs Group Inc. said it expects further monetary easing at this week’s policy meeting.

“The BOJ is already so long into ‘the reflationary trade’ that it has to continue to deliver further accommodation for the time being,” Goldman strategists Silvia Ardagna, Robin Brooks and Michael Cahill wrote in a report. Authorities will likely focus more on asset purchases than on interest-rate policy and the yen will probably weaken to 130 a dollar in a year, they said.

The pound rose 0.2 percent versus the dollar after Obama bolstered his warning to the British electorate against embracing a so-called Brexit from the European Union, saying it could take as long as 10 years before the U.K. and the U.S. negotiated a new trade agreement. South Korea’s won fell as much as 0.8 percent to a one-week low, leading declines among emerging-market currencies.

Commodities
The Bloomberg Commodity Index declined for a third day, extending its retreat from a five-month high reached last week.

Crude oil dropped 1.6 percent to $43.05 a barrel in New York. Saudi Arabian Oil Co. will complete an expansion of its Shaybah oilfield by the end of May, allowing the world’s largest exporter to maintain total capacity at 12 million barrels a day, according to two people with knowledge of the plan. Iran has increased output by 1 million barrels a day since sanctions were lifted in January, Shana reported, citing Oil Minister Bijan Namdar Zanganeh.

Copper fell 0.5 percent in London, snapping a five-day winning streak. Aluminum dropped 0.2 percent, after recording its best week in more than three years on the back of signs of improving demand in China, the top user.

“Metals are correcting from recent gains,” said Li Li, a Shenzhen-based analyst from Jinrui Futures Co. “Copper is probably reaching its peak and wide-ranging fluctuations are expected.”

Bonds
U.S. Treasuries due in a decade rose for the first time in six days, pushing their yield down by one basis point to 1.88 percent. The rate on similar-maturity Japanese government bonds increased by three basis points to negative 0.08 percent, the highest in more than two weeks.

One-year interest-rate swaps in China increased seven basis points to 2.63 percent, set for the highest close since April 2015. Recent Chinese indicators from a purchasers’ manufacturing index to credit growth have beaten estimates, lessening the need for monetary easing that risks fueling speculative trading in the nation’s commodities and property markets. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

The bulls need to hold the 6300 level (and in actual fact just below at 6290 from Friday) while the bears will be trying to short at 6330 initially where we have the daily pivot. Above that then 6360 and 6380 are resistance on the 2 hour chart and areas that are also worth shorting, whilst if the bears can break that 6300 where we have a few daily channels of support, we could be on for a trip down towards 6200. We have more earnings out this week, as well as the central bank meetings in Japan and the US – so a few traders will be keeping their powder dry for the moment. I mentioned Friday that I am feeling more bearish now and thats still the case, even more so if the bears break 6300, and am still thinking that short the rallies is the best plan for the moment. The S&P recent high at 2110 will be the level the US bulls need to break and is looking like key resistance. Above that then 2121 is the 20 day Bianca, a break of that would change the picture to a fairly bullish one.

67 Comments

  1. Morning all.
    Atm DAX sitting right on its platform up trend from 9600 and at 40 support on the 4 hour rsi too. We broke our corresponding line last week when 6340 gave way, so 261 prev low on cash looks like the only support before we fill the cash gap at 51.
    Loads of data this week which I’m sure WSF and anstel will keep us up to date on, but its not the numbers so much as how sentiment interprets them, and sentiment is definitely poorer/more realistic than recently.
    Taking this FTSE move as starting from 6060 on 5/4 to cash high of 6420, 6240 is 50%, so a possible reason to long/short cover around there.
    I’ve done a bit on the short side (surprise surprise) this morning but all out and looking for a bit of respite now from the selling, maybe an attempt at a base around here 70’s/280’s and a possible slo mo dead cat back to 6300/10340, which will probably be a good sell for weak DOW later.

    1. Just might be an exhaustion candle at 0900, grasping at straws, but a small long at 70, 10 stop. Sort of knife catching but a flutter financed by short profit so wtf.

        1. It wasn’t last week Senu, but was ignored in the bull fever.
          That obviously wasn’t an end of move exhaustion candle, so my long has entered hope territory. Would be nice to see a higher low/high sometime soon, especially on the DAX, if it does we’ll follow, otherwise it’s 40 time.

