Support 5909 5893 5875 5836 5733 Resistance 5939 5964 6006 6051

Good morning. There was a danger of a recurrence of the previous days movements as the markets were strong in the morning and then started to weaken quickly after the open of Wall Street. Fortunately as the afternoon drew on Wall Street rallied strongly as a rebound in oil prices boosted energy companies. The market has made multiple attempts at rallies over the last few days which have repeatedly failed however maybe this is the genuine recovery we have been waiting for. An eye on oil shares is probably the best indicator as no recovery can continue while oil shares lag and in this case the recovery was lead by oil shares. A promising day on the markets which could see more rises into the weekend. Travel shares lagged as world events made travel and tourism more risky but we hope this is short lived.

Was a decent day yesterday shorting 5900 first thing, then the 5850 long both gaining profit. The rally rocketed to 6000 in fairly short order but has since fallen back overnight and we are back at 5915 with the shorter term chart looking bearish, but the bulls needing 5912 to hold.

US & Asia Overnight from Bloomberg
Asian stocks tracked U.S. gains, with the regional benchmark paring its second week of losses, as material shares led the advance.

The MSCI Asia Pacific Index rose 0.8 percent to 121.66 as of 9:01 a.m. in Tokyo after dropping 1.7 percent on Thursday. The gauge is heading for a 1.9 percent decline this week. The Standard & Poor’s 500 Index climbed Thursday, led by oil and other commodity shares, as crude rebounded above $31 a barrel and metals gained. Comments by Federal Reserve Bank of St. Louis chief James Bullard that the rout in energy prices may dent inflation expectations helped fuel the rally as technical signals suggested the selloff may have gone too far.

“While we’re seeing a little bit of a rebound, I’d be hesitant to say that we’re out of the woods,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “There’s just a lot of uncertainty and risks. While oil could be close to a bottom, the news out of China continues to get worse and we’ve still got geopolitical risks. There are selective investment opportunities but there are just as many risks out there.”

Traders have been whipsawed in 2016, with equities around the world off to their worst start to a year on record as oil plummeted to levels last seen more than a decade ago and China struggled to maintain control over its markets. The MSCI Asia Pacific gauge has fallen 7.7 percent this year, while the Shanghai Composite Index is down 15 percent.

Regional Gauges
Japan’s Topix index jumped 1.8 percent after slumping 2.5 percent on Thursday. South Korea’s Kospi index added 0.9 percent. Australia’s S&P/ASX 200 Index rose 1.3 percent, as BHP Billiton Ltd. jumped 4.4 percent. New Zealand’s S&P/NZX 50 Index increased 0.9 percent.

Markets in China and Hong Kong have yet to start trading. Futures on the Hang Seng China Enterprises Index climbed 0.3 percent in most recent trading, while contracts on FTSE China A50 Index and the benchmark Hang Seng Index each slipped 0.1 percent.

The Shanghai Composite Index climbed 2 percent on Thursday, reversing a loss of as much as 2.8 percent and sending a gauge of volatility to the highest levels since September. Stocks rebounded as 28 companies listed on ChiNext small-caps index vowed to take action to stabilize the market and the China Securities Regulatory Commission assured investors that the forthcoming registration system for initial public offerings won’t lead to an oversupply of new shares.

E-mini futures on the S&P 500 index advanced 0.2 percent. The U.S. equity benchmark index climbed 1.7 percent on Thursday, while the Dow Jones Industrial Average rallied more than 220 points. The recovery accelerated earlier while Bullard answered questions from reporters following a speech in which the policy maker, who was a vocal proponent of raising interest rates, sounded a more cautious tone.

