Support 5947 5936 5918 5879 5878 5840 Resistance 5972 6022 6045 6140 6160 6194 6236

Good morning. The FT100 fell sharply at the open as China accelerated the depreciation of the Yuan and the Chinese stock market hit another 7% circuit breaker on steep falls leaving their market closed after only 30 minutes. As China imports so much from the rest of the world its economy is now important enough to send shock waves around the world when things start to look negative. The one positive note is that the circuit breaker mechanism is being suspended and therefore Thursday-Friday night the Chinese market will be allowed to trade for a full day. This may prove volatile but at least it will clear any sellers who wish to get out of the Chinese stockmarket …so this could be the bottom and therefore a base to build on into 2016. The FT100 went ex-dividend by 0.9 points so this had little effect.

US & Asia Overnight from Bloomberg
Asian stocks advanced in volatile trading, with the regional measure paring its steepest weekly slump since 2011.

The MSCI Asia Pacific Index reversed an early decline after China refrained from another cut to the yuan’s reference rate, with the equities gauge rallying as much as 0.9 percent. The rebound evaporated within 15 minutes as investors grappled with the outlook for financial markets after more than $4 trillion was wiped from global stocks in the first four days of this week. By 12:09 p.m. in Tokyo, the measure was 0.3 percent higher.

The People’s Bank of China set the currency’s reference rate little changed Friday after a falling yuan raised concern a slowdown in the region’s largest economy is deepening. Chinese shares swung from gains to losses to gains again after the government abandoned new circuit breakers blamed for exacerbating the worst-ever start to the nation’s equities.

“Nobody can judge what the Chinese government wants to achieve,” said Liu Yang, Hong Kong-based chairwoman of Atlantis Investment Management. “The direction at least is to try and stabilize the market. You need to take a wait-and-see attitude.”

The MSCI Asia Pacific Index’s advance comes after a four-day, 6 percent slide. Trading surged across the region, with volume for the Nikkei 225 Stock Average and Hong Kong’s Hang Seng Index more than 50 percent above their 30-day averages.

Japan’s Topix index gained 0.3 percent, reversing an earlier loss of as much as 1.2 percent. Australia’s S&P/ASX 200 Index slid 0.6 percent and New Zealand’s S&P/NZX 50 Index fell 1.1 percent. South Korea’s Kospi index slipped 0.1 percent.

China Stocks
The Hang Seng Index rose 0.9 percent, paring its decline for the week to 6.3 percent, and the Hang Seng China Enterprises Index of mainland firms trading in Hong Kong climbed 1.3 percent. The Shanghai Composite Index jumped 1.6 percent, trimming its weekly loss to 10 percent.

China has driven market sentiment this week with a series of interventions in the stock and currency markets. Having introduced a circuit breaker Monday, the regulator scrapped it, confusing investors as to their next policy move and adding to investor sentiment that authorities are improvising as they try to stabilize markets and shore up the economy.

Investors also will be watching closely Friday’s U.S. jobs report. In the face of crumbling financial markets, the December employment data will help signal the sturdiness of the economy. Futures on the Standard & Poor’s 500 Index rallied 0.9 percent Friday. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have NFP (Non-Farm Payrolls is a measure of the number of paid part-time or full-time workers in the US, excluding the farming sector) news out at 13:30 today which will be a fairly big deal, forecast to be 200k versus 211k last time, as this will give a guide as to the “health” of the US economy at the moment. We also have the Unemployment Rate out at the same time, forecast to remain at 5%. After the bearish and volatile start to the month this might provide a bit of support for the bulls who can spring a bit of upside from these lower levels. Its actually looking alright from the charts for a rise from the 5933 area so if this holds then we might see a rise to 6000 today, and possibly higher. The S&P has regained a bit of ground from its low yesterday (was a bit early closing that 1975 short in the afternoon, I didn’t expect it to dip so much a second time). There could be an initial dip as the daily pivot is at 5972 and we also have the top of the declining channel on the 30min chart here, so if we do then hopping on a long at 5935 could be worth going for. However, its NFP Friday so likely to be a little odd, so adjust your risk accordingly. Generally, I am looking at it being a fairly bullish sort of day, certainly till NFP – whatever that news is will determine how the afternoon plays out.

82 Comments

        1. I sometimes struggle to understand what you are writing, Hugh. “???GAP Chart Here have to fiddle??? with the time zones ???to removed??? the overnight data to make it clearer.”-doesn’t make any sense to me.

          1. Oh Sorry Jack –
            What I mean is that on IT finance software – the chart the default setting normally shows all overnight data.
            The overnight data can make it difficult to see the gaps between “the close” & “the open”.
            To make the gaps clearer – You have to reconfigure the time zone to only show the candlesticks/bars from 7:00 – 21:00 Hrs.
            This removes the overnight data from 21:00 to 7 am – hence it makes it much more easy to see the gaps that have occurred.
            It’s a shame it’s a not just a click of button, but it’s not – hence the fiddling around !
            Hope this clarifies things.

