One more high then hello bears?

Good morning, well slightly less “good” news on the US job front yesterday sent everything soaring, so we are back to the bad news is good and good news is good, fuelling a rise to an all-time high on the S&P. Of course what it all boils down to is QE and trying to guess when and if the Fed will start tapering. As I have said all along I think 2014 at the earliest, probably towards the end of Q1, assuming the data shows a sustainable pick up in the economies. Anyway, yesterday had a slight feel of a blow off top, especially with the price dropping back to 6675 pretty quickly after hitting the 6720. A bit annoyingly I was all poised to short at 6724 – which was the top of the 10 day Bianca yesterday and send out another SMS, having been stopped out on the earlier one. 6720 is now the resistance line for the bulls to break if they are going to go for the 6760 (top of the 10 day Bianca for today) and 6820 levels. I was cautiously bullish yesterday and still am, though I think we will start to top out soon, especially once (and if) we hit the 6800 area. With the Bianca support at 6670 (where we are as I write this) we could bounce a little from here if the bulls are going to try and build on yesterday’s gains, however if this level breaks then the bears could quite easily gain control. Its distinctly possible that 6720 was the high for the time being though.

Asia Overnight from Bloomberg

Asian stocks fell for the first time in five days while the yen strengthened and commodities slid as Chinese money-market rates surged. Emerging-market currencies rose and credit risk in the region declined on bets the U.S. Federal Reserve will hold off cutting stimulus.

The MSCI Asia Pacific Index lost 0.2 percent by 1:22 p.m. in Tokyo, erasing gains of as much as 0.5 percent. The Shanghai Composite Index dropped 1.2 percent, heading for the lowest level since Sept. 30. Standard & Poor’s 500 Index (SPA) futures decreased 0.3 percent. The yen advanced 0.8 percent to 97.39 per dollar and South Korea’s won climbed to the strongest level since January. Copper led metals lower and oil fell a third day.

China’s benchmark money-market rate jumped the most since July as the central bank refrained from adding funds to markets. Barclays Plc joined ING Bank NV in calling for a delay in Fed tapering after U.S. employers added fewer workers than projected. Data today is forecast to show consumer confidence in the euro area climbed to the highest since July 2011.

“Monetary policies will be slightly tight for the rest of the year as the pressure from rising housing prices and inflation is building up” in China, said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai.

The Shanghai Composite Index fell a second day, with the benchmark index for smaller companies tumbling the most in three months, after money-market rates jumped the most since July as the central bank refrained from adding funds to markets and corporate tax payments drained cash. The ChiNext index of small companies plunged 3.8 percent,

Fed Tapering

The Fed will probably delay the first reductions in its quantitative-easing program until March, according to a survey of economists conducted Oct. 17-18, buoying emerging-market assets. The won appreciated a second day, gaining 0.5 percent to 1,055.75 per dollar, the strongest level since Jan. 11. The ringgit rose to 3.151 a dollar, snapping a three-day drop. Thailand’s baht and the Philippine peso also advanced.

Policy makers unexpectedly refrained in September from reducing the $85 billion-a-month in bond purchases, saying they wanted more evidence of an economic recovery. Deutsche Bank AG sees quantitative easing continuing into the first quarter of next year, while Goldman Sachs Group Inc. economists said that while tapering in December “remains a possibility,” March is the most likely date.

Partially closing the government during the U.S. fiscal impasse trimmed 0.25 percentage point from economic growth in the fourth quarter and cost the world’s biggest economy 120,000 jobs this month, Jason Furman, head of President Barack Obama’s Council of Economic Advisers, said at a briefing yesterday.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

Today’s pivot is 6689 and that may act as initial resistance for the bulls, but the bigger level is 6720 being yesterday’s high. We are currently at the bottom of the 10 day Bianca channel at 6671 which if it holds opens up the possibility of 6760, being the top of the channel. It’s a pretty narrow channel though so liable to break fairly soon so a case of staying nimble. Its all boiling down once again to the “will they won’t they” taper and when. Its possible that yesterday’s high was the high for the moment, especially if 6670 area breaks. Next support after that 6646. The 30minute chart EMA’s are currently bearish so it’s a bit 50/50 if this level will hold and rebuff the downward pressure now being applied, as the SafeZone indicator is also currently bearish. I don’t think its going to be long till we get a drop down and even more so if we start hitting the 6800 area.

So, today still cautiously bullish, but looking for decent shorting points as you can see from the trade plan below. Only one long though as the 6670 area, with a  stop just below the 6660 rising trend line to ride any wave up.

67 Comments

  3. I would go short have just closed dax short £400 but am spooked by Nick as he was sooooooo right yesterday

  6. If you follow my tweets :
    #FTSE #FTSE100 broken bull flag daily chart. If 6663 holds, I see another leg up to 6800 level.
    #FTSE100 #FTSE every time the price crossed above the 200MA, there was huge bounces, with more than 500 points. #BullFlag in Daily chart

    So I need to see soon at least, 6800 level, from the 6300 low.

    Our pivot TODAY stands at 6688
    and supports below : 6673,6654,6623
    resistances above : 6763,6731,6712

  9. Not so much app. Used safari and changed the settings from web to mobile settings and it’s all gone as I hoped. So now mobile aswell as laptop.