Material and industrial shares led gains on the Asia’s benchmark gauge on Friday, while energy stocks also climbed. Crude oil futures rose 2.4 percent in both New York and London on Thursday. Contracts on copper climbed the most this year, while iron ore also advanced. [Bloomberg]

FTSE 100 Prediction
FTSE 100 Prediction

FTSE Outlook and Prediction
The charts look a bit messy but I think we will pop higher soon and break through the 6000 level. The 10 and 30min charts are bearish at the moment (not surprising after the drop from 6000 last night), however the 2 hour chart is showing support at 5909 so if this level holds this morning then we could get a spring back up from here. We also have some major PRT support at 5893, and with 5900 being resistance initially yesterday (we dropped off this twice, and then broke through on the 3rd touch) this area could be support. However, the recent pattern has been for the bears to sell any rally strongly as we saw at 6000 again, so the bulls will really need to be quick out the blocks this morning as we are almost at that support area. Fair bit of news out at 13:30 from the US later including retail sales which is likely to move the market around that time. If the bears break through the 5893 support area then it will probably stay fairly bearish for 5836 again, and possibly 5733 on Monday to test the bottom of the Bianca channels. The bulls do need to break 6051 and I don’t think they will do that on any initial rise (this is the 25ema on the daily). So, usual weird Friday coming up most likely, stay nimble and I have just gone for the one autostrade as per the trade plan below, however, if the long gets stopped then flip to short for 5836 and 5740.

103 Comments

  2. Morning all I’ve harvested some points since shorting and hedging last night as follows.Dax +2 lost my bottle on holding that one! Ftse +14 Ftse +7 ftse +1.5 lol! Ftse +13.5…….. Pleased with that little haul,could of been a lot more if I’d held longer.Thats all the gains I lost yesterday put back in my bank where they belong! Right whats next?

        1. Morning,anstel that turned below the 50% retrace and there are EMU merchandise trade no’s in 6 mins,probably garbage Retail sales from the U>S at 13.30 too.FWIW.

          1. I reckon the t – shirts will be in the shops till dinner then they might get sold out! The most important bit of technical And fundamental info was provided by your good self yday,a big thanks. WSF …….Monday’s shut for t – shirts !

          2. I wonder when we get our date with destiny,the dreaded 200.be afraid,be very afraid,but keep smiling!

          5. T shirts 🙂 The purely plagiarised bit might say, “Hilsden Trading – Open all Hours” think we are still working on something that expresses the cynicism about mkt action,but there are probably arrows and emotional faces too.

          7. Oh Sorry Nick,trading is quite stressful sometimes so I like to add some lightheartedness into the mix,hope you don’t mind? Well what it is myself and our esteemed friend WSF have a little business going in case this lot tanks,we our getting t – shirts printed with upward chart arrows on the front and downward chart arrows on the back,both with smilie faces superimposed over the top,WSF is a major contributor in the design phase and he has added Hilsden Trading……open all hours,to the final design……They are only available at certain times so if you would like to get your order in now send WSF a message,he is handling all the financial side,in fact I think we may become a PLC.We have all colours available at this time,we might be asking for a small advertising charge for your plug but it won’t be much :0)

          8. Ah got you. Could come up with loads of slogans:

            “Its better to be out wishing you were in, than in wishing you were out” Though this sounds a bit dubious outside of trading circles!

            “Do the opposite to the masses”

            “When the BBC says sell, I buy buy buy”

          9. Yeah teeth marks and maybe some sharks,Something fishy anyway! WSF your an inspiration with your ideas….Top Man!

          10. We might have an opening for a creative director and slogan specialist as we expand,your top of the list Nick with excellent ideas like those,thanks for your input!

          13. Wow I’m loving that one…….”get rich slowly rather than poor quickly” I’d like to add that to the design with the approval of WSF,I think I will buy 5 of the first production run for myself,one for each trading day,you know what,these would actually sell really well at the forex show in February!

        2. Somebody just asked me what I’d do if I won the Lottery and I said,Short the Dax with a 300 point stop loss.Think I need a break.

          1. It’s funny that you should say that WSF,I actually think the Dax is going to post some strong gains in the next quarter.11000 plus is my guess.

          2. Yes probably,just looking at the 30 co’s though they are all in sectors that seem out of favour this week.

  8. I noticed the little pye charts on the city site showing how clients are supposedly positioned is not being shown!!

      1. At some point Dan unless they replace oil with another form of energy the oil price should ascend I would have thought,The oil price and Marios QE should keep things going till the election.With the petrodollar propping up the usd I can’t see oil dropping too much from here,but…….life is full of surprises.

