No tapering then… I did say. 6690 today?

Good morning, well that’s it, I guessed right for once and no tapering yet. As would be expected the indices took off, with the FTSE only stalling at the 6640 level mentioned yesterday and where my arrow terminated. That’s the resistance now though we should see more bullishness, I expect a little dip back to 6600 before a further assault on the highs. The US markets closed at their all-time highs yesterday. Pretty much every took of – gold, indices etc. though the counter argument is that if they don’t feel they are able to taper QE yet then the recovery isn’t that strong and the economy still cannot support itself. When Ben Bernanke announced possible tapering of QE and the markets tanked in the spring it was said at the time it was all data dependant, a fact that seemed to get overlooked. I said at the time I doubted that the data would be that strong within a few months to enable withdrawal, however, I think tapering is more likely in 2014, possibly a small reduction in December just before Ben hands over the reins of the Fed chairmanship.

Yesterday’s trades both worked out but only for a combined 30 points (the long from 6572 then the short at 6555), not too bad but I didn’t trade over the news in the end and just sat on the side-lines.

Asia Overnight from Bloomberg

Asian stocks jumped to a four-month high, bond yields and credit risk declined while industrial metals rallied after the Federal Reserve unexpectedly refrained from reducing U.S. economic stimulus. The Thai baht strengthened the most in six years.

The Federal Open Market Committee said it wants more evidence of an economic recovery before paring its $85 billion-a-month bond buying program, surprising analysts who predicted a $5 billion cut to Treasury purchases. Japan’s exports rose the most since 2010 in August, boosting Prime Minister Shinzo Abe’s growth drive. The U.S. will post jobless claims and home sales figures today.

“It’s taper off, risk on,” said Keith Poore, head of investment strategy at AMP Capital Investors Ltd. in Wellington, which manages about $130 billion. “You want to hold on to your risk positions if you have them at the moment.”

Fed Outlook

Fed Chairman Ben S. Bernanke said there is no fixed schedule for tapering, which could still start this year should data confirm the central bank’s “basic outlook.” Economists had forecast the FOMC would dial down monthly Treasury purchases to $40 billion from $45 billion and keep buying of mortgage-backed securities at $40 billion, according the median of estimates compiled by Bloomberg.

Outlook

ftse 100 prediction
ftse 100 prediction

Fairly simple plan today – dip and rise. We have the 30 minute channel bottom at 6612’ish, more significant support at 6600, markets buoyed by more QE and no reason really why the FTSE can’t go for that 6690 later on today. The only slight concern is as mentioned above, if QE is still needed then the economy is weak. But then we all knew that anyway. I have put the trade plans below for today, the initial short might not be from 6640 if the weakness kicks in straight away, but either way we “should” get a bounce around the 6600 area. The trends are still up with the 10 and 20 day Bianca channels now both showing 6550 as the bottom of the channels.

36 Comments

  1. If anyone will start talking now about the market being about the economy then I am going to call the guys with white jackets and send that person on my expense for a long holidays to a LALA land….lol

    1. didn’t we already know that… I can’t believe people who day trade based on their view of the economy, I agree they are nutters!

  2. It’s hard to believe that anyone going long at this point is not concerned that any adverse development regarding any one of the following; new taper talks, Syria, Government shutdown, US debt ceiling, Greece, Italy, Portugal, the fact that the world economy may not recover for many years, may cause a sudden drop in all major indices.

  3. I couldn’t agree more Jack…. In my humble opinion we are for a very slow and sluggish recovery and the sort of grow in economy we use to have will be a distant memory. The economic cycle is based on real people spending real money and just looking at UK the spending power have decreased by 5,5% if I am correct.

  4. Wow another short opportunity on greedy DAX :), I’m not worried of short terms loses. Its going down fast very soon and I’m holding.

  5. Yes but if the market was always based of the economic climate it wouldnt look very encouraging for investors would it? It would always bd in decline if we based it of declining economic situations/countries

  8. Too much too fast. Bubble me thinks and bit quiet today me worries, though balloon may not be full yet 🙁

  9. Senu me personally would not enter back into a long trade on ftse until 6420… But lot depends on news related issue, the next big issue will be the Americans debt ceiling.

    1. Jack – My answer to that, for what it’s worth, is not in a while. As you’ve no doubt noticed, 6660 has offered resistance today, and the index is now around 6620, and falling.

  16. I think long to 6690 will come later on tonight it maybe after dow closes and it starts going up again………have short on dow from15550 getting into phrophet but will leave to 6200 hopefully soon GL

      1. I hope tomorrow Nick’s “today arrow” will come true. The drop to 6620 happened by the way. Markets cannot react as fast as Nick’s prediction 🙂

  17. Most people will be short now. It seems rationale. Hence the long! If you held your shares into the FED statement after a monster rally what is the reason to sell now? Debt ceiling is a non issue in my opinion.

  18. Debt ceiling is a non issue….how do you work that out think you need to google and see how the reacted in 2011!!!

  19. There is still no significant down trend we will have to wait for a big sell off which I assume might be 6800 for the ftse and 15800-16000, possibly. But there needs to be a reason for the sell off, it cant just occur randomly…

  20. Luke I just mean that since 1500 on the S&P people including myself have been looking for these big events to induce a mass sell off. Sitting in a short praying for this to happen whilst the market rallies is pointless. You may as well get in for the ride and load up on the dips if they happen. Syria Fed etc are small blips if you look over the year. When we get to 2000 S&P by 2016 the odd 25 point drop is irrelevant along the way. Think of all the shorting money lost along the way. Debt ceiling will be shifted. A bit of US politics for a week for the bond and currency markets to be a bit jumpy. Anyone else long? It’s lonely. GLA

    1. You could be right but…. when people get so complacent as you are in your views right now , the unexpected happens. I don’t think the market is where is suppose to be, there is no support in earnings for those levels

  22. Me long i thing every thing is being geared up for a big leap on ftse to get to top as cheaply as possible ….. maybe it will do the same as dow when it opened last sunday night at 11 o clock…. jumped about 150 points cutting 4 gran of me.. catch on hop GLA

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