    1. The mobile version of the site is not bad, you can switch between them at the bottom of the page when viewing on a mobile device.

  11. Personally thinking that 6720ish will be our weekly high. I would think it would be good shorting area for the short term, good bearish signals(higher highs, lower lows and all that)

  13. just go with the flow Sam, does it look like it will drop suddenly? Wait it out till 2:30 keep a running stop at 6672, Anything else would be a bonus.

    As once you close it, it will be very difficult to find an entry

    2. Thanks Ahwab, its a good idea. I have got two entries @6660. I was thinking I shall one for “greed” and another for “trading discipline”.

  14. Hi all….i’m new to this, but have a Nov sb long open on ftse from 6552. i’ve moved my stop up about 30 points, which give me about 70 points from where we are now. any advice on if i should keep this open for the time being? i usually get in and our during the day so this is the first time i’ve had a position open for this long. with the US dramas pushed out a bit, the figures yesterday pretty much guaranteeing no taper this year, and UK retail figures looking strong, i was thinking to leave this run, or perhaps even rolling it to dec with the lead up to Christmas.

    1. Reckon you should just leave it to run, with the Christmas rally you will be sure to get your money. Overtrading = high risk of losing capital.
      But if we do get the dip, I`m sure there is no harm buying it, but as for some of us daytraders we have to be flexible to go short and long within a shorter time span.

  17. Resistance @ 6552, breaks that then i`m finished for the day. Since DOW`s not free falling, just assuming its a sell off.

    Nice call Senu, I`m guessing you MIGHT buy the dip?

  19. My view is that people need to go long at the right point (6675 yesterday, 6659 today, total of 10 lots : £100/point).
    I have a bullish view for the week (at least till tomorrow and im putting a high probability on breaking 6720 tomorrow before US open!).

    1. not tomorrow, meant friday, got numbers confused, thought UK GDP out tomorrow, my stupidty!!! Still have same view!

    1. Agreed. The way I think of it is the markets pulling back slightly in order to gain enough momentum for its next run.
      Also by me saying I have £100/point running dont mean im risking a huge sum of my account (it’s only 5% – if SL hit) which I do consider a big risk for me at least.

  21. anyone else experienced this in the real world…

    my demo account with intertrader is not connecting saying “no feps available…retrying…”

    got no problems with my city index account…

  22. … personally i think there is limited upside in the next run up, i’m with those that think the 6720ish is the interim top for now, at least for the next 7-10 days

    1. UK GDP coming out tmorrow forecasted better than expected (which I am leaning towards as UK has been out performing…)
      Also QE talks of not tapering (Draghi did announce just recently that they will be hard on banks capital – which is setting a negative tone) but not till next year so dont think it will have any impact right now.
      Also if u look for several weeks correlation in markets have been out, they are now coming back into play!
      ALSO! Majority retailers buidling short on ftse, indicating still an uptrend (as majority retail traders lose money, if they didnt we wud all be rich 🙂 )

      1. Don’t forget overnight China PMI numbers , better than expected (china has been doing well looking at last reports).

  23. … hashmash i think you could be right but that will account for 1% shift at most, a recent reuters note said “selling is “orderly” and indicates more a pause than nervousness on the part of investors” and you know what that means … everyone PANIC .. 🙂

    1. See I am a strong believer of not believing everything i read (i think govts control media). And because of this investors I do not think will be put off, most investors dont trade…they INVEST, meaning they dont care about small drops
      (One of the hedge funds I worked for didn’t even care about the recent financial crisis and kept buying, of course more cautiously, and believe me they are one of the top fundamental hedge funds in the world).
      I am also def not saying ftse will hit 6800 in a straight up rally, but I am quiet certain (probably sound like an newbie using the word certain when trading) that this week we will break 6720, but cannot guarantee if the week will close above it! As you can see the earnings report today were kind of mixed, and yet FTSE has been able to stay above 6650, also if you look at recent history FTSE is MUCH MUCH stronger than US, to an extent where it feels like FTSE is pulling up other markets.

      If FTSE Closes below 6660 today then I might look into changing my view, if not then it just reinforces my views :).

      I love this place haha, love it when people question my views because it makes me want to think if i am really wrong:). If i cant find any negatives then hey more money :).

      SO Final line is FTSE Closes above 6660 then im in for at least a 6720 break this week (as mentioned before I cannot bet it will close above it this week).

        1. I worked there for not too long, it was purely value investing (very long periods, years and years) which i hate, i moved to a BIG BIG systematic hedge fund as electronic trader which i quit after 2 years and now im doing a PhD in order to become a quant trade (prob go back to old place as quant trader).

          1. Thanks to you! Followed you tip £100/point (couldnt dare 100 quid, so went in for 10 instead) – that was big gamble for me! 🙂

          1. dude dont follow my tips lool, im telling u if i change my view im quiet sure i wont update here instantly as i wud be too busy myself reviewing my positions… by that time u cub be in big losses.
            Never follow other peoples views blind folded! Have ur own views and see how it compares to others.

    1. appologies, i made a mistake by saying UK GDP out tomorrow, i meant friday, still doesnt change view :).
      Tomorrow we got initial jobless claims (expectations better). As we know if we miss market goes up, if worse…market goes up haha (hope thats the case tomorrow).

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