Still cautiously bullish…. till next week anyway!

Good morning, well retail sales coming in under forecast yesterday set the cat amongst the pigeons and caused a few jitters, as its feared that the “recovery” might not be all that strong after all. I am still thinking of the following bigger picture –  a little bit more upside from here then a decline early November before a Christmas rally kicks in towards the end of November. That said, the bulls weren’t exactly charging off the support levels yesterday, around the 6710/20 area and we have dropped back to that level overnight. With the 10 day Bianca channel still narrow, and the bottom at 6714 the bears are still knocking! 42 companies are reporting earnings in the US later today which will generate some movement! Among the 256 companies which have reported already since Sept. 30, 76 percent beat earnings estimates while 54 percent exceeded sales projections (from Bloomberg).

Asia Overnight from Bloomberg

Shares in Asia fell, paring the benchmark index’s first back-to-back monthly advance since April, as the Federal Reserve starts a two-day policy meeting. Australia’s dollar dropped to a two-week low after the central bank said the currency may weaken, and metals declined.

The MSCI Asia Pacific Index slid 0.3 percent to 142.26 at 3:22 p.m. in Tokyo while the Shanghai Composite Index fell to an eight-week low after the size of a central bank cash injection disappointed the market. The so-called Aussie declined against all 16 of its major peers. Standard & Poor’s 500 Index futures decreased 0.1 percent as Apple Inc.’s stock fell in after-hours trading. Copper and lead lost at least 0.4 percent, snapping three days of gains.

The Fed starts a two-day meeting today to consider whether to start trimming its $85 billion-a-month of bond purchases which have buoyed emerging-market assets globally. Reserve Bank of Australia Governor Glenn Stevens said the nation’s terms of trade are likely to worsen and its currency may be “materially lower” than current levels. The People’s Bank of China added 13 billion yuan ($2.13 billion) into the system via the first reverse-repurchase operations in two weeks.

“We’ve had such a good run in equities and this is a fairly healthy correction,” said Adrian Zuercher, a global strategist at Credit Suisse (Hong Kong) Ltd., part of the Swiss bank’s asset-management unit that oversees about $433 billion. “U.S. data is showing some impact of the government shutdown and our best guess is that markets are in consolidation mode for now.”

Earnings Season

The S&P 500 rose 0.1 percent in New York yesterday to close at a record high. Shares of Apple (AAPL), the world’s most-valuable company, traded at $523 after the official market close versus their $529.88 finish in New York.

Apple said revenue in the current period will be $55 billion to $58 billion. While that topped the $55.5 billion average of analysts’ estimates, it represents a modest increase from the $54.5 billion reported a year earlier. Gross margins will be 36.5 percent to 37.5 percent, Apple said, versus the 38 percent analysts estimated.

FTSE Outlook

ftse 100 dip and rise
ftse 100 dip and rise

Today’s pivot is 6723, pretty much where we are as I write this. 6740 is today’s line in the sand – the bulls will be keen to break that to test higher levels, maybe even 6800. However, on the flip side, a break of 6700 flashes some warnings and could lead  to 6670 and then lower. Once the daily channels (raff and Bianca) start breaking then there is going to be quite strong downward momentum. As I mentioned at the beginning of this email, I do think we have a little bit more bull left in the tank, and then the declines are more likely to start next week. we are having a bit of consolidation currently, hopefully for a little bit more of a push higher. The 6700 level has held a couple of tests on the 25th and the 28th October, and I think it might hold just a while longer. Initially this morning it does seem to be holding up ok, though I have plotted an initial dip, mainly based on the fast that he coral is red, and the EMAs are bearish. There is a ProTrend resistance at 6731 which is where I think it might initially dip from. If the price can get above the 6740 level then we should have a few more positive sessions remaining.

104 Comments

  1. Certainly agree with the big picture, as it coincides with my oft repeated view for this quarter. FOMC meeting today and tomorrow could be the catalyst for a short term dip to 6650 – posibly 6530 but unlikely. My personal strategy is to ride it out so I won’t be switching positions. However for those with shorter timeframes this could be the opportunity for a short.

      1. I don’t use brokers charts that much so not sure if I can be much help. I use CMC markets – I have no complaints except trade size is a bit small – but that is the medium term problem in my business plan. Maybe try their charts – I prefer them to IG, and see if it is what you are looking for.

      2. Jack – I use the rather hobbled version of ProRealTime so kindly supplied by IG Index. The programme is brilliant in some ways, but quirky and uneven in others. I rate change management as a weak area, but when a new version of the programme was introduced recently, my work in the version being replaced was transferred automatically to the new setup; I lost nothing in the process – which is to be expected! Additionally, access to the old system is still available. All I can add is that I think it outrageous and totally unacceptable that access to your material should be lost as a result of a version update – you are effectively barred, as I understand it, from making use of your own intellectual property. I’m sorry I can’t offer anything more constructive.

