Rising to 6050, support 5800 today. FTSE prediction

Good morning.
Market Summary for Thursday
The FT100 opened a bit nervously but then ground its way up during the day with only a small retrace around the Wall Street open. The two main factors were a rise in oil prices which went above $30 for a brief time and the ECB indicating it may be willing to stimulate the eurozone economy again. Whether this is a rally in a bear market or the basis for a sustained recovery is unclear, so caution is still the key word. The best performing sectors were oil and commodities with “safer” shares being the least positive.

US & Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index rebounding from a three-year low, following a rally in U.S. shares and oil amid optimism that policy makers in Europe and Asia will step in with more stimulus measures.

The MSCI Asia Pacific Index gained 1.6 percent to 116.33 as of 9:15 a.m. in Tokyo. The gauge is heading for its third week of losses amid turmoil in Chinese markets and the rout in commodities that’s sent crude oil below $30 a barrel. The European Central Bank said it may bolster support as soon as March, while China’s vice president Li Yuanchao said the government is willing to intervene to tamp down market volatility. The Nikkei Asian Review reported that the Bank of Japan, which meets next week, is considering steps to counter the hit to inflation of crude’s slide.

“With further hopes for policy coordination among the central banks, the market will be supported,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo. “Things will still be volatile, but we’ll generally be rising.”

Global equities halted losses Thursday on the brink of a bear market as oil rallied and the ECB signaled it may boost stimulus. The MSCI All-Country World Index has dropped 19 percent from a record high in May, amid plunging energy prices, rising U.S. interest rates and concern over China’s ability to manage a transition to services-led growth.

Rally Reversal
Investors have been looking for a sustainable rebound as the selloff has continued since the start of the year. The MSCI Asia Pacific gauge jumped as much as 1 percent yesterday, only to erase those gains in afternoon trading.

“While the statement from Draghi did help boost sentiment overnight, its unlikely this rally will be sustainable,” Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, said by phone. “Any negative news could easily pop this optimism. China is still in a difficult position. They’re still seeing massive capital outflows.”

Japan’s Topix index jumped 3.1 percent in Tokyo, the most since September. The gauge had fallen 16 percent in January through Thursday, on course for the biggest monthly drop since October 2008. The Topix and the Nikkei 225 Stock Average entered a bear market this week, falling more than 20 percent from 2015 highs.

South Korea’s Kospi index climbed 1.3 percent. New Zealand’s benchmark gauge added 0.5 percent and Australia’s S&P/ASX 200 Index increased 0.9 percent. Markets in China and Hong Kong have yet to start trading.

Below Book
Futures on the Hang Seng Index rose 0.7 percent in their most recent trading. Hong Kong stocks fell below the value of their net assets for the first time since 1998 on Thursday as concerns over capital outflows and China’s economic slowdown sent the benchmark index deeper into a bear market. The Hong Kong dollar traded near its weakest since August 2007, while benchmark money-market rates jumped to a more than six-year high.

Billionaire investor George Soros said China’s economy is facing a hard landing, a situation that will contribute to global deflationary pressures. Soros said while China has resources to manage the situation, the slowdown there has spillover effects on the rest of the world.

E-mini futures on the Standard & Poor’s 500 Index added 0.2 percent. The underlying index rose 0.5 percent Thursday, recovering from a 21-month low, as energy shares rallied with oil.

European stocks jumped by the most in a month as ECB President Mario Draghi said downside risks to the euro-area economy have increased since the year began, and the central bank may need to bolster its stimulus programs as soon as March amid rising concerns about the recovery. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Here we are at Friday after a crazy week, with things stabilised for the moment, and I think in the middle of a 3 day rally. I think this bounce has legs up to 6050ish before there is more downside towards 5400 and possibly lower, though at the moment I am preferring to focus on whats going to happen today. Another sell off will likely reach 5620 before continuing down. Anyway, for today, we have some fairly positive looking shorter term charts to start off with the 10min and 30min showing bullishness, and a rise to the top of the 20 day Raff at 5850 looking possible first thing. There is also a pretty decent rising 30min channel with resistance around the 5877 level and support around the 5740 area. We do also have the daily Bianca channels showing resistance at 5858 and 5875, so the bulls might have a bit of a struggle to break through these sort of areas, especially going into the weekend. As such, I think some short term shorts around the 5850 area for a dip to 5790 this morning look worth a go, but I expect the 5800ish area to hold as support today. If we are going o get another big down leg then the bears will fall back and regroup ready for the next assault, so the market might just take a bit of a breather today and Monday.

