Nice bounce off 6620 yesterday. Resistance at 6695 and 6735 now

Good morning. Well the FTSE dipped a lot further than I was expecting for yesterday’s session turning into a bit of a trending day. I was a bit loathe to hop on a short though as the other indices I was watching – S&P and Dax – failed to drop at all, usually a sign that something isn’t quite right. Sure enough the FTSE hit the bottom of the 10 day Raff when I sent out the email to members and then climbed back. That said, I have said a few times in the past few weeks that I was expecting a dip to 6600 before the Santa Rally kicked in, question is, is this it starting early or just the usual “buy the dip” as the bounce did start when the US came online, and as we know they only know how to buy at the moment! I wouldn’t be surprised to see another dip yet though.  The warning sign yesterday was a very bullish press, reporting the decent news flow and Carneys comments. Talking of which he has reworded the interest rate future slightly saying that unemployment hitting 7% isn’t THE catalyst for putting up rates, but merely the trigger point where they will consider it.

New Fed chairman Yellen secured the future for more QE with her comments yesterday, basically saying the US economy is still struggling and stimulus will be maintained. I’ll still stand by my end of Q1 2014 for any sort of tapering as I have been saying for months. Announce in March, start tapering in April is what I am thinking.

Asia Overnight from Bloomberg

Asian stocks climbed the most in four weeks while metals gained after Federal Reserve chairman nominee Janet Yellen signaled stimulus will be maintained until the U.S. economy improves. The yen approached a two-month low.

The MSCI Asia Pacific Index added 1 percent at 3:07 p.m. in Tokyo as Japan’s Topix Index rose 1.2 percent. Standard & Poor’s 500 Index futures were 0.3 percent higher after the underlying gauge increased to a record in New York. The yen weakened 0.4 percent to 99.61 per dollar and lost against 16 major peers. Silver jumped 1 percent from a three-month low and copper futures advanced 0.6 percent.

The U.S. economy and job market are performing “far short of their potential” and a “strong recovery” will ultimately enable the Fed to reduce its stimulus, Yellen said in testimony prepared for her nomination hearing today. Japan’s economic growth slowed last quarter while Finance Minister Taro Aso said it’s important to have intervention as a policy option. Data today may show slowing expansion in the euro-area economy.

“The market’s worry about the inevitability of tapering will be eased and that may be enough to buoy markets in the Asian region today,” Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “We know she’s dovish given her history and we’d expect that she will be very accommodative in talking about the U.S. economy.”

Bond Buying

A “strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” Yellen said in a testimony that will be delivered to the Senate Banking Committee. “Supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”

The Federal Open Market Committee will probably taper its bond buying to $70 billion at its March 18-19 meeting from current pace of $85 billion a month, according to the median of 32 economist estimates in a Bloomberg survey Nov. 8.

The S&P 500 Index (SPX) rose to a record yesterday, led by retailers on holiday shopping. Cisco Systems Inc. (CSCO), the world’s biggest maker of computer-networking equipment, dropped 11 percent in after-market trading after first-quarter revenue trailed analyst estimates.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

I was a bit wary of really going for the long at 6620 as it felt so risky after the fall, but sure enough the 20 day Raff channel came good as per that email I sent round to members, chart shown below. Last time it retraced  to pretty much the 61.8% fib line the next day, so if it was to do the same again, that’s around this area as I write at 6680. There is a chance that we will actually recover further though towards 6735 which is the top of the 10 day Bianca channel for today as well as having a fairly major ProTrend resistance line there too on the daily chart (its actually at 6722 so around that area). Its feels a bit early for the Santa Rally to really kick in just yet so we may get a dip towards yesterdays close at 6630, though for the open the EMAs are still positive and I expect we may hit the 200ema at 6694. There is also a downwards sloping ProTrend resistance line 6703, so a small, slightly risky short at this area may be fruitful for a dip to the pivot and yesterdays close.

yesterdays Raff channel
yesterdays Raff channel

138 Comments

  2. S&P 500 and Dow are conforming to the buy signals which I reported on Nov. 11. The FTSE though is a different kettle of fish. E.g., the 1 hr. series has a negative tilt and threatens to fall further imminently.

    1. lol, what a surprise. That EMAs still bearish since last week. DOW, SPX, DAX all in good health. Is the isolation in that island

    2. Well, this is just a guess. Looks to me like FTSE/30 mins. is shaping up for more downside. 6630 wouldn’t surprise me.

    3. I am hoping, we might touch 6630 (Yesterday’s close) before DOW opens. As DOW goes up ftse might follow. Never know!

  5. Will get busy today from 15.00 when Yellen is question on ecomony by banking committee so would expect to be bullish but yesterday could have been buy the rumour sell the news who know these days.

        1. for a daytrade is more than good. If you were in the right side of the trend, you could stay longer, IMO

  10. Finding this a great money making market. Atm still selling the sighs, had an order @ 6675 and another @ 6700 sold at 6640. Not looking to go long with the ftse so bearish, but that DOW could go anywhere.
    Hope my fellow bears, White,Sam to name a few or doing well, gl all.

