Rise to 6040 today, then dip back. Can the bulls hold above 6000?

Support 5969 5956 5909 5895 5854
Resistance 5996 6043 6044 6078 6181

Market Summary for Friday 19th February
The FT100 fell back slightly on profit taking and also a reaction to a fall in oil prices which was triggered by a record build in U.S. crude inventories.
Also there was some caution ahead of the EU summit where the UK’s membership terms were being renegotiated.
The pattern was of a slow slide down during the day but this was minor compared to the gains of the week.
Some buying came in as the market came to a close (on the EU summit news) which helped the FT100 close down 0.36% for the day.

US & Asia Overnight from Bloomberg
Asian stocks rose, reversing earlier losses as a weaker yen buoyed Japanese equities and oil rebounded above $30 a barrel, lifting energy shares.

The MSCI Asia Pacific Index advanced 0.6 percent to 120.25 as of 1:44 p.m. in Tokyo after jumping 5.9 percent last week. Consumer-staple and industrial shares led gains all but one of the measure’s 10 industry groups — utilities — rose on Monday. The regional benchmark index remains 8.9 percent lower this year as a combination of tumbling oil prices, concern about the slowdown in Asia’s largest economy and a selloff in bank stocks sent a measure of global stocks into a bear market.

“People are willing to take risk again,” said Karl Goody, who helps oversee about A$10 billion ($7.2 billion) as a private wealth manager at Shaw and Partners Ltd. in Sydney. “People are looking at the selloff this year and saying: enough is enough, there’s been enough pain now.”
HSBC Holdings Plc, Europe’s largest bank, reported a surprise fourth-quarter pretax loss of $858 million during the lunch break in Hong Kong trading. The shares rose 1.5 percent higher before the break.

Japan’s Topix index rose 0.5 percent, reversing losses of as much as 1 percent. The yen fell 0.2 percent to 112.86 per dollar after climbing 0.6 percent last week for its third straight weekly advance.

Australia’s S&P/ASX 200 Index added 1 percent. Brambles Ltd. surged 8.7 percent after the supplier of warehouse pallets reported profit and sales that topped analyst estimates.

Singapore, Korea
Singapore’s Straits Times Index gained 0.1 percent and India’s S&P/BSE Sensex Index rose 0.3 percent. South Korea’s Kospi index retreated 0.1 percent. New Zealand’s S&P/NZX 50 Index was little changed. Markets in Thailand and Sri Lanka are closed for holidays.

The Shanghai Composite Index rose 2 percent, on course for the highest closing level in a month, amid speculation the new securities regulator chairman will take steps to boost the world’s second-largest equity market. Hong Kong’s Hang Seng Index rose 1.1 percent and the Hang Seng China Enterprises Index, a gauge of mainland stocks listed in the city, gained 1.5 percent.

CSRC Boss
Xiao Gang, who had been chairman of the China Securities Regulatory Commission since March 2013, was replaced by Liu Shiyu after last summer’s rout wiped $5 trillion in market value and dented confidence among the nation’s 99 million individual investors. The government has had to step in to steady markets and restrict share sales after unchecked leverage drove an initial surge in local equities before a collapse in June last year.

Futures on the Standard & Poor’s 500 Index climbed 0.6 percent. The U.S. equities gauge ended Friday’s session little changed.
The pound dropped as much as 1.2 percent against the dollar after London Mayor Boris Johnson, a well-known political figure, said he’ll campaign for Britain’s exit from the EU in a June referendum.

Investors are awaiting the start of a Group of 20 meeting this week. Officials from the world’s biggest economies gather in Shanghai starting from Friday, with the weakening global-growth outlook expected to dominate the agenda.[Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have had a pretty decent bounce overnight as Australia and Asia have rallied, rising from 5915 to 5980 to set up the charts for what would appear to be a bullish start. We have the daily pivot at 5956 for initial support and if this level holds then I can see a climb to the 6040 area this morning. The bulls will be desperate to regain some ground above 6000 again, having relinquished that last week after bringing it up from 5500. The shorter time frames (10mins) are pointing to an initial dip as the moving averages cross over to bear, so it will be interesting too see if the early support does hold. The 2 hour chart has gone bearish at the moment, with resistance also showing at 6040, so I am thinking this week we get a bit of consolidation, dip to 5850ish at some point to set up a spring board for a push higher. I had mentioned that I was looking for 5400 as the low, but I think 5500 is it for the moment. We also have to see how the FTSE will react to the EU referendum news that came out over the weekend. Going to be an interesting vote that one. So, feeling for today is optimistic and therefore slightly bullish with eyes on 6040 if it get there to see what happens.