122 Comments

  1. Morning all, I’d like to re-iterate tmfp’s comments yesterday and thank Nick for letting us freeloaders spout forth on his website.
    Am not getting sucked in yet and still sitting on my hands but have just been through single stock portfolio and reduced that by half as I agree with Nick and thing we’ve got another down leg coming. I’m tmfp will be along in a minute to tell us how far down!
    Good luck all it could turn on a sixpence.

  2. Morning All,
    Yes Chippy – echo your sentiments.
    Looking at a few charts last night, the Key figure Nick mentions is 6050. (Weekly).
    Shorter term resistance points around this area are 5916 . …

  4. Morning All,

    My longs from yesterday on Dax 435 and Dow 740 looking really good. I was certain it would be stopped out last night. This holding business is really an emotional roller coaster but again not watching it every tick helped.

    I have closed half my position this morning on Dax at 781 and Dow at 16040 for a very nice profit and leave the rest running till US close expecting 9940 and 16400.

    I’m just getting addicted to this meaty gains and ignoring 50-60 points gains scalps don’t know if its good or bad. I let a few trades run and got stopped out b/e after showing some good profit.

    2. You got to the next level of trading. Most important is not to slip from it. It’s emotional roller coaster like you said that makes it impossible for others to achieve big profits. How did you manage that? Did you constantly think about it or totally forgot about it? What timing did you give yourself before deciding to look again?
      Today 30 points just fell into my account when I had to be separated from my computer for 15 minutes due to domestic circumstances. I took short 9.30 on Dax 9765 and closed at 9735 at 9.46 when I managed to pop up at the screen. Looks like it was a good time to close. However those 15 minutes away from the screen made me a bit nervous and I couldn’t properly distract. GL and keep up.

      1. Hi Jack,

        If I have to explain all my thinking it would be a long story and don’t want to bore people but I just reversed the way I would lose money when I started.

        You put on a trade, it shows a loss, you wait in the hope it will atleast become break even so you can close it out. It will retrace but will never hit b/e instead becomes a bigger loss. Why can you not apply the same principle when it shows a profit, put it to b/e and leave it. What is worst that can happen, you will be stopped out b/e

        I didn’t check these trades much, once I did before leaving office it was showing good profit and around close when most of my profit was gone but still decided to leave these positions open.

  5. Morning, thanks chippy, your faith is flattering and probably misplaced! 🙂
    With 100 point swings so commonplace they’re barely worth a mention, I think those most at risk of being right, but losing money, are day traders who haven’t adjusted their parameters to cope in this environment.
    Its ok for Masters of the Universe types with deep pockets playing with other people’s money, and for scalpers like me with a quick in and out, but medium term I’d trade sparingly with low stakes and not at all unless indicators were really strong. Scaling entries into or with strength or weakness, rather than just one hit, is a good plan, but the countertrend side of that isn’t everyone’s cup of tea.

    This bounce has got to be regarded as a dead cat, there’s no technical reason on any of the three indexes to call a bottom yet but, yeah, Nick’s 6050 is totally feasible.
    The volatility is caused by fomo (fear of missing out) trading. E.g. today, there’s probably nervous longs or hovering shorts hoping for another 50, another 100, but when it turns, they will pile in for fomo.
    We’ve all got to put our money where are mouths are sometimes, like I did on Tuesday, but continually re assess any plan and don’t get one eyed.
    Anyway, you know all that.

