Resistance at 6382 today?

Good morning. The FTSE just missed my shorting area at 6385 yesterday and then fell away which was a tad annoying. I had expected a retrace to the 61.8% line of Tuesdays falls, but in the end it only managed to get to the 50% line, around 6370. Here was a bit of weird price action just prior to the close when the price was driven down quite hard, almost retesting the 6310 area mentioned, but soon bounced back, thus making it look like a bit of a stop killer. I didn’t get it on my charts but yesterday several people in the chat room experienced a ghost spike on the FTSE to 6600. Ghost spikes have a habit of coming true so bear that in mind over the next month or 2. Obama officially put forward Janet Yellen for the Fed chair job, a move that will see a fairly uninterrupted continuation of Bernanke’s policies of money printing. The impasse in the US continues and while the politicians faff about 800,000 government workers don’t get paid, still, be small fry compared to the fall out if they don’t raise the debt ceiling.

Asia Overnight from Bloomberg

Asian stocks swung between gains and losses as health care shares rose while energy companies and materials producers declined. Japanese equities climbed as the yen weakened.

The MSCI Asia Pacific Index dropped 0.2 percent to 138.78 as of 1:18 p.m. in Tokyo after rising as much as 0.2 percent. U.S. House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity.

“The market obviously is expecting the gridlock to be resolved,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion). “But having said that, I think the market is uncertain until this is resolved, and so we’ve got choppy trading conditions ahead for the next week or so.”

Japan’s Topix index added 0.7 percent after yesterday rising the most since Sept. 19. The nation’s machinery orders rose more than expected in August, data showed today.

S&P Futures

Futures on the Standard & Poor’s 500 Index climbed 0.4 percent. The measure rose 0.1 percent yesterday amid signs that lawmakers could raise the debt ceiling and on optimism Janet Yellen won’t rush to withdraw stimulus if she becomes Federal Reserve chief.

President Barack Obama nominated Yellen, the current Fed vice chairman and an architect of its stimulus program, to succeed Ben S. Bernanke as central bank chairman. Most Fed policy makers said they were likely to reduce the pace of bond purchases this year, according to minutes released yesterday of their last meeting, which took place before the U.S. government partial shutdown started.

US Debt limit

U.S. lawmakers for the first time yesterday embraced one possible path out of the fiscal impasse – – a short-term deal to avoid default — even as they remained far apart on how to make it happen.  The sticking point remains clear: House Republicans prefer to attach policy conditions to a deal, and Senate Democrats are dead-set against them. Any deal also would require finding a way forward that allows both sides to declare victory, though their deep differences make such a compromise difficult.

Also, the parties must resolve their related fight on ending the partial government shutdown, which only adds to the stakes as the standoff drags into its 10th day.

“We’re not going to vote against making sure that America pays its bills,” Representative Steny Hoyer of Maryland, the second-ranking Democrat in the House, said after leaving a meeting with President Barack Obama yesterday. “We think it ought to be longer-term.”

Obama has already said he could accept a short-term deal without policy conditions. The U.S. is entering the final week before it runs out of borrowing authority with a flurry of activity. Lawmakers are looking for a way to break the deadlock that has brought the country into a partial government shutdown and close to the $16.7 trillion debt limit.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I see some continued bearishness despite what looked like a stop killing spike down at the close last night. in a similar vein to the Dax prediction above, I think the FTSE might dip from the 6380 area to test yesterday’s low at 6316, however if that breaks it opens up 6300 as the round number support and 6280. A break through the 200 ema area at 6382 will invalidate the drop potentials and we could then be on for a test of the top of the 10 day Bianca channel at 6400 and the 20 day at 6456.  Today’s pivot is 6342 so that may act as support for a while on any drops. Looking at the 30 minute chart there are a few resistance’s around the 6380/90 area hence why I think the bulls might struggle a bit there, certainly initially.

126 Comments

  6. Well, 6385 short didn’t work, 6390 short worked to cover lost short from 6385. Will it go short or it is another long trap for shorters?

    1. The key will be tonight – if the US rallies into the close then it will be pretty clear that the expected deal is imminent.

      Cast your mind back a few weeks when the Dow was at similar levels. We had a long weekend coming up and an attack on Syria looked pretty nailed on. The Dow should have tanked at the close – instead it rallied about 75 points. Over the next couple of days Russia brokered a deal with Syria and the Dow then started its run to 15,700. Overdone and not expecting the same this time but a move to around 15,300 by year end is a comfortable level for the Dow.

      1. I’m getting ahead of myself……don’t know why I thought it was Friday…..been a very long week already haha. Either way look at rallies into the close as a good turning point.
        Yesterday the Dow faded into the close as it has done most days in the past 3 or 4 weeks.