61 Comments

  1. Morning all,nice smooth trend last night in every mkt that was shut 🙂 seems to have slowed down a bit now,seems to have halved the pace,still looks like another good week in the offing and G20 at the end as an opportunity for Finance Ministers and Central Bank people to get on TV and say stuff to be important,makes a change from the U.S hogging that role with their endless scheduled News releases.

    1. Obviously a close + 16500 adds weight to the double bottom Bull theory with the Dow that has had everyone excited for the last 10 days and that Cup and Handle on the 8hr Dax now looks like it was what it looked like.Be interesting to see if it turns around before 17k or 17050 or not.

        1. A break of 550 looks pretty inevitable on the DAX, maybe to 590…A few Ek’s worth of Bayer should do it.

  2. Morning.
    Still marking time near the trendlines/resistance, looks pretty quiet this morning, just now appear to be girding our loins for another try at breaking recent 6030/9550 highs.
    Taxing my brain trying to work out a system of 1min rsi trading with a h*dge on the 5 minute binaries, keeps me amused anyway.
    Macro, it’s who’s going to blink first really, I think I’ve finally decided on my short stop at 6141 daily cash close.
    I wonder what Cameron did to BoJo at prep school, they really don’t like each other do they? Is it something to do with pigs? (Deliverance reference).

    1. Morning tmfp, agree it is who is going to blink (if anyone). As you say, feels like low volume squeeze and the World, his Wife and the whole of the rest of his family is short (IG have it back to 59% odd shorts having started the morning at 52% odd). With all that in mind I re-shorted the ones I covered on Friday at 6000 on the open! Happy days, 40 points on 1/8 of the position. I suppose it helps the average!

      1. Hi chippy, that’s the way, keep chipping at it!
        Not that the IG or any other positional aggregates are that important, but 59% isn’t exactly the 3 W’s, it’s only remarkable when we get up to the ~80% levels that the Shoeshine Boy Effect kicks in.

        1. Hi tmfp,yeah that Schrödinger’s cat,is he alive or dead and bouncing 🙂
          Re the basic 90% wrong and extrapolating from it with client positions there is also the way people get dogmatic about being right and anyone else is an idiot etc etc and they have all been on the Bear side recently,so maybe with that kind of “retail” money in a trade that counts as an indicator for the other side too.

    2. Talking about Cameron and Boris I think Boris is just fagging for Murdoch because he wants to be P.M.Murdochs US papers were saying Britain should leave last week,think it was WSJ that had a serious piece.Not ruling out the Deliverance thing though 🙂

  3. Long steady overnight rise on all indices. Normally consolidates at current levels but I think that’s it for bulls today. 6020 short

  5. This 5 min binary is mental, just made £192 for 0.5 of a point 🙂
    When it’s quiet like this trade the out of money stuff against the 1 min rsi seems to be the plan.

    1. Morning Chaps – Been enjoying a bit of “time out”.
      tmfp – I’m thinking that’s the ladders – is that correct ?

      2. Hi Hugh, welcome back, same here.
        No, not the ladders, don’t know what happened to them, it’s three prices, opening and +-4 atm. No a particularly good day to trade them as movement is weird (look at that DAX 1min!) and volume light, but my approach has been look for cheap buys and dear sells depending on 1min rsi, mainly been opening early in the 5 min period and close in last 30 trading seconds, only run a couple to the end. Made a few bob.

        1. Don’t understand what you’ve typed here ..
          “it’s three prices”
          doesn’t matter – just at the minute – perhaps later when you’ve got a moment…

  6. Morning all

    I’ve gone long again at 6000, with the stop at breakeven and target 6100. Another contrary trade. That downward trendline is just too neat and obvious.

    What did Boris say to Dave yesterday? It’s not me it’s EU! I thought the market would take a little more notice of the referendum, but I guess it assumes we’ll stay in. There’s an IG binary for the referendum at 65.5 – whatever that means! Still trying to get my head around these.

        2. Yes, Eric Anderson in the U.K made £ 84,651.51 from an initial 500 pound investment last November,thats less than most of the Traders on Twitter and he wouldnt mention the 51p if he was just making it up 🙂 🙂

          2. 🙂 Charity ? I’m sure that isnt from Millionaire O’Doherty mentoring.Theres old Bath Buns in Tescos on a Sunday morning for that kind of cash.

  9. the greatest benefit out of a Brexit would be
    1. conservatives would sack cameron and a snap party election would be held
    2. giving boris the prime-ministership
    3. donald would win the presidentship across the pond
    4. they would have their 1st joint meeting and boris would convince donald not to build the wall along the mexican border
    5. they then issue a joint statement that us & uk would build a physical road bridge across the atlantic to bind the “special relationship”
    6. & they would “force” europe to pay for it, or they would divert the planes destined to bomb is to brussels
    waiting for ladbrookes to give me odds on this!!

  10. Hi folks. Been reading for a little while. I’m a humble dairy farmer attempting to swing trade etfs in my SIPP, isa and dealing accounts.