    If medium term was my thing, I’d start light scale up shorting from about now till it hit this major downtrend
    http://i.imgur.com/rSjmTf5.png
    taking +100 against the average short on the flash crashes that will come with any further rises.
    If it went through that downtrend, then I would spend the last few years of my life living in a cave somewhere.
    Anyway, today I’m just playing 1 min rsi extremes as usual, and taking profits too early as usual, currently all square, and +63 on the day. And sleeping at night.
    🙂

    1. Faith?!! As you know from Tuesday I’m normally somewhere on the other side of your trades! You are right the “FOMO” or panic is what makes massive moves. When I was standing on the old S.E. floor with a book and a pencil we didn’t have charts but could see the whites of thir eyes, it is trying to see the whites of their eyes through an old laptop/ipad that is my game, too old to learn new tricks.
      That said, whilst having half an eye on Death in Paradise last night I had a look to see what this RSI is that you go on about and played Wall Street on demo account using it. Quite interesting!

      1. It was ironic 😉
        Whites of eyes? I know what you mean. Extreme RSI is more of a slavering at the mouth, wild eyes detector, indicating temporary insanity.

        On the LME there was a big copper trader I shall call Jones, who had an unfortunate facial tic when stressed.
        In the last couple of minutes of a ring, if things weren’t going the right way for him, clerks would lean over their dealers’ shoulders and say “Look out, Jonesy’s ticking again.”

        1. Excellent. We had a “Jonesy” on the LSE, his tic. was banging his biro against his cheek if he had a big order. During the BT float he very nearly drew blood!

  6. Morning all,been reading all week that Oil Reserves include product that isnt in demand and are therefore unreliable and that anyway they are declining at an accelerating rate,bad weather in the U.S etc etc,cant help wondering if this isnt Oil shorts closing for Friday,trailing stops being hit and people jumping on momentum and that therefore next week will see Oil turn back down and take Indices with it when people question whether any of those stories could be true over the weekend. WTI 30.88 at the moment,a buck and a half above yesterday afternoon.

    2. Brent could bounce to 37 without disturbing any bear indicators, would be a cracking technical sell there, previous failed support level, downtrend, 38.2 fib and probably overbought on rsi and stoch.

      1. Thanks tmfp,so that investing .com interactive chart is free as well that’s great,however Steve jobs is taking the mickey out of me again.its so annoying,I bought an iPad last year with the idea I could pull up a Ftse chart or Dow chart on it with the SMAs that I use.The idea being I could use it in conjunction with my phone if I had to go out.The bloody problem with the iPad is it doesn’t support adobi flash player,So I can’t use it for my original purpose as the app is not as well specified as the advantage web on my laptop….the investing.com uses flash player as well! Oh well my laptop is pretty much maxed out ,looks like I need another laptop,anything will do i reckon.ebay here I come,unless I can scrounge one of one of my mates :0)

    1. Cancelling that stop for the mo, may get a blow off 10 pt candle which I’ll short more, 30 stop on both.

          1. Unfounded so far, but while that DAX 75 neckline and ftse 04 hold not getting too excited for downside.

          2. Dow soon then, doesn’t need to do much to match 5900ish, maybe 16080, might be tempted into a go at 16250 out of the blocks.
            DAX and FTSE parted company over the last hour a bit, DAX only 10 off its highs we’re -20, should be the other way round really. Probably see more of this while the ECB influence is felt, obviously far more bullish for Euro priced stocks than sterling (if you believe it’s bullish for anything).

  12. Well it’s a sad day. That rise today finally wiped out the last of my first deposit in my trading account. Not bad I suppose as I have made it to the second year of my spread betting career before this happened. Will revert to the demo account for a bit and reload a little while later once I feel the time is right.
    As you guys were saying this recent volatility is not for the novice or the faint hearted. Learnt to much to give it up I think and so once some funds are useable “ill be back ” just as the terminator says.

    2. Tough.
      I had a vague acquaintance of the other half invite himself round to look over my shoulder the other day, declared it to be ‘a piece of piss’, opened an account and lost his £2k in two days.

    3. Sorry to hear that Coombsy,but 2yrs is well above most peoples timeframe for blowing up an account for the first time,I’d guess you dont need much time on Demo,2yrs shows you know what to do and you can keep to R/R rules,guessing you just got sloppy lately,if you’ve got anything stressful going on in your life have a look at smoothing that out and it will be ok again.Good luck.