  2. Good Morning All,

    A very good day yesterday shorting Dow and Dax.

    Plan for today: I’m looking for 119 level on the Dax to short it. If it gets there before NFP, I will take a poisiton with GStop which is around 30 on the Dax.

          1. Out for -10. It is just my thinking that it would goto 10100. So not a problem 2 of 3 trades done today -20. Will wait for Dow open.

          2. Yes,wasnt criticising,just dont have your faith in the push up going further,so confirmation on the 3 or 1 min pushing above the Hammer etc etc,but I’m guessing you are looking 5 min and up on the charts and looking for decent lump sums so it balances out that way.Seen that 3 trade a day rule with some retired expat guys who used to do early morning on (ii) with Australia.

          3. I was looking at the 3 min and expecting some support 10020-30 region but not meant to be. If I start of with losing trades better to stop after 3. There will always be another opportunity. We might still see 10100.

          4. Bidding my time a little here. Trying to ration myself to RSI T trades
            Only one on ASX @ 4968 – if it goes sub 59 may be worth a L for 20.
            I’ve had nothing on FTSE or DAX although CAC flagged up but then disappeared.

          5. Just in passing – I’ve got a kind of neg.bias because of that JPY/USD chart – which has been MACD + this morning. (IG does it the other way round USD/JPY – so rather than the inverse correlation with FTSE – they kind of mirror the moves).
            Don’t want to over complicate things though !             🙂

        2. RJ, I looked at both of your trades here. I understand your reasoning about support clearly. However in my strategy nothing suggested long at 10.34 and 10.47. Maybe support was there, but the exit of trend line wasn’t confirmed so as EMA. By my strategy (if I was trading) I should have been in short from 10.15 accurate and would be taking half at 10.26. However it’s easy to say what I’d have done. It’s good for you for trying, there will be other trades.

    3. just noticed before I nip out the Ftse is just about to kiss the 200sma on 3 min.maybe a bounce there?

  4. Morning chaps,well I still have my 52 long and I added at 82 got a few things to do so I’m just leaving it alone till after NFP GL all

  5. Sorry chaps got those comments upside down,hope it’s not going to be one of those days GL all p.s. So much for the 200 sma lol.

          3. Morning Jack,it’s a lively little bugger the Dax isn’t it,had a few adventures before with it,if our friend Mario sneezes and mentions QE though it’s very entertaining if your long!

          4. From my very basic knowledge of charts it looks like the 50 sma on the Dax and Dow need to be exceeded for further gains above 10008 ish.But we could do with an expert on charts to chime in really Jack.

          5. Yeah, I think you went long too early. I went as a punt seeing you were long higher, that’s all. It gave me 20 quid as I put the lowest stake. But I am not trading now before NFP. GL next time.

  8. People are forgetting the 7% cut off China did yesterday, resulted in a gain today, the drop hasn’t finished yet and its just a Friday gain, next Monday the losses will continue.

    1. Ravi I thought they had withdrawn the circuit breaker yday,what am I missing here? Blimey I might still need my bunker after all, Hope you guys don’t mind the light hearted bunker comments but we still need to have a bit of light hearted fun.

      1. They have withdrawn it, but the reason they did it was because the market was selling rapidly, all of a sudden theres been a rise after removing it, but what about the people in sell positions? Its still go to fall a bit I feel next week.

        1. If you look at my last to comments on ydays board I watched the A50 at 1 am, it stayed level then shot up violently about 200 pts or so right off the top of the chart before dropping back the numbers are on ydays post. Going to see what I can find out about this ,thanks Ravi.

  13. Jack, you are right, there was no signal just a blind entry, 10100 did eventually come. I should have avoided the entry may be its because of winning yesterday just took some stupid unplanned trades. My planned trade was short from 119 which worked out well.

      1. Hi Hugh,

        Thanks its been going alright, I don’t understand the RSI bit as I don’t use it but good to see the confirmation. Did you short it at 10100 ?

    2. I went to shops and just came back to see. The first thing I thought was RJ was right. But I also felt I should have held all this time while I was out. It was a long into a spike. The scenario was to “take stops” above 10086 and touch the bottom of the previous support of January 6 at 10118 and bounce.
      Great trading from you again. I am a bit depressed and it’s not because of trading. I think it’s January. And today is my son’s birthday. So I was shopping for that.

        1. Jack, don’t feel bad. Take sometime off if needed to get your thinking straight, it might help.

          Cheer up and enjoy the time with your Son which is more important !!

          Markets will always be there and provide opportunities.

          1. Hey jack just read your post about feeling down,look at all the good things we have got,our health is one thing to be grateful for, but we take it for granted we have a roof over our head and food to eat,you have a son and spring is on the way,we have a nice little community of traders here to chat too, I did a lot of research into nutrition eat turkey its full of tryptophan which is an amino acid combine it with sweet potato which has vitamin B6 in it and loads of fresh veg,broccoli cauliflower carrots etc the tryptophan and the B6 make something called 5 HTP which is the precursor to serotonin a neurotransmitter that makes you feel better,try it I bet you will feel better,all the best mate.