        1. I totally agree with you, the fact that they changed the charts overnights (not even over weekend but just before the most busy day of the week) made me feel helpless, outraged and distraught. The new charts don’t have some indicators I used and the same drawing techniques. It’s completely new to me and would take me months to adjust.
          I moved to Spredex for the time being and made one trade to practice, it works okeish, but I am not used to it: cannot find my account history etc. At least they have charts I am used to which will enable me to continue while I am looking at other platforms.
          IG, Intertrader – oh, I wish. They didn’t open account for me in the past, but I can always try again.

        1. Yes, that was before Nick’s Analysis and latest Trend so I raised stop to 6810. Plan (as of now!) is to go short at new heights (like 6770, 6780, 6790 etc), hold on and close some of them at 6710, 6700 etc. All at minimum stakes.

  4. why do you short when there has been nothing to indicate short??? why not take a small position long and wait for a real signal for a short

    i dont understand the thinking!!!

    2. Neither do I. There is a guy named FTSEday that I love to read his posts, so amusing. He is always shorting the FTSE.
      But this people who likes to short, do not understand, that the timing to short is 2x more difficult than going long, in any trend (bull or bear).
      In the moment we are in a very strong bull uptrend, making even more difficult.

      1. Hahahaha I have come across him on twitter too, I think he is the worst trader in history. He posts complete bullshit lol. It’s amusing though

        1. Ya, and the guy is always in the hospital, and trades trough the phone (not recommended) and recently he almost got killed driving a bike, which he bought with trade gains, as he said…heheheheheh. The guy lives in Thailand

    1. dow futures 20+ during that time, but slowly giving up. Buy on dips is the trend today, i was expecting atleast 6740 to go long, no trade till that. shorting seems a worry today.

  7. its such a backwards way to trade cause the moment you loose money you will say’the market went against me’ when the market did no such thing you went against the market!

  9. a newbie and trading in demo accounts…

    I can certainly vouch for the fact it is harder to short than long, and I found this out the hard way! I made £1500 in my first week trading and thought great, I know what I’m doing. Started going against the trend and thought I’d short what I thought are highs, and got stopped out now I’m about £10k down!

    glad it’s not my real money I’m playing with….

    Got a long road to rebuild, but don’t think I’ll make it as the my time limit expires soon…

    1. Thanks, I wish Intertrader looked at me (LOL. They didn’t open an account for me 2 years ago without much explanation).

  11. which one is first? 6780 or 6750?
    Shorted @ 6764, only for intraday dip, nothing much against the trend

      1. Shorted from 6770, had an order in, looking for the sell off towards the end of a bullish month. Good luck, I don`t think we`ll get higher than todays high of 6673.
        Good luck

  15. Hi everyone. Any idea when the ftse will start to come down to 6400 or below? Any thoughts or insight much appreciated. Thanks in advance

  16. I’m trying to get out of bullish mode atm, I realised from yesterday’s slow drift downwards that it could have easily just kept going down. Keeping stops very tight atm. Going short atm, hopefully see a drop towards the end of the month for profit taking. After a hectic month of debt ceilings and what have you

        1. Looking at the recent trend, it was very risky to go short. That Sunday overnight, would be broken, anytime over the week

  18. Any prolonged sell off may come in January – firstly it would be long overdue after a good run in the final qaurter of 2013 but also because we may have the debt ceiling issue once again and tapering surely has to start. Is 6435 likely? Possibly -although it will be a dip of about 6% so a pretty hefty move but those two items in particular have the capacity to move the markets down by 5-10%.

  19. … trouble is Javed, according to the “experts” the debt ceiling issues only seem to increase the markets by anything between 2-5%, i read somewhere that each extended month of QE increases the indices approx 1% a month, that’s without all the so caled “fundamentals”, so at this rate its 1800-1825 S&P year end, 6950-7000 FTSE, …. if tapering arrives in March could be 1950 & 7300, oh and of course stocks would still be fair value 🙂

    1. Great, why don’t we make FTSE 8000, S&P 2000 and DOW 18000??!! Right, just because some arrows, candles and god knows what else point in that direction (in all analysis after it happened) it doesn’t make it so. This reminds me of 2010 when everybody was so much in the same mood and then the fat finger come and the DOW plunged 1000points in a matter of seconds!! I saw recently interview with some hedged fund founder, which company was attributed to that drop and he predict a sizable correction!
      Everybody is talking about market this or market that, but what is Market?? unfortunately it is bunch of fat fingers, that’s all. Market is not someone or something invisible which we cant see or touch.

      1. … Come to think of it your probably right with those figures after today, what can possibly go wrong 🙂

  20. NOw we are reaching the minimum 500 pts in FTSE from the lows. I’ve been preaching this for quite some time, since it crossed over the 200 MA.