        1. Got stops @ 6680, so I`ll at least take 15 points, as this market is crazy. DOW is the cause for concern as it just keeps going higher and will inevitably push the ftse up..

    2. I went short this morning 6685 and closed at 6675. Now looking to ride from 6630 to 6680, counting on DOW for an up trend.

    4. Yep been liking these shorts for past 2 weeks, but waiting now for a good long entry point. Still not completely convinced though

  11. .. your not going to get many better opportunities to buy the dips than now, so get in there buy the dips 🙂

    1. So you actually think the pivot 6656 will hold and 6630 won’t be reached with US open? I was about to start short but missed 6670 as went to look at some items.

      1. A couple of posts ago you were convinced about the short, now you are long. Do you tend to change your decisions just like that?

  16. Increased stop, don’t think it will go as far as 6620, though will reach the 6640(my original short position). Sorry jack, got hit by a mad rush of impulse.

      1. lol, I thought you were so insistent on the short? Btw my initial target for my short was 6640, so I used that as the basis to open my stop loss. I don`t think we will get 6620, but rather a rise to 6675-6680 area.

  22. yellen’s speech i guess should push ftse up back to 6700.
    But however i do believe we are in a down trend now for a bit.
    Im holding a small long position…to be closed at market close. do think i should hit 6670 before close again (quiet certain of that).

    1. I’ve been watching your method and noticed that you tend to give support or resistance areas for those who are not in a trend so they tried from certain levels and I think this is helpful but it gives people false hopes. But I suppose it consoles them as they have something to do. It only refers to trending days as I think your predictions on usual bouncing days are great most of the time.
      I guess you get a lot of grief on the trending days like this. Some people make profits, some people complain they tried from levels and lost, so they are angry – normal reaction of people.

      1. What I also noticed you are getting more long trades right rather than short ones, as if you are inclined to long trades more.

    3. Nice one Nick. I missed the down trend. I waited for up trend and choosen an appropriate entry point. I was aiming at 6630 but then that didnt happen and I just got in (trade) before DOW opened. That seems have worked for me 🙂

      1. Nice when it works. Trending days are the spanner in the works. And afternoons when the US comes online usually!

      1. *6649 we’ll see 🙁 i only try to make a maximum of 3 trades a day so i guess this is the last one. moved my stop to b/e so looks promising

  27. This FTSE really is a joke compared with the other indices. I wish I was again in DAX. Stopped trading there when I missed a gap up.

  29. Brenda Kelly from IG saids, is the miners, it has a lot of weight. But this guys in Britain are gold miners or what ?

  30. DOW making all time highs one after another and FTSE lagging, sleeping or….
    Maybe I need to see DOW in 200000 so I can see something in FTSE

  31. think this may be a pump n dump … yellen speech no real news, market has this information already ? Anyone think the same ?

  39. Leaving a good bullish harami for tomorrow. Anyone have successful trade a candle like that in FTSE ? I traded once one in DAX

  40. Dow/4 hrs. showing signs of breaking through upper bound of rising channel, starting Oct. 30. This should happen tomorrow.

    The best laid schemes o’ mice an’ men
    Gang aft a-gley,
    An’ lea’e us nought but grief an’ pain,
    For promised joy.

    2. thanks dude closed at 6672 got 22 points-coudnt help but go long at 6652 looking for a retest the closing highs 🙂

  44. .. the real concern should be, as a result of the huge disconnect beteen the S&P, DJI, and Dax, any correction on these indicies is going to send the FTSE into freefall, it’s got no backbone to save it … buy the dips 🙂

          1. I’m long from 6660, not the best. All ready picked up points today so just going to let a trailing stop run for the night. Stop at break even at the moment. Hopefully will wake up in the morning to some $$$. lol, more like wake up and I got stopped out at b/e.

          2. Im long from 6657 so not much better. I work on nights so my plan is to keep a eye on it through the night im hoping for a really optimistic 6730. But im probably being unrealistic.

  49. FTSE closes at 6666……mmmm……maybe the Devil rides in. 1 week to go before the Santa rally might kick in……so buy the dips…..6650 and 6600 still good levels.

      1. Well over the last 10 years I think it has been an average of 160 pt rise so its probable. I have a feeling this year it might come quite late.

  50. Closed my DOW short at 15820 from last night at break even and sol again at 15875… Let’s see what happens this time lol

  51. Can’t believe people are talking of a Santa rally… US markets are on fire. There wi be a pull back of some kind. FTSE is going sub 6600 for sure in the next week or so… Santa rally will prob start beg/mid Dec

  52. Huh Santa rally have been going all years, but have been reading lots lately that some big bear have converted to the bull which me is one of the warning signs that we are nearing tops.

  57. I think early price action says today people have had enough of ftse underperf …lets see we have seen this movie before.

  59. FTSE been lagging all indexes, yesterday it had a chance to be bullish and it was just sold. DOW now at long term resistance, any sell off in the US should impact the UK…. there are no hedges at current levels everyone is thinking that the markets cant fall… time will tell crash ?

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