    1. Gave up on this short, Senu @6401.5. I don’t like shorting when price is sitting on 10 MA and pushing to the top of the channel. If price would be coming back to 10MA I don’t mind to risk some short, but not now when we crossed R2.
      However it’s imho

  9. Good rule to have on a trending day if market going up, dont short and guess the top, best to short on weakness…. Having said that I have closed longs @ 6386, just shorted FTSE @ 6400.3 , hedged with long on CAC

  11. Ahwab, have you closed your longs @ 6384, as mentioned last night or holding it ;-)… good trade though. cheers

  13. If I had my longs taken 2 days back, I would have booked profit … unnecessarily averaged and booked heavy loss….

  15. closed long at 6400 from 6340.

    Hope you didn`t get caught out al, as readying itself for another drop i reckon.

  16. Too many shorters out there, so dragged out the bullishness just to knock out a few shorters at the 6400 imo.
    We`ll see what happens when DOW opens, might get a drop to end the week negatively into tomorrow.

    1. i’ve hardly traded this week. i’m too nervous since breaking-even, maybe i’m maturing as a gambler. small shorted placed.

    1. ahwab, i was waiting for you, otherwise i wouldn’t have closed by short in loss (shorted @ 6403). bad luck

  18. These days really annoy me, slow movement in one direction, and you see 10-15 point drop you think reversal, but no =/
    The US budgets talks just gave some breathing space, 100 point recovery bit too much imo. Looking to see 6370 at least my 4:30, from then on 6310 =)

    1. Oh, I didn’t see this message Senu. Was busy increasing my bets and pulling my hair (only joking). No, I was hoping for a bounce off 6398 but it deeped to 84, annoyed my to bits. I averaged down to 6392.3 and when it reached – I closed and little fraction twitched and I still lost 7 quid. I was completely mad and angry. And a second later it jumped to 98. I was so upset so took long 6401 (or maybe a couple of trades like long then short, can’t remember, but I see a couple of losses in between) and it started finally going, really nervous £12 pp quickly setting SL 6396 just in case and I closed on 6410 cos it covered my losses and I was under pressure and didn’t want to lose what I had. It wasn’t a trade with target, it was who knows what… Well, I am detaching myself from the platform today. Not a single bet more.
      But the target 6423 R3 would have worked as I thought it would.

      1. Plus CityIndex charts started lagging and price changes on tickets , had to display one from Spredex. that was utterly annoying

  25. I know most are very short-termist here given that this a day trading site. Timing is key – so it is worth keeping an eye out for data releases.

    NEW YORK–U.S. stock futures pares some of their sharp gains, which were sparked by signs that the stalemate in Washington was easing, after jobless claims rose more than expected.

    About 60 minutes ahead of the open, Dow Jones Industrial Average futures climbed 98 points, or 0.7%, to 14825. Just prior to the release of the data, Dow futures were up 107 points.

    S&P 500 index futures gained 13 points, or 0.8%, to 1662 and Nasdaq 100 futures rose 26 points, or 0.8%, to 3159. Changes in stock futures don’t always accurately predict stock moves after the opening bell.

    Initial claims for jobless benefits in the latest week rose to 374,000 from an original estimate of 308,000 the week before, compared with expectations of 312,000. Jobless claims can be reported during the partial government shutdown, which has entered its 10th session, as the data is mostly compiled by the states.

    The markets got an early lift on signs that the political impasse of government funding may be nearing an end. Rep. Paul Ryan of Wisconsin, chairman of the House Budget Committee, has outlined a plan to fellow conservative Republicans to raise the debt limit for four to six weeks, as part of broader deficit-reduction talks, The Wall Street Journal reported.

    President Barack Obama will meet House Republicans later Thursday, after meeting with House Democrats on Wednesday, in an attempt to break an impasse over government funding and raising the nation’s borrowing limit.

    Through Wednesday, the Dow had lost 5.6% since closing at a record high of 15676.94 on Sept. 18, but was still up 13% for the year.

    -Write to Tomi Kilgore at tomi.kilgore@dowjones.com

  27. Got it. Won my money and a bit on top. Finished today. Quadruple stake payed off in the end. Long from 6401 paid off.

    1. 23 trades today. It is my record for over-trading. Complete insanity. Maybe this drilling noise gets on my nerves.

  32. The Dow may keep flying today and tomorrow – if we can finally get a deal. I have revised my year end expectation. I think 15,400 is comfortable. On the FTSE that would equate to 6600. Think that is pretty conservative.

  35. great stuff hey…! ftse gets you sucked into going long cos you think it’s “flying”, then it pulls the plug….!

  36. yea the ftse has been awful also weird correlations to the gbp. Old correlations not holding intra day

  40. Got my points back after a 10 point scalp, market is fluctuating like mad. Done 2 trades to finish day interesting what tomorrow holds.

    1. Still expecting the weekly candlestick to be negative, highly doubt it would reverse, but who knows…?

      1. Closed out at 52, lost 12 points, bstards are going to try end the week on positive.
        Ridiculous today

  46. Not sure of the basis for shorting. If kicking the can down the road comes to nothing so will the rally……..but not today. Ride the wave up today……..but keep an eye on the closing minutes on the Dow tonight.

