Slightly bullish still – 6760 next?

Good morning, well a bit of a funny day yesterday that was still bullish but what a slow drift up! The bad news was that the long from 6675 missed as it only dropped as far as 6685, but the good news is that the 6730 short has taken overnight. However, with the updated Bianca chart having 10 day support at 6707 I don’t think the original target is likely to get hit, as its still looking fairly bullish. I have set the stop to breakeven. Really wasn’t expecting that order to take! If it gets back there then I am looking at the top of the 10 day Bianca channel at 6760 then the daily ProTrend at 6800. Today’s news of interest is UK GDP at 09:30, and then durable goods from the US at 13:30 – both of those will affect the prices around those times. UK GDP is forecast to be 1.5%, quite likely as the UK data has been quite positive recently.

Asia Overnight from Bloomberg

Asian stocks fell, extending the regional gauge’s first weekly decline in three weeks, as forecasts from Canon Inc. to Posco disappointed investors. The MSCI Asia Pacific Index sank 0.9 percent to 141.67 as of 1:24 p.m. in Tokyo, extending this week’s fall to 1.2 percent. The gauge climbed to a five-month high on Oct. 22 amid speculation the Federal Reserve would delay tapering stimulus, pushing its earnings multiple to 13.8 times estimated profit, according to data compiled by Bloomberg.

“The earnings numbers are not fantastic,” Evan Lucas, Melbourne-based market strategist at IG Ltd. said by phone. “Many of the export-driven Japanese companies like Canon had the weakening yen supporting them earlier in the year but that is now stagnating. People are starting to reassess those shares that have had that support.”

Of 73 companies in the MSCI Asia Pacific Index that have reported quarterly results this earnings season and for which Bloomberg compiles estimates, 60 percent posted profit that missed expectations.

Regional Gauges

Japan’s Topix index today fell 1.9 percent, Australia’s S&P/ASX 200 Index rose 0.3 percent and New Zealand’s NZX 50 Index advanced 0.6 percent. South Korea’s Kospi index dropped 0.8 percent even after data showed the nation’s economy expanded more than forecast last quarter. Futures on the Standard & Poor’s 500 Index slipped 0.2 percent.

Hong Kong’s Hang Seng Index slid 0.5 percent and China’s Shanghai Composite declined 1 percent. Singapore’s Straits Times Index lost 0.2 percent and Taiwan’s Taiex Index retreated 0.9 percent.

Fed

Fed policy makers are scheduled to meet Oct. 29-30, when they will evaluate the strength of the recovery with a less complete set of figures than usual due to the 16-day partial government shutdown that caused the suspension of reports and collection of data.

China

The odds of a severe slowdown in China or a credit crisis will fall after a Communist Party summit in November as leaders tackle local-government debt and financial reforms, a Bloomberg News survey indicates.

Fifteen of 23 analysts said policies flowing from the meeting will reduce such risks, and a majority said the plans will help China become a high-income economy by 2030. Royal Bank of Scotland Group Plc sees freer interest rates and Barclays Plc says changing officials’ performance benchmarks may help contain local-government spending.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

I don’t think the bulls are going to give up just yet and with the daily pivot at 6702, as well as the bottom of the 10 day Bianca channel at 6707 there is still a case for some more upside. We haven’t had a big bearish plunge off the 6720 resistance area really, and there are still a lot of retail traders short which the market will want to rob. Sorry, stop out. The trends are still up for the moment, however, its Friday, we have had a good climb and some will be wanting to bank profits I am sure. For the open the 30 minute EMAs have crossed to being slightly bearish, but we are nearing a cluster of supports – the blue horizontal lines I have plotted on the chart. We also still have a fairly strong upward channel on the 30 minute chart. I am not ruling out a rise to 6850 currently – the top of the 20 day Bianca channel is climbing and sits at 6795 at the moment.

So, still cautiously bullish, but more so if this 6730 area breaks today. I have put 2 scenarios below, blue being preferred which is the support at 6700 holding, pink is a possible dip a bit further and then bounce. The 2 trades below cater for both and with tight stops if neither work out then losses are minimal.

88 Comments

  1. Everyone is long here! scary to go long. Reversing from 6720 as per Nick’s chart and will there be a bounce from 6710 ?

