Support 5858 5850 5840 5805 5767 5718 Resistance 5897 5903 5953 5970 6055

Good morning. Positive Chinese trade data yesterday helped the FT100 and oil prices to rise on Wednesday morning seeing the FT100 6000 level being breached to the upside. However, as has been the case for the last few trading days, when Wall Street opened it become apparent that professional traders are using any strength to exit positions. Crude prices having been strong in the morning weakened quickly once again and slid towards $30 per barrel. In after hours trading the FT100 has fallen heavily inline with Wall Street so unless there is good news from China overnight there could be quite a negative open on Thursday. Unfortunately my short order was 6014 and the high was 6012! Still, the earlier longs worked well on FTSE, S&P and Gold. I mentioned in yesterdays missive that there was still likely to be another leg down, whether its ended at 5840 or has a bit further to go remains to be seen. Bulls need to break 5900 this morning for further upside towards 5953.

US & Asia Overnight from Bloomberg
Asian stocks dropped for the eighth time in nine days, following a renewed selloff in U.S. equities, as material companies led declines.

The MSCI Asia Pacific Index sank 1.5 percent to 120.97 as of 9:11 a.m. in Tokyo. A gauge of materials shares, the region’s worst-performing equities this year, lost 1.8 percent. The 2016 selloff in U.S. stocks intensified on Wednesday, with the Dow Jones Industrial Average tumbling more than 360 points. Chinese shares dropped to the lowest levels since the depths of last year’s rout in a late-day selloff as an unexpected rebound in exports and government efforts to stabilize the yuan failed to ease investor concern about the world’s second-biggest economy.

“Negative sentiment is dominating the market,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “The market focus keeps shifting whenever there’s positive news. We saw very good trade numbers from China yesterday and yet we’ve seen the rebound being short-lived as the focus shifted to commodities. It’s hard to get bullish.”

The MSCI Asia Pacific Index jumped 1.7 percent on Wednesday, its steepest gain in almost a month, and European equities also advanced. The rally fizzled in the U.S., where a sell-off in consumer and technology shares sent the Standard & Poor’s 500 Index to a three-month low. The Russell 2000 Index of smaller companies closed in a bear market, sinking 3.3 percent to its lowest since 2013, and down 22 percent from a record set in June. E-mini futures on the S&P 500 added 0.1 percent on Thursday.

Japan’s Topix index slumped 2.9 percent after jumping 2.9 percent on Wednesday. South Korea’s Kospi index fell 1.3 percent. Australia’s S&P/ASX 200 Index tumbled 1.5 percent, taking its decline from an April peak to 18 percent. New Zealand’s S&P/NZX 50 Index lost 1 percent.

China Futures
Markets in China and Hong Kong have yet to start trading. Futures on the Hang Seng Index fell 0.7 percent in most recent trading, while contracts on the FTSE China A50 Index slipped 0.8 percent.

The Shanghai Composite Index dropped 2.4 percent on Wednesday to close below 3,000 for the first time since Aug. 26. The gauge has slumped 17 percent in 2016, the world’s worst-performing global index, amid concern about the outlook for the economy and uncertainty over the central bank’s exchange-rate policy.

China’s trade surplus widened and exports recovered last month, a report showed Wednesday. Other economic indicators remain in the doldrums. The official purchasing managers index signaled weakness for a fifth straight month in December, while figures over the weekend showed producer prices extending declines to a record 46 months.

Brent oil finished 1.8 percent lower at $30.31 a barrel on Wednesday, after falling to as low as $29.96 intraday, on speculation Iranian shipments will soon climb. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

I have resistance at the 5900 area to start with today so if the bears resume yesterday evening’s drop then we could well see a drop down to 5850. We have some support here though if this goes then 5800 looks like the next likely bounce point – we have the 10min and 30min channel bottoms here. Below that the 20 day Bianca at 5767 would be worth a long. Looking at the S&P we could get a bit more downside to the 1865 area and then in theory a bounce (though the media would have you believe that its the end of everything and we should be selling like mad), I have plotted the blue arrows for my preferred route, though the additional pink ones are plan B if the 5850 support breaks. I have gone for the initial short off the daily pivot as the 2 hour chart has gone bearish and the moving average is showing resistance at 5897. The bulls have fought back quite well from that 5840 level once again, though I think if we test those lows again then we are more than likely to break through. 10 day Bianca resistance is 5953 as an upside target for today. Interestingly gold has stayed below the 1100 level, even with that bounce off 1082 yesterday, so the bearishness might not have too much further to run. The FTSE really needs oil to bottom out and start climbing to break its bearish trend (maybe around the $26 area).