  48. Not today Tan. As I said buy the dips. If you had got in at 6338 -yesterday’s close you would have been sitting on a tidy sum today. Did you follow my advice yesterday?

    1. Surely you were talking about long term prospects as today caught quite a few people off day trading. Who knows what tomorrow holds we might see a drop? But I for one prefer to trade the trend, although I went against my better judgement today and try to second guess the market. Well done on your long though, will you be still be holding that if you saw a possible drop again, or just leave till end of rally as you intended. As these situations I suppose suit you very well =)

      1. Swings and roundabouts. Yes today was a surprise but expect such volatility when political events take centre stage as things can change very quickly and overnight. Yes big question as to whether this rally can be sustained…….the deal in all reality doesn’t anything more than a delaying tactic. So definitely buy the rumour sell the news .

        As for me I managed to offload my 6338 long at 6440. So I have my underlying long which was at 6462 originally…….now effectively 6425. I will keep that till year end and buy the dips at 6338 and 6222 if I need to.

        I think days like this are very tough for everyone….but probably daytraders in particular as tend to prefer to tight ranges.
        Good luck tomorrow……

        1. Actually, today was no surprise.
          Doomberg put out last night (late) that Janice was to replace big Ben. Janice has kindly said that QE was to be continued. Add that to the news yesterday of another 25 hours (oh, woops, Days) and we got a big rise. Yeah more Qe, no more worries of debt tomorrow.
          Just another day as an Ostrich.
          GLA

  49. Good luck C59.

    Tan. Yes it can…….but what is your timeframe……seconds, hours, days?
    It wont hit 15200 today in all probability. It can tomorrow if a deal is struck. But by the end of the year it will be in excess of 15400 so its all your timeframes and risk management.

    1. John – no
      Dax dropped about 250 points in last few weeks while DJ dropped 600 odd. I understand your reason for it to drop due to high, but very risky imo. Not saying it won’t but i’d make sure you got plenty in your account or tight stops.
      When you look at the daily on the DJ it has about 900 points to go to hit the top of the daily trend line. So if the Dax follows the DJ up, I’d guess 600-700 points up to go. There will be retraces ofc.
      GL

    1. It`ll be quiet tomorrow with so much rise, it will possibly carry on with a slow rise or we might see a sell off tonight/morning.

  56. The crooks just dropped the dow 110 points to book their profits from the fake manufactured 320 dow rally…have a look at the spike down at 11pm on both the dow and ftse…lol..

  57. They did it so fast…dropping the dow by 110 points and bringing it back up immediately…out of hrs..lol..

  58. Took a trade on both ftse and dow today…got stopped out on both…net loss today £515…not good…shorted at what I thought was the high’s…dow at 15000 and ftse at 6440…bloody hell…this short squeeze has to be one of the biggest I have seen since August 2011. Dow up some 450 from lows of 14700 a few days ago…even yesterday after close it was at 14970!

  59. Very very angry that just 2 hrs later I could have had most of my £500 loss back with the spike down at 11pm. Stopped out in the dow at 15115 and ftse at 6465

  60. From experience Flash stops on quick rapid spikes like at the USdow close rarely get hit at your limit…too much slippage…

  61. Ray – Daily chart on DJ was on a bottom yesterday. Could well go another 900 points up to top of the trend. I’m not saying it will, but you need to be aware of it. GL

  62. Have not traded dow for few weeks now…should have resisted the urge to short it when it was up over 200…silly me!..

  64. Thanks Flash…doubt will focus my efforts on dow at the moment…too much whipsaw action…a little trading on the ftse occasionall,but more equities…

  67. A couple of the shares im in and looking good atm are JSJS and QPP. RGD look good still but you would not be getting in at the bottom. (Nick, I told you to get into RGD, hehe, just got RNS today stating 2 new contracts one of which is to supply ASDA).
    Also hate to sa it cos im short on them, but for the next few weeks I expect JDW to rise. They have it a bottom on trend lines and due Divi on 23/10 so id expect a rise until that date.
    GLA

  68. Ray – sorry to hear about your loss. Buy the FTSE whenever below its September close of 6462. 6435 and 6335 are decent entry points. Email me anyway.
    Take care mate.

  70. Tan – It’s obviously diffilcult to say with a fast moving political issue. Personally as I said a few times I want to be long in this market in the medium term so I’m looking to buy dips to 6435 and 6335 initially. However if you really want to day trade then I suggest trading this morning but getting out by midday before the US wakes up. There will be further political developements today……….beyond that no one outside the Washington bubble can really predict.

  72. Haves you are right very difficult to say. Loss to much.
    I know long term uptrend. Very difficult to get few £.

        1. Yes my inital position was the September close of 6462. Anything below there is a buy and hold till the end of the year for me. However looking at the fibs – 6435, 6335 and 6225 are good entry points if there are further dips (which is to be expected) along the way. Hope that helps.

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