  21. 14 October
    #FTSE100 #FTSE every time the price crossed above the 200MA, there was huge bounces, with more than 500 points. #BullFlag in Daily chart

  22. Shorted DOW at 15568, still got ftse running.
    Going on a whiml, calling today as our high for the moment, possibly tomorrow. Got tight stops @ 15610 and 6791 on ftse.
    Gl all

  26. Now I’m starting to look closer to FTSE, I’m slightly thinking to exit from long positions.
    I have two choices :
    1st – Continue to move the trail stops.
    2st – Exit in 6840

    1. For what it’s worth, I think a straight run to 6840 might be overly ambitious. Looking at FTSE/5 mins., I think it might go to 6780 or thereabouts.

      1. No straight run, for sure.
        This is a swing trade. Do not trade at 5 min chart
        I have it for quite some time.

      3. 6840 is only 60 points. But this will be the next target.
        Nothing is for sure in the markets.
        SO keep your stops and let it flow.
        The uptrend as resumed today in the ascending trend line from early October, when it was broken yesterday.

    1. long to6800 could go to6840 will not be sleeping much tonight trying to make most of it ……… good thing about these new tick charts verry easy to see at night

  29. … Wouldn’t it be a surprise if the fed tapered …. They wouldn’t would they? 🙂 ooh missus the very thought 🙂

    1. You know, I was just thinking that!! :-)… those Yanks are unpredictable, last months when everybody was expecting taper they didn’t. I remember a comment made by one of the voting members, that they will do what needed for the economy not the market. In my opinion, at this stage the QE is doing more damage then good. No one will really do anything as they are shitlesy care what is going to happen when Ben stop printing. M.King was right when he evaluated the printing saying that its only benefits stock market and have a very limited impact on the real economy.
      They keep saying money is cheap but no one is really investing in anything else then stocks. How is that suppose to help the economy?

  30. you would soon need a six stringed guitar and a bigger screen on laptop to acomadate all the goings on

  31. Nick i thought you mentioned that ftse would go down to 6200 before bouncing to 6800 PLUS before year ends. Any chance of that happening. If not whats the lowest it will get to. Appreciate everyones thought & insight.

    2. Nobody really can predict the market. Historically FTSE always drops to the laval where it started the year but I cant see this happening this time around.If you look at fundamentals then FTSE shouldn’t be higher then 6200 at the top. We are in very slow grow environment and the high asset prices just don’t reflect reality. The market hasn’t price in any rises in interest rates in a near future and we all know that low rates are just not sustainable for a very long time and they will have to go up. The energy prices in UK are going up by ab.8% so just keep watching as everything else will start creeping up . All of you who think that Bank of England will just watch inflation going up and do nothing, think again. 🙂

  32. S let me guess you have a short open from 6400ish?
    My recommendation is close it now and move to the next trade. Maybe then wait for a short signal on the weeklies and be patient!

    1. Yes, AL. The thing is i got in at 6527 expecting a down turn, looks as though skies the limit. Where do i exit now is the question?

  34. What price do you guys expect it to reach a peak at before some correction. I had a target 6770. Seems to just keep climbing, surely it must run out steam soon

  35. Hard to predict, I think peak would be around 6850 this week or even today and then down turn next week. As ever, nobody knows for sure.

  36. When you think it is looking like a one way bet it is time to exit. It’s had a great run straight up from approx 6338. If I had a different strategy I would bank most of my gains now ahead of the FOMC tonight. Of course difficult to predict but will be quite choppy and a likely catalyst to sell if there is going to be one. It may have one final pop tonight past 6850 before heads lower but too risky to hold large positions going into the release.

  37. .. I think what your seeing here is the “market” telling the fed who’s boss, don’t fight the market is the new mantra, the “market” is well pissed that it was wrong footed last time and it’s thrown the toys out of the pram, personally I’d like to see the market get a good slapping in the meantime it 6850 today, 6900 by Friday in all likelihood 🙂

  38. That what happens when the fed give free money away…. Just another boom that will cause another bust.

  42. … Long on the S&P 1777 (there’s an indicator for everyone to short 🙂 ) 1800 by close of play!

  43. Such a huge raise in stock market should actually make us feel good as it signals that the economy is growing and the good times are ahead of us. Does anyone really feel that way??

  44. just closed my long from 6510 for a nice 305 pts, yum yum!
    had a great last month, 3 trades, 2 wins 1 loss, net 368pts

      2. thanks! yes, waiting patiently for the next signal… remember I work off weekly bars and market analysis, so signals form slowly for me!

        1. Congratulations Al.

          You seem like a great disciplined trader. Love learning from you and your views on this forum

  46. If the news comes more dovish than expected, I believe we can break the May Top.
    DAX has already broken the 9000 level

  47. We are in a crucial day. Look at the daily candle from the May top.
    If we hold at these levels, I see another leg up, if we break the 6880.

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