73 Comments

  1. Well greed won the day. It rose to 5902 and now back down to stop me out. Silly I know but wanted to try and hold for a few days. Out for 2 points.

      1. Missed the entry argyle, am at work. There is strong support at 5835area. That’s three times tested now and not broke.

  2. Oh dear like I said Coombsy if you hold it,I left you a congratulations message at 6am ish this morning.its testing my nerves!!

    1. Where was your stop Coombsy I saw it drop to the 5830s in the night so I guess you moved your stop up?

        1. I thought it must have been below 30. We need nerves of bloody steel at the moment and quick reactions.Im watching the A50 like a hawk.You might be better out of it to be honest for now.

          1. The Dow seem happier when the A50 is above 9466,based on observation and my feel for it that’s all.so it’s just my view no charts .

    2. I saw that Anstel thanks, must admit as soon as the eyes open I was on it to see my fate. But that’s the game we all play.

  3. Think the bottom has been reached for this cycle, today I think the buying will take place this afternoon a bit different from recent days.

  4. I keep telling myself disapline,disapline,disapline.its nearly sunk in! And it’s the grey matter that works against us,Fear and Greed are both our enemy’s.

    1. anstel, it is actually the other way round to me. I used to think that Fear is when I open my stops and let the position go into a loss. Then what? Are you scared then? Not really, because why don’t you close? But over Christmas it came to me that it’s not Fear that makes you open stop loss, it’s Greed. You are sorry to part with your loss (you are greedy to lose it) and so you are not scared to open stop loss – to buy you time and buy you hope. So you are basically paying for extra time to find out that maybe the price will reverse at some point of that time, in other worlds you are buying hope (which blocks fear for a little bit) for a certain amount of time (1 hour or 2) that the price will reverse . When a real Fear kicks in – it’s when you realise you can lose everything and you SUDDENLY get so scared that you close the whole lot on a huge loss. So basically what I concluded to myself: that I should be scared (Fear) to lose behind the line of my stop loss but not stop loss itself. So I should be feeling safe while I am in a zone of stop loss. But when I am winning I should get more Greedy to win more (squeeze as much as I can from a winning trade). That’s what I am working on now. Hope it was helpful somewhat.

        1. Yes that’s all very sound Jack,if a trade is going your way trail stops behind profits and add size,but I’ve been caught when a Dow trade dropped 70 pts past my S/L so unless guaranteed it’s still risky.Im working on two aspects of my trading and it’s more the emotional side First I’m using very wide stops,but they are not stops,I’m hedging instead,I’m working on the theory that if we get 50% of our trades right,when it goes wrong we get another chance to get it 50% right when we break the hedge.I will probably get comments and laughed at but that’s what I’m trying,second,I have been in situation where like you say it’s massive pressure,as soon as you take a loss on one position it seems to break your resolve and you shut more to relieve the pressure,I’m trying to rectify this by something I learned from a Larry Williams video.Einstein Theory……E = m c2…… Emotions = money in account x contracts in the market. I Have a much better understanding of my Trading Emotions and I’m trying to find the sweet spot,at the moment I’m just a little out of my comfort zone,Thanks to Larry Williams that E = mc2 is great for me GL Jack.

          1. anstel, we are getting there, it’s just a hard journey. Everyone got his style of trading and chooses to do what’s most comfortable for him. If hedging gives you peace of mind that’s the right thing for you. I cannot mentally deal with hedging (plus my platform doesn’t provide that, luckily for me I suppose) so I don’t intend to do it. It takes more time and messes with my brain. I like simple, fast and right. GL to you too.

          2. Jack I have just reread your earlier post from 11.29am.i can think clearly about what you are saying now and it’s very very good.Thanks for sharing that info,it’s heartfelt and you have thought carefully about the emotional responses you are having to trading in the heat of the moment and afterwards.i think if we can gain an understanding of our emotions whilst trading and experience them,but control them it will help us all,thanks very much Jack GL as always.