    Currently holding a large-ish average short in 3UKS from around 5910. The 14 3 5 stoch on the daily had been working OK lately in the down channel. Even though it’s showing in overbought territory, I’m starting to get pretty concerned this morning that it’s going to go quickly wrong.

    Any words of advice/comfort? Thanks

    1. Hi Cowboy, depends on how big your @£$£@$%’s are really! It has been noted on here that several people, myself included, are running shorts that are currently way “out of the money”. tmfp of this forum has a stop positioned at 6150 odd, I am just sweating it! It appears that we are on a low-ish volume squeeze. That said, where is the news going to come from to kick it down?
      For my money I think there is a correction due and Friday wasn’t a correction. I don’t know when it is coming so am happy-ish watching the bulls get out to play. By the way, I don’t understand charts so all the above is not scientific and shouldn’t be taken as…….!! Good luck.

      2. Sorry, forgot to say – 1. If you are losing sleep over it then cut it and have another go later or 2. If you have ammunition left and you are sure you are right then try doing a bit of top scalping. Again good luck with whatever you chose to do.

  11. Can’t believe I’m saying this….
    Hi Cowboy 🙂
    Persumably your hedging out a portfolio….& .your portfolio will have risen quite alot.
    My immediate thoughts were…
    1) There is a GAP to fill between 5735 -5787 – would be worth setting some Limits there.
    2) Start using Stops – it’s the only way to control stuff…
    …it”s difficult because you get drawn into trading one way or the other …..

    1. Thanks Hugh,

      You could well be forgiven for thinking it was a hedge. But since I only set up the accounts in the spring, and hadn’t accumulated very much at all due to reservations about the market, I have since been quietly liquidating holdings on the bounces since the summer. And here I am now playing with trading tools while I see how the bear takes shape.

      I take your point about stops, but have found this difficult to do, given that the trading hours are so short, and so much can happen during the US and asian hours.

  12. Well done Nick, that’s your 40 box ticked, now over to the DOW to see if they can keep things going on the long side.
    They should open comfortably above their feb 1st cash high of 510 so it would be reasonable to expect some Fomo buying and short stopping.
    Will be interesting to see how long it maintains for, but would be surprised to see anything but fast out of the blocks.

      1. LOL, yup all is rosy in the world now.
        My final short just triggered, my average now exactly 100 points under water. Make that 103… 🙂

        1. Just about with you tmfp, but holding back final sell, feels so squeeezy I might get ’75 tonight or tomorrow. I’m be a bit behind you on the average (5950?) but if I get ’75 will be with you at 5950. Let’s see.

          2. Hi Cowboy, yup I’ve sold into the last part of this recent rally, expecting/hoping that the down channel will continue/resume.
            I usually only intraday trade but every now and again take a longer view. This is my third big short recently, the other two worked out ok, fingers crossed for this one, will call it a mistake another +100 from here..

          4. Whats your thoughts on how I should set my chart up for this type of trade?

            I’ve currently got Stoch 14 3 5, MACD and RSI10 or 5. on the four hour, today’s rally is showing divergence on all three. Or am I see what I want to believe?

          5. Yes, this is a fairly important week.
            If it closes in the 6100’s, above the weekly downtrend and above the late January highs then technically there’ll be no more justification for being short in my book.
            OK, on monthly performance there are only tails under 6000, but the same could have been said about 6500 in late 2014.

          7. OK, so missed the ’50 and didn’t see ’75. Not really doing this very well today, better get on with my day job! Could someone let me know when it is either 6150 or 5700 please, cheers!

          1. Nice,have a good afternoon Hugh,just remember you explaining it to me with lower no’s on that range is all.

    1. Yes,this isnt really a good level for doing much on the Dow,be nice to see it come down a bit,but I expect it is an out of hours climb later.

  16. Quick round up of some FTSE Charts…

    FTSE Daily
    Perfect Touch of the Trend Line
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=vsbyyawcy55fxok4btaemo5hr&type=png&purpose=file

    FTSE 4 Hour Chart
    Looks a bit different to the daily.
    The issue is the MACD …to my mind a bit of a negative pattern
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=xpau5j1yv2dr1sxil510odu0y&type=png&purpose=file

    FTSE 3 Hour Chart
    Bearish divergence of Price/MACD more pronounced
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=0tkea4etp01wdopi0e90qe1c3&type=png&purpose=file

    FTSE 2 Hour Chart
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=w03urqobvit990ct79eaubecd&type=png&purpose=file

    FTSE 1 Hour Chart
    Any number of scenarios may play out.
    Some of the Oil major’s credit ratings have been reduced tonight but I’d
    of thought this was accounted for.
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=4catsj46kzlshbxlve25yr1ms&type=png&purpose=file

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