      1. Stress WSF, yeh had a bit lately, contract up for tender at work, young dad, doing house up and finishing off essays and exams for my full time job. You could say I had a bit lately. As you might remember i have been less disaplined of late. sloppiness you can not be in this game.

        1. That list sounds far too familiar too me – a challenging cocktail 🙂
          My views have changed quite alot over the last few years and I’d say the biggest is the R:R aspect – Targets and Stops.
          It validates to you – your own trading & confidence.
          This year – (because it’s possible) – I’ve tried to keep a record with small “snap shots” of each trade.
          It makes for interesting reading !
          I’ve put 12th Jan below – 3 wrong un’s. Hindsight.
          Why was I going short in an uptrend ? The market hadn’t shown any weakness (much like this morning in many ways).
          I’ll let you draw your own conclusions 🙂
          http://ee.md.it-finance.com/ProRealTime_V10/display_chartimage.phtml?name=084sdbai17fv0k2jj96ljz96k&type=png&purpose=file
          One red line is the entry – the other the stop..(should change the colour)

    4. Yeah, you’ve been quite lucky. Many people lose first deposit/s in the first year. For you it’s an opportunity to learn and think what you want to improve, what the mistakes you’ve made and try to concentrate on that. As far as I know the main mistakes are: stop losses (underlined and highlighted: the worst offender), closing early, taking punt trades influenced by whim or any other consideration without stop losses, too high stake at which you feel uncomfortable with, chasing losses, averaging, emotions too high: greed (I want my money back), fear (unwilling to take risk), regret (I should have, what if I). Have I missed anything?

    5. Hey Coombsy I know how you feel,I’ve been there,done that,got the t-shirt,it’s an awful feeling…..But…….look at it this way…..If you had to start a conventional business you would need fixtures and fittings,stock,staff,comply with all the bullshit courses the government demands which cost money,accountant fees,heating,and lighting,repairs and renewals,advertising,maternity pay for female workers that get pregnant advertising etc etc….it’s a nightmare.If you wanted to fly commercially to get a CPL it used to be upwards of 50K and all the steps involved ppl .night rating,IMC rating,twin rating,IR,hours building etc etc.The point I’m trying to make is don’t view it as a failure and a waste of money like the thoughts you have going through your mind now…..no it’s experience….your training…..and we have to pay for training either by low wages as an apprentice or paying for courses to learn our trade…..Hope that helps to overcome the negative feelings you may be having so you can come back and be part of the 1%. No surrender …all the best and good luck.

      1. Cheers Anstel, all what you say makes sense. I told the misses when I started I’ll treat it like a new career, so definatley have no negativity about where I am now, as I said I have learnt loads. Don’t worry my chin is up and I’ll crack on.

        1. Awesome Coombsy that’s the spirit,This for me has been the hardest last 9 months so far,You will come back stronger but take a break first then come back refreshed.and evaluate your mistakes,learn from them,and adjust your strategies accordingly.Good Luck.

  13. Nope went short this morning from 5850. Had one last trade left in my account and it creeped up today. I too believe like you lot more down side to come just didn’t get the timing right.

      1. Watching paint dry, you mean.
        Good luck with kid, house, exams and being young. Been there, done that.
        🙂

      2. Good luck Coombsy, sorry to hear you have blown your account. £500 for all you have learnt is good value though, look at it as the cost of your education… cheaper than a Uni course!

        1. Thanks nick, I’ll email once I recoup some funds and will join up. Going to keep it ticking over with the demo account for now.

  15. Just a thought…….Not seen Senu around here since last year? If your looking in Senu say hi mate :0)

          2. More the merrier,only singled out the Maestro because it was an RSI chart and because of something he said this morning about Brent.

      2. Who will reduce production? They couldn’t agreed about what biscuits to have with their tea at the mo.

        1. WTI must be controlled by the government I guess,it’s a no brainier,hold back on production of WTI……..the oil price goes up again………..the stock market rally’s more people invest thinking its going to go up for ever then when oil is nice and high again pump out the WTI at top dollar and when there’s no WTI left and everyone’s fully invested in the market pull the plug and hey presto instant wealth transfer to the rich people……oh and you tmfp because you will be short and the difference is you deserve it.