        1. Way too tight for this kind volatility. Best to think of support and resistance as zones rather than exact levels.

          1. Morning All,
            Coombsy & (Dan – Think you’re right) –
            I sat down last night had a look at my trades and I’ve been stopped out virtually on all of them.
            This morning went Long 5835 – aware the low was 5828 – thought I’d stick to 5820 – then promptly got frazzled.
            Either my entries are to early or my stops to tight.
            One or the other needs some attention ..but I’m thinking – if you move the “entry” it is possible that it wouldn’t get filled.
            If I widen the Stops – I should increase my targets.
            So it’s probably a mixture of each.
            The actual trades have been in the right direction but not very helpful if you keep getting stopped out.
            The other thing – because I’m pushed for time, most of the time – I set orders/limits and stops. But I’m thinking it’s better to set an alert at the entry price and then see how it sits. (Mind you if I did that I’d probably be way to late to do anything!)
            Conundrum 🙂

          2. Small stakes wide stops I think as you know hugh.getting stopped out all the time kills confidence and lots of little losses add up but you know me GL hugh.

          3. Hugh, Coombsy – even though my trade failed and I got stopped out, once the price broke through the stop level it carried on – meaning the stop was in a decent position and the price had to break out of its range to confirm. This kind of market needs huge stops IMO, however, like you say Coombsy, it means your targets have to be higher which also means you need to be more patient when the price is fluctuating between your open price and target.

    1. There are cynics, there are doomsayers, and then there’s Albert Edwards, the Societe Generale economist who is in a league almost of his own.

      Edwards’ most recent call is that if the US economy plunges into a recession led by weak manufacturing output, stocks will be worth about a quarter of what they’re priced at now.

      It’s a heavy-duty prediction.

      On Tuesday the S&P 500 was at 1,938.68. Edwards sees it possibly passing the low of 666 it hit during the 2008 financial crisis and ending up at just 550.

      The main thrust of the thesis is that central bankers inflated asset prices after the 2008 crisis and didn’t let stocks hit the lows they should have done.

      Central banks also caused a huge debt bubble to expand in the emerging markets and China, which is now pressuring emerging-market currencies to devalue, which could lead to a deflationary spiral and a US recession.

      Now that central banks have used up their ammunition to prop up stocks, asset prices will fall dramatically if the recession does hit. Stocks will be valued at seven times earnings.

      And Edwards thinks the US is on the brink. Weak manufacturing data is the canary in the coal mine.

      When an economy is hurtling towards recession it is almost always the manufacturing sector that takes the less volatile services sector by the hand and leads it into a recessionary underworld.

      1. Hi Anstel,

        I don’t know how you manage these positions, just reading about it itself makes my head spin. It is a very complicated business with hedge, it may look like a very helpful tool put in the long run it will cause you lose more money.

        Keeping it simple works best !!

        GL

        1. I’m with RJ on this. When you hedge a position you’re essentially delaying making a decision on a market. Eventually, you have to pick a bottom or top to the market and close a hedge. What’s the strategy Anstel?

          1. Here’s the way my mind is thinking Dan,have a laugh if you want!when we place a trade if we have a 50% chance of success if instead of a stop we hedge we have another 50% chance when we break the hedge.it takes time and stops you trading ……but I have found success doing this,at the moment though the emotional side makes it harder.Just trying my best Dan and looking for an edge Good Luck as always Dan.

        2. Thanks RJ,I think if you have patience it helps,I’m exploring all avenues but in the past I have been successful hedging.
          It strikes me whichever way you approach trading it’s hard but I find patience and holding a position for a longer period a help,Good luck as always RJ we all need it.

      2. Short Term Trading / Hedging
        My experiences of it..
        – it’s fine in a sideways moving market – but you don’t know when you’re in a sideways trending market until several weeks or months after. (Luck)
        – as soon as the hedge is “lifted” – you can be exposed to the very trend that you were hedging against. The problems start to increase when the it’s left exposed overnight or over a w/e.
        – & finally – it freakin’ messes with your head! It’s difficult enough sometimes to get your head straight let alone add other things.
        I’d agree Keep it simple…:-)
        Long / Short / Reduce / Flat / Rest

  20. Yep, the bottom has been reached. Plenty of money waiting to come back in and watch the Dow after Euro close bump up to 16350