  2. Morning tmfp and all. looks like Nick’s arrows are done 🙂
    same here tmfp, waiting to short the bounces, with stop @ Friday’s close. So, as close is the best. stopped once already. GL

  3. Morning all.
    I have a long scenario in play until a break of 6250 on ftse. Certainly not looking particularly healthy, but as you say tmfp perhaps consolidating above 260/270.
    GL all.

  4. Morning all,be interesting to see if IG still have 70% short tomorrow,if the recent pattern holds good then either todays low or last weeks 9905 on dax will be the low of the week,lol,downtrend on dax weekly doesnt kick in until 10600 or so,consolidation or everyone has found a better place to put their free money and get a return in which case the usual May pattern will be to turn down or go flat.Bets on around 10k or 10100 at the 200 sma I’d guess.

  5. A small short term ray of hope for DAX, immediately recovering that 227 dip at 0934/5. IF it can hold 40+ for 15 minutes, maybe even break 60, could be bounce time. IF.

    2. That was my original thinking Senu but the drift back to 32 at 10.07 planted seed of doubt, then we continued lower and I thought a further move down was on the cards. Wrong, obviously.
      Don’t get sucked into shorting too early, plenty of room for a dead cat up to my original thought of 300ish on both.

      1. Thanks tmfp, I just asked for learning purpose. Though the green candle looked bit engulfing, but not. only focused on FTSE as of now.
        Looking to short around 88.

        1. 287 is 38% retrace of the drop this morning, worth a small short but only first time round for me.

        2. 50% is around 310 or so fwiw,but since Feb there are a lot more tails than closes near the low too.Below that 50% retrace hard for me to find an S/L point for a long and tbh I’m biased to the long side and was wrong about the open,so i’m just watching this 🙂

          1. Yes, fair enough, I’ll start a little scale up short from 00, then 10 stop 20 see how we go.

          6. Really not sure.
            BTD around here I suppose, but if DAX loses 300 then 290 in short order could get a bit bloody.
            Still long 40ish before the DOW.

  9. Morning all, not really certain what is going on in terms of cash markets but looks to me like we might have a bit of a drift. Am playing around with FTSE/Dow difference, just gone short at 11652, will add if it gets to 11700.

  10. The DAX snuck in a quick recovery high there, may turn into just about it for this morning, but I’ll take +20 on that short for the sake of it, looking to replace.

    This market action reminds me of my cat. Periods of frenetic activity followed by that “Wtf was that all about?” then falls asleep, occasionally twitching.

    1. Good old John Ward, that man is indefatigable.
      I am sure that BHS was an excellent tax dodge for Green Slime.
      I had an interest in a department store lighting and display company about 10 years ago. Stuart Rose was very good for us.
      When in High Streets and malls, I used to take trainees into BHS for an example of how not to do it.

  13. Hi Chaps….I’m busy with some life stuff but just thought I’d wish you all the best of luck trading today…..Make some money chaps…GL.

  14. Despite the succession of dead cats, still looking long side rather than short before the DOW at these levels. I think ftse’s vulnerable to a sharp buyable sell off <60.

    Where's our anstel today?

  15. Missed the 50’s long, waiting for a big Red that never came. In the fail zone again low 70’s, but getting a bit late for any further big downside.
    First question to ask the DOW is 17900, hold or break?

        3. Should have taken 10, stop b/e now still wanting DOW to have a closer look at the big number.

    1. took 10 on half rest b/e
      Although the DOW looks in no buyer decay mode, I can’t see that much downside over here right now, but closer to the close will be interesting.

      1. hi tmfp, just back after a long meeting. i thought dow will be around 18k till FED. still some blue 🙂

  20. Not wishing to dampen Senu’s spirits, but that DOW’s got 17800 written all over it, maybe not before our close, but just look at the action since it opened, no buyers.

  21. Added short at 56, expecting Mr. Tumble to come to town shortly, stop at av b/e + a bit 62

  22. And that’s it from me folks.
    I think the DOW will find it hard to get much further than 900 the rest of today and if I knew someone who was long at 880 for example 😉 I’d be telling them to be a little cautious.
    Cheers!

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