      1. A bit risky, mahmoud, but it’s interesting idea.
        Not sure if it will drop that far, if at all… but let’s see.

  2. I think until we see a major top occur, going short is very risky. These couple of weeks I’ve been trying to guess the top, trying to short, thinking it can’t go much higher, but have been unsuccessful many times. I think I have finally learnt to stop shorting at the present moment in time…

    1. I’ve been there many times thinking “I can’t go any higher”. But guess what – it can. Until it goes up, nothing you can do to stop it until it stops itself.
      I remember trying to short FTSE in spring on the day of Bernanke speech in May 22 I think, so guess what – many people shorted and it went to 6870 where it finally dropped – on the peak. Who would have thought? I got my money back and was happy but it was a nerve breaking experience.

  3. Look before you leap, if it’s a reversal, they tend to be immediate drops, these slow momentary declines are just potholes along the bullish road

  4. Yeah that DAX will need some correction before the year end, while DOW and ftse been stalling this one seems to just going one way up

  5. Jack just hold your long, we will see 6630+, more numbers at 1:30, remember at this stage good news is good and bad news is good. We might get a sell of this week though, or perhaps at the beginning of November, ATM we are all treading on thin ice.

    1. sorry Ahwab I was out from my long from 6704.5 as I needed to go to dentist with my son, I didn’t get in again after that.

  6. I’m looking at FTSE/30 mins. Showing EMA 20, LinReg 100 (why not 🙂 ) and Bollinger (for a bit of context). Otherwise, I’ve ditched my indicators for the moment. Within the last few bars FTSE has shied away from 6730, which was an effective overnight resistance level. EMA 20 crossed below LinReg 100 at 02:30 this morning, so the choppy rise since 08:00 has been against this bearish background. Difficult to call, but the next alert is if the index falls below EMA 20 – which would very likely usher in further downside. (Just crossing now!)

  7. What can possibly go wrong, investors borrowing money at highest levels in history to buy stocks at all time highs.

  8. FTSE goes up in the morning, then some data comes, FTSE dips and goes up new high after dow open. This what happens in the recent days.

    1. I DIDN’T GO SHORT. I just scalped 10 points some time ago on short from 6725.3 and I called it a day.

  9. We need to see at least +500 pts from the lows in FTSE, before we can starting guessing a top. You have to remember that price crossed above the 200 MA, not doing so for quite a while.

  10. …. yes taper talk, even though they are not going to be tapering, its always good for a wild swing until you hear the magic words “the fed will continue it’s accomodative policy for the foreseeable future” the were off again 🙂

  11. We got our dip to the daily pivot much later, as ad normally get that in the morning, short stop @6705

  12. guys according to my chart ftse will push up to 6735-6750 by 4.30 pm! if you have a long position you should be in for the money today, but make sure you have tight stops.

  13. Hi All,

    Does anyone have any trades still open?

    Does anyone plan to leave any trades open over the weekend?

    Nick

  14. … a tad of sarcasm on my part with that last report, 6750 was never going to be hit today, we would have needed a non event to happen that the media could have put a massive spin on, durable goods report just not sexy enough, china exhausted (although i think they could have re-run that one for a couple more days), there was obviously not enough shorts being loaded up to make it worthwhile hitting 6750, it’ll get there but just not yet, probably OOH tonight 🙂

  15. Ftse didn’t favour both bulls and bears. Most of the seniors and other members expected to cross 6730 and touch 6750. Is it been delayed now for Monday or it is now in bear hand?

    1. Looks like. Dow becoming fall proof. Taper talks this week might push higher and ftse too. But I expect a dip before that as said by Nick on Friday.

  16. A look ahead on the weekly timeframe – Trying to see the wood
    S&P 500
    Last major dip – October/November 2011
    Subsequent trend – Positive, especially since November/December 2012
    Current development – Emerging strongly from mild dip
    Next target – 1800+
    Dow
    Last major dip – August/October 2011
    Subsequent trend – Positive, but flat since around May 2013
    Current development – Just beginning to recover from local lows
    Next target – 16000+
    FTSE
    Recent major dips – August/September 2011 and May/June 2012
    Subsequent trend – Generally weak and short-lived growth. Flat since around March 2013
    Current development – Just beginning to pull out of recent, relatively minor double dip
    Next target – 6800+ (Growth may be aided by US performance)

    Any strong agreements or disagreements? Would be interested to know. 🙂

  17. Jim, your analysis is well researched. What this shows us is anyone could have gone long over the last couple of years and if they held long enough would have made money.

  18. The only reason the market has been on the upward trend is due QE, with every boom there is a bust. When investor/traders become complacent that nothing can go wrong then this is the time to be very careful.

  19. Dow, Ftse rocketing on IG on Asian opening, NOT a market to short just yet HOWEVER bears your time will come, sentiment is transient

  20. All Friday people waited for 6750 and what they do – spike to it when the market is closed? Why and Who is doing that – the platforms?

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