Rise to 5970 then drop, still not overly bullish. Maybe 5750 yet?

Support 5935 5917 5910 5898 5895
Resistance 5971 5972 5973 6014 6024

Market Summary for 23rd February 2016
The market got off to a reasonable start to the trading day but fell back on the Wall Street open due to a fall in oil prices and some poor figures from commodity companies.
These sectors have risen quite sharply over the previous week so traders were quick to profit take and book short term gains.
Some of the poorer performers from yesterday did well but the commodity and oil sectors were amongst the biggest fallers.
Frustratingly was the fact that my short order was 6025 to target 5960 or lower, and the high was….. 6025.1 thus just missing. Especially frustrating as the resistance level I had was actually 6027! Still, the late long managed to gain some points so wasn’t all bad.

US & Asia Overnight from Bloomberg
Appetite for equities continued to sour in Asia as oil’s drop and a revival in demand for low-risk assets saw stocks from Japan to Australia decline with emerging-market currencies.

Asian shares fell the most in a week as a resurgent yen weighed on Japan’s Topix index, while mining and energy shares drove a 2.1 percent retreat in Australia’s benchmark. Crude fell toward $31 a barrel in New York after sliding last session as Iran’s oil minister ridiculed a plan forged by Saudi Arabia and Russia to lock production at January levels. Gold built on Tuesday’s advance, while yields on 10-year Japanese government debt fell back below zero. The pound slipped below $1.40 for the first time since 2009 as Malaysia’s ringgit dropped by the most in a week.

Oil’s retreat is weighing on global stocks along with concerns about growth in China, the world’s second-biggest economy. A gauge of expected volatility in American equities jumped by the most in two weeks on Tuesday, a sign investor sentiment remains fragile amid turmoil that has persisted in global financial markets since the start of the year. The risk that U.K. citizens will vote to leave the European Union in June is weighing on the British currency.

“It will take some time before market sentiment does turn,” Kerry Craig, global market strategist at JPMorgan Asset Management, told Bloomberg TV in Melbourne. “It’s still very pessimistic. Most investors are very risk averse. You need catalysts or triggers such as an oil price stabilization, clarity about what the Fed is actually going to do and what we see happening with the Chinese currency and economic data.”

Stocks
The MSCI Asia Pacific Index fell 1.1 percent as of 2:36 p.m. Tokyo time, with raw-materials producers leading the drop. The Topix slipped 0.7 percent, building on Tuesday’s retreat as the yen solidified its gains. MSCI’s All-Country World Index declined a second day in early trade, losing 0.3 percent following last session’s 1.1 percent drop.

Australia’s S&P/ASX 200 Index also fell as BHP Billiton Ltd. — the world’s biggest mining company — tumbled 8.2 percent, the most since 2008. Hong Kong’s Hang Seng Index fell 1.5 percent as PetroChina Co., the country’s biggest oil and gas producer, declined 2.9 percent.

“Oil prices are back in the spotlight,” Jason Wong, a currency strategist in Wellington at Bank of New Zealand Ltd. said in an e-mail to clients. “We think that it’s inevitable that oil prices move back below the $30 market soon as supply continues to outstrip demand and inventory levels are very high,” he said, describing market sentiment as “gloomy.”

Futures on the Standard & Poor’s 500 index declined 0.1 percent, following a 1.3 percent retreat in the U.S. benchmark.

Currencies
The yen gained as much as 0.4 percent versus the dollar following a 0.7 percent advance on Tuesday. The currency, which typically moves in the opposite direction to Japanese stocks, is the best performer among major peers this year as gyrating equities and concern over the global economy bolster demand for haven assets.

The ringgit fell 1 percent as lower crude prices dimmed prospects for Malaysia, Asia’s only major net oil exporter. South Korea’s won weakened 0.3 percent.

The pound slid for a third day, touching $1.3965, its lowest level since March 2009. It also fell against the euro. Sterling has been falling all week after London Mayor Boris Johnson, one of the nation’s most popular politicians, said Sunday he’ll campaign for the U.K. to exit the EU in a referendum.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, added 0.1 percent in a third day of gains.

Bonds
Yields on Japanese sovereign notes due in a decade fell by almost one basis point to negative 0.003 percent, as rates on similar-maturity Treasuries held at 1.72 percent following last session’s three-basis-point drop.

“It all goes back to the recent volatility in inflation expectations,” said Jim Vogel, head of interest-rate strategy at FTN Financial in Memphis, Tennessee. Falling oil “puts pressure on shorter-term inflation expectations.”

Commodities
West Texas Intermediate crude oil futures fell as much as 2.5 percent in New York and were trading at $31.17 a barrel, after sinking 4.6 percent last session.