      2. Yeah thanks Argyle,I felt the same but lost control of my emotions at 102, hedged 50% for a while,then made the decision to dump the hedge,cost me 67 points but I can get them back when the ball is more in my court.I made two mistakes tday that one and I added long on the earlier rise just before it dropped,that cost me 89 points,which in money terms is just over ydays gains,the lessons we pay for are the ones we remember!GL argyle if you are trading.

        1. I’m wrong there Argyle,I had two seperate hedges and I lost about 33 – 34 points on each.but actual points on the Dow I lost about 34 on the hedge.from 102 to 135 ish if you understand what I mean.

  12. Morning Chaps,
    Late this morning as I had errands to run !
    FTSE Getting stressed again up here 5887 – 95 – 99.
    Nice run if you were on it from 5835

  17. Hi Folks
    Been following your conversations for quite some time now and find them both amusing and also informative. I’m looking to sign up with nick in the coming weeks. I’m a wounded novice trader from some years back and feel ready to try investing again although at a more controlled and risk managed way compared to the past. Anyway, just though I would say hello as a courtesy.
    Pablo

    1. Hi Pablo,i would leave it abit the volatility is off the charts,just friendly advice,all the best.

      1. Volatility is good though, more points on offer when you get it right. Just had a long at 5864 that was a bit of a knife catch at the time but netted 50 points in very quick fashion

        1. That’s really really good Nick,how long did it take you to find consistency?from when you started trading.Volatility is great if you are good like you are but maybe a bit harder when we are learning?

  20. I still think the calendar event that will matter isnt US Retail Sales tomorrow etc etc it’s their Holiday on Monday,cant see Friday as a day they will buy and hold for 3 days to see what they come back to.

    1. Well seeing how within 5 mins it’s miraculously all fantastic again Just keeps bringing that daily 200 sma to mind at 15750,trading too much BS gets too messy!and it stinks.I think the oil price will suddenly jump up in spring and take the indices with it,well it is an election year WSF like you said.So until we get down to sub 16000 and preferably the 200 Im not happy with these unauthentic rallys.I think there is a wobble coming from China so if it’s up here at this level it can drop back 300 -400 or so and still be just south of 16000 and above 15750. T-shirts are at the printers!!!! GL WSF we all need it in these times more than ever.

      2. Thanks anstel,Good Luck to you too.Dax seems a bit less supported than the rest to me at the moment,faster to push lower and less keen to rally to earlier levels alongside the Dow.

      1. just to confirm 5946 was the level of the signal – add 10 – 20 points if you’d like to reduce “risk”

          3. Only one trade – which was my Daisy Horn RSI T.
            I’m probably thinking the same as others – thinking this may bounce back to 6000 so treading carefully – which sounds like me making excuses up not to trade !
            In many ways – it was a great day to trade.
            Two bounces of 5835 for 40 points
            One off 5900 for 40 points.
            RSI Signal at the end 30 points
            What could be better. Much better than a trending day.

          4. Thanks for your honesty Hugh,yes it’s really hard when it’s like this.just taken + 23 and a + 2 Ftse but lost -34 and – 89 on Dow.those are my facts.Very best of luck,it’s hard for all of us however we approach trading,there’s no one way of being successful,just got to be open to all strategies at all times.On your daisy horn Rsi T how many points did it yield?…..Don’t feel the need to post it if you don’t want too,I understand,but be interesting to know what strategies and trading styles yield the most points.might help everyone?

  27. Choppier than the Dover-Calais ferry I was on a few years ago. Bad memories. It ain’t easy, but there are levels which the price keeps bouncing from, 5840 today and 6000 earlier in the week. Like Nick says, if you get it right you can get 50 points down, reverse it and get 50 the other way. Always have stops and limits. Don’t over trade and always be able to leave a trade. If you have to watch every tick then reduce your size.

    1. Thanks Dan for your comments,hope you are doing well and best of luck.I have had days when I’ve nailed it,100 up 100 down and 100 up again on the Dow,it was like I was trading subconsciously,like driving a car,I thought I’d cracked it at that point,if I don’t crack it this year it’s not for Lack of trying !

    1. Looks like a double top Argyle on 15 min Dow chart sma,but I’m still very early days with charts.

  29. Probably totally irrelevant as there are other things in play.
    Short 5960 FTSE GAP fill Stops 10 T1 – 2 – 3

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