    1. The clue will be around 4 and 4.30 watch the Dax Cac and FTSE. If they dont fall at close expect Dow to climb considerably

        1. Well kind of back where I started. Still looking for nice rally this evening, then switch short at 8.23 pm on Dow

  21. Hey anstel,re Hedging etc etc worth remembering that by definition trading in a generally accepted way loses money,although what you can get away with is always about account size and what you can hold in your head,some people cant hold more than one time frame in their heads for even one market,Peter Brandt only trades off big indicators in large timeframes now,so pretty likely he traded against himself all the time when he was making his money and working shorter timeframes too. PTJ has been shorting Indices since Oil moved down through major S and Indices breached major ma’s,that doesnt mean he hasnt been long sometimes too though,it’s impossible that he hasnt despite his ma rules because of his trade frequency.Also there is a reason free Broker courses all say major S and R and hold and only talk FX and Indices and that isnt because they want their clients to make money,equally the Hedge button appeared because most clients only try it when they are scared and it costs them more,then they blame the instrument not their judgement.

      1. Yes I think it has fallen a couple of hundred too far now too,cant pass it off as just another day/Bank Holiday weekend,this will spook the next Mkt to open if they dont push it up the way it was at the start of the week,but Oil is closer to 29 than 30 now.

  24. Hi WSF I’m exhausted,possibly a lot of truth there in your comment.I need a break I’m knackered catch up later. Where’s that 200 15750 ish?

  25. Yeah me too,very long day,14 trades,all short,stopped once,but just cant see it clearly now.Thought the Dow open would repeat that fall and flat bit from 4a.m,dont know why now,think I’ll call it a day and open a Beer to stop me from Trading anymore,Sunday night will show up soon enough.
    200 weekly Dax = 9056.4,Dow = 15751.8 🙂 good call there
    Ftse was 6398.Have a good weekend.

    1. Not the 5740 long, I stupidly had a moment of weakness and have ended up long from 5808. Been expecting it to rally all day and for some reason couldn’t switch my mind set to go short. still holding. What you reckon on Monday with the Dow closed any chance of some up side?

      2. Coombsy – I guess there’s every chance of a re- test of 5835 – then – being optimistic – the GAP higher up 5938 – 5969. Obviously lots of hurdles to jump before then .
        Mind you – just seen 5807 at 8 o’clock – so maybe you’re out.

          1. Nope still in, thanks for the chart Hugh. Didn’t have a limit set and family duties kept me from manually coming out break even. Looks like a push up for the last 20 mins.

            1. Well finally out -22 points once it moved up decided to watch into close hoping it would rally before close but it fell back and I’m out. Silly position to be be in but hey we all live and learn. Least I’ll have a worry free weekend. See you all next week.

  28. I am absolutely knackered.hedged For safety on our beloved Dow. 7 losing trades and 25 winning trades in last 24 hrs last two losing trades where because I wanted to close them for weekend,I would have held them otherwise. In money terms I have gained almost 4x multiple of what I lost. So I think that’s not too bad.See what next week brings,good luck everyone.

  30. Looks like tmfp is right, fully fledged bear market now in operation. There will be rallies which will trick us back in long but 6000 on FTSE will be as good as it gets as lower lows get breached. I would say there is now only one safe trade and that is to sell the rallies. Possibly a long in gold wouldn’t be a bad medium term trade either.

  31. Hi Argyle,I looked on the city site,the little pie charts showing how others are trading has been reinstated,it had been removed last week.it shows 87% long Ftse 77% long wall St and 69% long sp500. Looks like you are right,more downside! Big Question is…..is this the start of an economic collapse? We have Chinese 4Q GDP (YOY) and (QOQ) ,retail sales, and ind prod out Monday night GDP is projected down 0.1% on fx street economic calander,for both YOY and QOQ ind prod projected down 0.2% and retail sales YOY projected up 0.1% FWIW! Certainly it’s going to create more volatility.Be interesting to see where the market opens,whether it gaps down or gaps up,you would think it would drop on open as people have got nervous over the weekend,but could well then have a bit of a relief rally ( I can’t see it reaching 6000 to be honest,I think if it hits 5900 it will be surprising) before more downside later on.i think short the rally’s is a good plan or maybe better just either don’t trade or stay neutral. It’s a very challenging market indeed with all the variables involved Good luck Argyle.