The proposal to cap output at January levels puts “unrealistic demands” on Iran, Oil Minister Bijan Namdar Zanganeh said Tuesday. Ali Al-Naimi, his counterpart from Saudi Arabia, said high-cost producers should bear the burden of reducing the current surplus in production. U.S. crude stockpiles rose by 7.1 million barrels last week, the industry-funded American Petroleum Institute was said to report, with government data on supplies due Wednesday.

Gold for immediate delivery gained 0.1 percent, extending Tuesday’s 1.5 percent climb, as investors favored the safest assets. Industrial metals retreated, with copper, lead and zinc all losing 0.9 percent in London. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Todays pivot is at 5971 and we also have a cluster of other resistance levels (200ema and T3 coral trend line) here on the 30min chart so I think if the bulls manage an early rise to this level then it is worth a short. Above this then 6024 looks worth another go, which would double top with yesterday and is also resistance on the 2 hour chart. I am not feeling as bullish as some commentators at the moment and as mentioned on Monday would like to see a bit of a dip back towards 5750 which we can then rise from; I think the bounce from 5500 came too far too fast really. For today I have a fairly simple plan which is an initial rise then a dip down, maybe even as low as S1 at 5917. Hopefully today we won’t miss an order level by 0.9 points before a nearly 100 point drop!

160 Comments

  1. Morning.
    Chalk up another win for that favourite set up that I’ve mentioned before, where a weak overnight is bought back up pre market to the previous day closing levels (962) for a second bite at the short cherry. Hung on for the top part of previous low support at 5916/20 to cover for a nice start to the day.
    I keep saying “crucial”, probably because I’m fed up with looking at red ink, but with three trading days of the month to go, these levels are really important imo.
    If 9300 DAX and 5910 FTSE are broken for a couple of consecutive hourly candles then the next targets are another -200 DAX -100 FTSE -250 DOW.
    If they hold, then nothing’s broke on the upside and those that believe this is only a temporary pull back before the moon will be in the driving seat again.
    Classic stuff.

    1. Nice 0850 exhaustion set up on 1min off 40 for a short for another go at lows while it’s vulnerable. B/e stop now.

      1. Took 48 on that, looking for a re entry on s/t oversold bounce, maybe to 9320/5920 if/when the dust settles

      2. Morning tmfp, not sure I’ve understood anything you’ve said above(!) however – Saw the open at around 60, desperatly wanted to sell it but seemed stupid having ducked the opportunity to sell it 100 points higher therefore bought a cheeky VIX at 22.1.

        2. Yeeha, I love the small of burning indices in the morning 🙂

          A bit of a watch your fingers day for any bulls I think, because when is it cheap?

  4. Hello Guys, I am new here.
    Though I will just come by and say hell0 to everyone!
    Seems like it’s finally falling apart, I am also running a short from 5950 this morning and long at 5880.
    GL All

  5. All GONE. That’s it. I’ve just opened my computer. Absolutely devastating. Oh well, I may as well watch some movie.

      1. School run. I rarely manage to look between 8-9. I always hope for the move after 9 (and I would have caught it at 9332 maybe, but it took me longer today. 🙁 Who would have thought that the price would fall like a brick?

          1. “All gone” means, when I see a fall like this I understand it’s late to short and early to long. So you are out of action. And also that I will not get a good price when I short again later in the afternoon. Basically you are left picking leftovers.

        1. I don’t understand either Jack – what do you mean “ALL GONE”.
          Do you mean you’ve emptied your a/c ?

          2. Oh No. Now I get it: it made an impression that I lost the acc. Well I can understand as it happened to me in the past. I meant the Opportunity gone.

    2. Don’t worry Jack, there’ll be more opportunities tomorrow or later in the day. You can’t trade ’em all

  6. Another leg down from this miniscule bounce to 80+ , maybe short term exhaustion to 60? Bit out there on the r/r for a short though

        2. It’s a bit of an over exuberant flyer, the possible window for the last leg down seems to have closed, so half expecting to be stopped.

          2. Survived that slo mo attempt at stopping out, looking like a bit of momentum gathering again but took 10 for the hold.

          4. Morning Hugh
            Still waiting for a decent bounce to short @ 5900!
            Hoping for a third attempt to break at 870 and then target would be 1st 5850 and then 5820.
            GL

          7. Yes another good shorting chance, will 75 hold 3rd time? doubt it if DAX can’t retrace asap
            Bad trading but added at 78 av now 85 and stop to there, next 15 minutes should tell

  7. So looks like 5875 and 9220 have appointed themselves as support for the time being. Not going anywhere upside until 5900 and 9260 break and hold.

    1. Lol, he does talk a good talk, I’ll give him that. Looks pretty good for 81, must be that hard life scrimping and saving.