      2. Stops at b/e now. I would be annoyed if it stops me out again and moves to 800s. I should have held the short from 119.

    2. Hugh, I think I understand now what you mean about GAP chart. I have it on Dax every morning for several days now.

        1. Thanks Hugh. I closed half of the remaining at 840. Its Friday and can be tricky and IG website is playing up.

      2. Anstel – I wouldn’t worry about it -it’s Friday I you might just get stuck into something that isn’t going anywhere……

        1. There is that danger Hugh thanks,let’s see if I can squeeze a few points out of it seeing as I have my position on.I like all your charts you post BTW thanks for posting.

      1. Afraid not – not that surprising though as I don’t do the DJI (only FTSE) !
        Me & FTSE – we’re monogamous X 🙂

  19. I have set 9800 as stop for the rest of my position. I will manually close it at 9 if stop not hit. Enjoying this ride !!

    This has been really a good week.

    Have a good weekend everyone 🙂

    1. Not watching the markets after trades are placed with S/L and TP definitely helps !!
      Closed the rest at 737 average 130 points profit of my original stake.

  20. Evening All,
    Just a few thoughts here

    Some thoughts…..

    OK – So the FTSE is heading lower ! A key area(s) is 5864 & 5775.

    H & S on FTSE (perhaps)
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=teo9tyt89xdwndnqeih3awllh&type=png&purpose=file
    (Click on the links for the charts)

    The FTSE feels as if it wants to move lower.
    IG’s Mr.Mahoney quotes 5864 and 5768 as being keys levels.
    PRT Lines – are suggesting (the 5892 Monthly Support – now broken)
    – next Trend 5760.
    The previous low was 5775 (24th Aug 2015).

    So to summarise
    We closed at 5912 on Friday – Broken
    5892 Monthly PRT Level Line – Broken
    5884 Cam “Long”
    Sunday night opening price was 5860 approx. – down another 50
    points Approx.
    5864 Mohoney’s Level
    5856 – Is the “Cam Short” Level
    5775 24th August Low
    5777 – Is the S3 Level
    5768 Mohoney’s Level
    5760 – PRT Line

    So two areas here 5775 – 5760 – taking an average let’s say
    5767 Long ..
    Stop – 5750
    Target 5783 – 5800 – 5816
    http://ee.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=x9m7mc24hmxhp7jbho0yjab9x&type=png&purpose=file
    (Click on the links for the charts)

    It maybe that we close the gap and move to 5912 area early on.

  21. Evening All,
    Just a few thoughts here

    Some thoughts…..

    OK – So the FTSE is heading lower ! A key area(s) is 5864 & 5775.
    The FTSE feels as if it wants to move lower.
    IG’s Mr.Mahoney quotes 5864 and 5768 as being keys levels.
    PRT Lines – are suggesting (the 5892 Monthly Support – now broken)
    – next Trend 5760.
    The previous low was 5775 (24th Aug 2015).

    So to summarise
    We closed at 5912 on Friday – Broken
    5892 Monthly PRT Level Line – Broken
    5884 Cam “Long”
    Sunday night opening price was 5860 approx. – down another 50
    points Approx.
    5864 Mohoney’s Level
    5856 – Is the “Cam Short” Level
    5775 24th August Low
    5777 – Is the S3 Level
    5768 Mohoney’s Level
    5760 – PRT Line

    So two areas here 5775 – 5760 – taking an average let’s say
    5767 Long ..
    Stop – 5750
    Target 5783 – 5800 – 5816

    It maybe that we close the gap and move to 5912 area early on.
    Reply

  22. Hi hugh you were dead right on Friday evening re that little Dax long it hit plus 40 but I wasn’t fast enough,thought it would go up more but it went down and I lost on it.

  23. Hi Anstel- I’m just about to turn in for the tonight but thought it worth posting something ! ( I’ve had a few + glasses of wine as well so please bear this in mind!) 🙂
    I hope you came out of your Dax trade with a stop, as I’m still getting the feeling that you haven’t fully understood the importance of the 3:1 RR ratio.
    The ideal trade is one that your risking 10 – 20 Points to return 20 – 60.
    (It is a form of gambling, I suppose). You’re looking for that sweet spot where the returns are good and accepting the odds. RJ’s doing well because he’s set out in his mind that he will do three trades per day with 10 point stops.
    This would imply being careful with the enteries to ensure that that the 10 point stop of being taken out is minimised as far as possible by being patient and waiting for the right price to enter the trade & accepting that.
    Have a think about this – your trading will improve and your “peace of mind” will as well.
    Hope you don’t mind me typing this – I mean well and as I mentioned I’ve had a few so I’m going to turn in… Nite 🙂

Comments are closed.