    1. northmantrader.com/2016/01/17/pendulum-swing/

      That makes for a interesting read …

      Personally I think we will see a wave 5 up before the major correction looking at the SP 500 & Dow monthly charts it looks like its missing the wave 5 up yet …

      Markets currently well oversold on daily and now on weekly I expect a big bounce …

        2. Hi Hugh, yeah thanks Rich for that.
          I don’t disagree with matey in the slightest, although I’d like to see one more brief low and a quick retrace before getting too excited on the up side.
          Interesting times.

  32. Evening All,
    Just having a browse through some charts and looking at at the USD / CAD which I thought may be of interest.
    USD/CAD – Weekly Chart – quite clearly picks out the turns in the market to my mind.

    If it was to be assumed that this was going to make it’s way to 1 USD ;1.60 CAD $
    – you’ve got your 10% correction in the DJI getting baked in right now.
    Chart Here
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=dl7c8kyfp4n4g7n0ei18t7dsg&type=png&purpose=file
    Just a few observations.
    1) Are we heading for 1.60 ?
    2) The climb of the $ was 44% 1991 – Jan 2002. Using this 44% – the $ should have reached 1.3090 – which is the March 2009 High & many Index Base Dates Approx.).
    The dollar is currently 1.4600. So it has over shot this level by roughly 10%.
    Are we oversold then on the indicies?
    3) An alternative view is that we overshot the 1991 support level by 18%. A widening of the range may lead this to overshoot the topside by a similar amount – which would put the dollar at 1 USD : 1.88 CAD $. (Oil/Commodities would have sunk & the Dow would have moved to much lower levels.)
    We overshot the 1991 Support level by about 18 %. Might this do the same to the upside?

    There is a Bank Of Canada meeting on Wednesday. From what I read – they are expected to be considering cutting interest rates which will lead to more dollar strength.

    Another extended weekly chart below
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=adnzopqc91swxrucnpdlmchwj&type=png&purpose=file

  33. Hi –
    My post is waiting moderation so thought I’d post it without the chart links.

    Evening All,
    Just having a browse through some charts and looking at at the USD / CAD which I thought may be of interest.
    USD/CAD – Weekly Chart – quite clearly picks out the turns in the market to my mind.

    If it was to be assumed that this was going to make it’s way to 1 USD ;1.60 CAD $
    – you’ve got your 10% correction in the DJI getting baked in right now.

    Just a few observations.
    1) Are we heading for 1.60 ?
    2) The climb of the $ was 44% 1991 – Jan 2002. Using this 44% – the $ should have reached 1.3090 – which is the March 2009 High & many Index Base Dates Approx.).
    The dollar is currently 1.4600. So it has over shot this level by roughly 10%.
    Are we oversold then on the indicies?
    3) An alternative view is that we overshot the 1991 support level by 18%. A widening of the range may lead this to overshoot the topside by a similar amount – which would put the dollar at 1 USD : 1.88 CAD $. (Oil/Commodities would have sunk & the Dow would have moved to much lower levels.)
    We overshot the 1991 Support level by about 18 %. Might this do the same to the upside?

    There is a Bank Of Canada meeting on Wednesday. From what I read – they are expected to be considering cutting interest rates which will lead to more dollar strength.

  34. Hello chaps, I see you’ve been having some fun whilst I’ve been away 🙂
    Looking pretty weak for Monday morning, trading around 5765 atm.
    Picking a bottom looks a bit of a potentially expensive exercise, (dropped 15 pts while I’m typing) but a heavy exhaustion sell off could be on the cards and, depending on how quick it gets there, low 5700’s could be worth a brave short term long.
    I don’t think we’ll get my 5200 this move, maybe 5400 before Easter.
    See you in a few hours.

    1. Hi tmfp nice to have you back,bloody hell it’s been a bit flipping volatile round here,you would have loved it!!

      1. Hi anstel, yes so I understand from the Sky News ticker in the hotel, much as I tried to ignore it. 🙂
        See you in the morning.

        1. Hi tmfp,hope you had a good trip.What’s a Bear song that isnt by Status Quo ? getting tired of that one.

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