      1. John “the US dont extradite”McAfee at 70 impresses too,he’s running for President as a Libertarian as well,not a lot of people know that.

        1. I followed McAfee’s Central American exploits, very entertaining, especially the dog shooting and teenage harem.

  9. Morning all

    Hammered the binaries on the Dow last night. Managed to get £96 from risking £4. Think the market cleared my target by half a point. Very addictive, gonna have a break now though.

    Si, saw your post last night, you getting closer to breakeven now?

    1. Long DAX 9211 as I thought it would hold the 9200 level but it obviously has not. Remains a weird one this DAX but if the US is not to messy I would imagine it will climb back over 9200. Over next few days it could get to under 9100 I think before a rise again, like Nick predicts on the FTSE.

  13. Another lovely day so not much communication from me but after a sweaty few days now at b/e after dividends (last week and the expected few points tonight) and general mucking about. Would like to see Nick’s 5750 before I start closing but I know tmfp will be along to tell me that is right in the middle of nowhere!

      1. To be fair I think I’d comfy being short down to 5500 but, like you, am very much a “didn’t make a loss by taking a profit” sort of chap.

        1. Don’t want to piss on your chips chippy, but a bloke I very much respect for his track record doesn’t think we’re going much lower than ~5820 (S&P 1882) before the uptrend resumes.
          It’s giving me a bit of pause for thought…

          http://i.imgur.com/mTCxGlA.png

          1. Interesting, thanks, yep will have a bit of a re think with that in mind. After I typed the above I did close the VIX for a whole point. Maybe I’ll have a trim once the yanks come in.

  14. FWIW re the Bank shares conversation,just bought half a position in LLOY 0.62.39 and a bit,other half if lower – probably tomorrow when the figures come out 🙂 dont think they will go away so happy with the averaging down on a plan to hold 2yrs,resumed divs to cover costs & a bit, Govt wants 74+ to sell,recent low 56, R every few pence up to last yrs high 89,below 56 is may 2013 47.

    1. 62.62 so holding up a bit better than most other banks but 2 hrs to go and nothing in the trade history that looks like “educated” buying,so dont expect tomorrow will lift the price.

          1. was looking at 15 min with your RSI 10 on Dow,made it look like they could be a bit higher in an hr until the 13.15 bar closed.

          2. Hi WSF, Dow is definitely heading up to 380-400 on RSI 10 at 15 min and that should give us a decent area to short again on FTSE at 900-920

          5. Well tmfp, I guess I shouldn’t use the word ”definitely” – But I am looking at 15 min RSI (10) and can see a small bounce from Yankies to 380 and then I will ready with my short gun lol!

          6. Fair enough, if you’ve been reading my stuff you probably know I don’t put a lot of store in non cash technical data.
            All I can see on the DOW rsi is downward momentum, maybe slightly oversold in the hours.
            We shall see shortly, look like opening bang on that support….
            Just took 10 on half my last bounce short @85, running the other bit for opening weakness.

        1. We did our bit continuing on from the overnight, now it’s up to the DOW and we will ghost it.
          The next support is at the mentioned 16075 which would indeed put us around 5820, which I think would be a good partial profit take area in the short term.
          We have just sort of bounced off 850 which has been mentioned as support but I don’t see anything magic about it.

  20. Ooh dear, this looks nasty. Didn’t get to read that blokes stuff until just now, will think about it after this leg. Shouldn’t have closed that VIX, bugger.

        1. That 10 pt DOW gap up and subsequent 40 pt candle look like someone’s just fired up the algo machine, maybe big volatility coming.

          3. Ah, that’s what it was, thanks WSF, I didn’t even know there was such a thing.
            “507 million barrels in stock” wow, was it you that said that charges were going up for storage?

          4. Dont think that was me,but Oil storage is certainly a growth industry.Just trying to work out how to short Canada cheaply.Wonder if the recent Oil news doesnt give Yellen the get out she needs,theres a rumor that carney wants rates down too 🙂

    1. If it’s as WSF says, on the back of some oil stat, I’d expect normal service to be resumed soon.
      What’s your plan, going to grab b/e with both hands?

          6. Sure, the stake is whatever you’re comfortable with, I just meant you were getting a bit rabid, on smaller and smaller moves. Done it myself, can end in tears. 🙂
            Got a bit of a short on at 62, funny old DOW atm, but looking for 15 minutes of weakness here, stop 72.