    2. Under 30 on the way down is usually a “get ready to look for a buy” sign for me WSF, but on the way up 40 is the one to break to signal bear mode is possibly finished for a while.

      1. Thanks,fwiw the 30 yr seasonal would suggest a base in Feb and a climb from the end of that month to early May as a normal pattern,so if it does turn I’m thinking an ETF that isnt leveraged maybe for a bit on the old if it’s wrong its a ltbh approach 🙂

  17. Dow soon then, doesn’t need to do much to match 5900ish, maybe 16080, might be tempted into a go at 16250 out of the blocks.
    DAX and FTSE parted company over the last hour a bit, DAX only 10 off its highs we’re -20, should be the other way round really. Probably see more of this while the ECB influence is felt, obviously far more bullish for Euro priced stocks than sterling (if you believe it’s bullish for anything).

      1. Depends when you look and at what charts, I guess.
        Since our high at 11.54 we are currently -17 and the DAX is +12 on IG, give or take a point.

        1. But then I was confused when you said at 11.45 that you were shorting DAX at 9788 because it never got there on IG.
          Are you using a different platform?

  19. Well done to you shorts with more patience than me, but I’d have covered around here and am looking for a little long in the 80’s, don’t reckon it’s all over just yet, depends on DOW now.

    1. I came out a while back – but S again 5898 – I’d be surprised and stopped at 5902.
      The pattern is with me at the moment – which would be busted if it closes above 5902.
      Initial target 5878

        1. Nothing so concrete Hugh, just ‘hunching’ while waiting for DOW.
          In the great scheme I think these levels are unsustainable but wary of a bit of a bullish hammer fix for the end of the week.

          1. So much messing about around 5 points ..
            Took my stop off as it’s so quiet – thought I’d try your 3 x 1 Min close technique
            Watched – just not convinced so closed / flat at 5898.9.

  21. I reckon this sneaky Dow has 200 upside in it,just when you least expect it,probably after a spike down to get everyone short…..me cynical,never.

    1. Maybe Anstel but the rise in the last 44 hours has been quicker than the fall in the preceding 30 hours. Probably a bit of pull back and then this evening another spurt before another pull back in the last 30 minutes. Monday /Tuesday up a bit and then the Bears will regroup and take this back down where it was 2 days ago. Can’t see any real positive moves till oil starts to climb, then 6500 maybe in summer before 5200 by end of year.

        1. Just reading your post again Argyle you seem to have the whole of 2016 planned out.im all for looking ahead but wow you take it to a whole new level! Amazing foresight if your right.

    1. took +15 maybe a 16.00 rally coming up
      Just doesn’t feel like a big selloff, but I’m getting tired, been a long first week back.

      1. Silly waste of a short, covered for the sake of it in middle of nowhere, MHH? From now I reckon dip bounce dip, maybe 95-910-95. Let’s see how wrong someone can be….

      1. LOL don’t worry about Argyle, he’ll be alright, if you need to worry about something try his football team 😉

  26. What’s goin on its meant to be goin up according to my tea leaves oh boll@cks I’ve been drinking that Yorkshire tea by mistake! It’s the PG tips that works the best!

    1. I’m a bloody cheapskate……I only got the Yorkshire tea cause it was Bogoff,now look what’s happened:0)

      1. It will probably drift up a bit, but close it before 8.30 or the Yanks may decide to sell off for weekend

    1. Bearish formation on 1 hour and 4 hours on both Dax and Dow might very well hit the stops.

      Closed Dax at 770.

  29. Small short for the weekend at 5905. Also chucked out all remaining equities so feeling a bit bare (bear?!). Not long til I’m down the pub, see you on Monday.

  31. Its not stopped out. Stops on the Dow revised to 16010. Closing before US close if the position is not stopped out.

    Overall fantastic week..Have a good weekend everyone !!

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