          7. I understand tmfp and appreciate what you are saying.
            It’s just very tricky to play with bounces otherwise I normally target 10-20 pt on each trade.
            For-example I had a decent trade this morning short from 5950 and took +65 but then again I was waiting for a bounce to 5900 and target was 5850 and then 5820 but ofcourse that didn’t work. So here I am scalping from bounces 🙂

  26. MHH nearly on us, time flies when you’re having fun…
    As most of today’s selling would have been bull liquidation, I don’t expect much short covering into the close, or much buying just for 6.3 divi, so, quite bearish really, keep selling bounces and cover shorts on weakness around 1627 sounds like a plan.

  27. took 10, a little oversold on the DOW and maybe a bit of divi buying will probably hold 50 into the close.

  28. So, its coming good. My short is back in profit thankfully. Probably short term oversold, but on my daily chart, we’ve just about crossed the 80 mark on the 14 3 5 stoch, and its a long way to the bottom of the channel. Hope I’m right. At least if not, I get to break even now. Someone’s comment about decay on the triple short etf is dead right though. Proved it today. My breakeven has decayed about 25 points in the space of six sessions.

    1. I’d have been in profit by now too if I hadn’t have sold some of my positions on the way down! (As each one was turning positive). So my avg now is 16064. Come on, keep going Mr Dow.

  29. DOW now back where it was before the magic petrol stat. 50 points of bs delivered to your door. Sooo predictable….

  30. No real melty melty on the DOW so far but hardly inspiring either, I’m off out now leaving a 5816 limit on 50% of my short, just in case.
    Catch you later, cheers!

  31. This is the kind of mkt action that ends up with over leveraged Pension Funds running positions with no stop losses.
    Oh well,Bears make money,Bulls make money,repeat over shorter and shorter timescales.

  32. yes! I held firm and bought and bought more on DAX ending at close £120 a point at 9161. And with a little help from my Saudi friends we are now back in the black for the day and rising!

  33. Hi Chaps –
    Made a real mess of things today !
    Don’t want to talk about it – so don’t ask .
    See ya all tomorrow…

    1. It happens Hugh and I made a right pigs ear of it too. Some days best go have a drink and forget about it.

      1. Yes it’s just the flip side of the days when everything goes right and you do multiples of your average,they balance out in the end.Dow seems to be pushing at the 50% retracement level now.

    1. Maybe, we are now heading to 6300 and dow to 17300-17500. End of bear trap for a while and then pull back. It’s really depend on oil for now I guess!

      1. Bullard is talking later,some NY Dinner thing,G20 on Fri,so who knows,dont think any of them will try to talk it down 🙂

          1. 🙂 I really am going to hang on to mine,maybe sell a few at 80,but I think with the Div and the security of the Govt “backing” its worth letting them run a bit.

  36. The yanks are going to push this through 16500 right before close. I love this stuff, oil baby oil. Gone from -80 to over +140 on the my DAX long. Just closed at celebratory 9300 and now for cheek sake long at 9297 again as the way this sh##t is going it will open at 9400. Nite nite all.

  37. Lol, welcome to the Wacky World of Index Trading!
    🙂
    A tenuous explanation for this rally from nowhere is the last minute cancellation of the NY Feb POMO buying of MBS’s, which was due at exactly the same time as the rise started (11.15/16.15 gmt).
    The theory goes, as dealers were expecting a fixed income bid from the Fed which didn’t come, they instead had to square off unhedged delta positions (options) by selling rates, which in turn fired risk levels on algo complexes, which in turn drove a momentum ignition in ES (expected shortfalls), VIX, bonds and good old USD/JPY……as well as equities.
    (And I’m not saying any of this as an excuse because it went up and I’m a bear).

    This may or may not be a fix or manipulation per se, despite the Fed involvement, but is a plausible indication of the dangers inherent in trillion dollar derivatives and autorun algorithms.
    When we think about Black Swan events wiping out our margins or the world as we sleep, they are traditionally wars, natural disasters, that sort of thing.
    Derivative “accidents” like this might possibly be, are far more likely.
    Consider: Glencore, teetering just recently, has $100billion of derivative exposure.

    Once I close this position I’m not opening another one, I’m too old for this crap.
    I do not enjoy going out for dinner and coming home £12k worse off because of some f*cking computer program….I enjoy scalping far more and, in points terms, make nearly the same amount for far less involvement.
    Just thought I’d share 🙂

  38. This out of hours “rally” a complete joke – up 1.7%! So recovered the whole of the days normal trading drop – where it was unable to put in any sensible rally. Struggle to see it opening up by that much at 8am

  39. I hear you tmfp, been shorting from 6030 all the way down to the break of 5900, buying 80% of each short back when it moved 20+ ticks in favour but leaving a foot-in on all 15 sells. To cut a long story short, made roughly £5000 on the way down but all the 20% foot-ins I had running are now nearly £5000 underwater due to that ridiculous last hour rally-seems futile sometimes so scalping seems to be the only way! Night and take care. GG

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