Support 6062 6038 6016 6008 Resistance 6125 6135 6137 6175

Good morning. Another frustrating day for longs as it appeared the strong rally into Christmas was starting. Unfortunately later in the session the FT100 nose dived along with the DOW to close 17 points lower, having been as much as 60 points higher earlier in the day. Some commentators said it was related to the Spanish elections or the weak oil price but it was quite aggressive when it happened. Commodities and supermarkets featured most in the biggest gainers, whilst oils were in the losers column. Overnight the FT100 has risen from its 6020 low, so not he positive side at least the bulls managed to hold above 6000. Was a bit early with the shorts yesterday going in at 6095 to start with which was a bit unfortunate. As mentioned yesterday, this week will see low volume and increased volatility.

US & Asia Overnight from Bloomberg

  • S&P 500 stages late rally in New York to end day 0.8% higher
  • China calls for `flexible’ monetary policy to support reforms

Asian stocks were little changed in thin trading as investors weighed the prospect of more stimulus from Chinese leaders.

The MSCI Asia Pacific Index added less than 0.1 percent to 130.05 as of 9:12 a.m. in Tokyo. Australia’s S&P/ASX 200 Index climbed 0.5 percent with volumes about 40 percent below the 30-day intraday average. The Standard & Poor’s 500 Index rebounded on Monday from its biggest two-day loss in three months.

China’s government said monetary policy must be more “flexible” and fiscal policy more “forceful” to combat slowing growth in the world’s second-largest economy. The rout in crude prices this year has pushed oil to the lowest levels since before the financial crisis, threatening to keep inflation from meeting central bank targets in Europe and America.

“Equity valuations are still compelling,” said George Boubouras, Melbourne-based chief investment officer at Contango Asset Management. “We expect lighter volumes going into Christmas this week. Relative valuations are still there,” favoring equities, he said.

Asian shares are down 5.6 percent this year, on course for their first back-to-back annual declines since 2002, as a commodity rout deepened and Chinese growth waned. The loss is about three times that of the S&P 500, which has dropped 1.8 percent in 2015. The Asian gauge trades at 13.7 times estimated earnings, compared with 17.1 for the S&P 500 and 15.5 for the Stoxx Europe 600 Index.

Japan’s Topix index gained 0.3 percent as the yen traded little changed against the dollar for a second day. The nation’s markets are closed Wednesday for a holiday.

Regional Gauges
South Korea’s Kospi index lost 0.1 percent. New Zealand’s S&P/NZX 50 Index gained 0.5 percent. Futures on Hong Kong’s Hang Seng Index advanced 0.4 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index of mainland shares traded in the city climbed 0.3 percent.

Futures on the S&P 500 rose 0.2 percent. U.S. stocks surged in the final minutes of trading Monday, rebounding after the biggest two-day rout in three months as financial and technology companies led gains from equities’ lowest levels since October. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Despite that dip yesterday from the 6115 yesterday I am still thinking buy the dips is a better play this week. There is initial support today at the daily pivot at 6062, with 6038 below that where we have the bottom of the 30min channel. The bulls really need to break through 6100 and hold above that to get the 2 hour chart to turn bullish (still bear at the moment) for a bigger rise this week. The 10min and 30min charts are looking more bullish this morning than they were last night in terms of the moving averages, so we may well see an initial rise first thing, probably to test that declining 30min PRT line at 6104. If the bears appear there then we will most likely drop down to the pivot, whilst a break higher will likely reach 6135. There are a few daily resistance levels here at 6135 so a break of this will be worth going long on for upside towards 6250. Initially its probably worth a tentative short at 6135 though in case those daily resistance levels hold and we get a repeat of yesterday. I am thinking longs off the pivot and 6038 look the best plays though.

78 Comments

  1. Morning.
    Well, we seem quite happy back in the mid/high 6000’s so far this morning, courtesy of that crazy 140 pt rally in the last half hour in the U.S.
    I’m not expecting much fireworks this morning, so playing the rsi which has worked fine so far, a long off 60 and a current short from 90, half out at 75, running the rest.

    1. and a nice little bounce off the 60’s again, all square now, trading range temporarily established.

      No more bear propaganda today apart from:
      The well known stat that 85% of retail traders (like us) lose money.
      The current % of retail trader long positions on the FTSE, according to IG, is……

      1. Morning all,10500 on the Dax is interesting,didnt think they would walk through it this morning.Not very festive.

        1. I’m trying really hard to temper my rabid bearishness but, where ever I look, it’s weak and potentially a lot weaker.

      2. The DAX is looking pretty bad the last few sessions and if 10470 goes it’s got the potential to look a lot badder.
        6060 gone, not looking good if it doesn’t snap back asap.

      3. It’s ok tmfp, the answer is only 81%!
        Seems to me that everyone is out to lunch so could be anything.

  3. Acid test for me on whether it will stay weak is the ability of the present rally to extend past 6060/10500.

          1. With the benefit of hindsight a Shooting Star that pulled back around the 200sma on the daily was a pretty good reason to run a tighter stop on a dax long today,although if this goes back to where it started I’ll still blame “them”not me 🙂

        2. A bit premature maybe, but looks like it’s on a grinder.
          Watching the 2 min trend line develop.
          No signals from the dead DAX, although that has a shallow uptrend too.
          Charades anyone?

          2. That went alright +17 but out now.
            Time to start picking tops…85/90?
            A larger 1 min candle will maybe be a sign of exhaustion top.

    2. Short at 81, stop to new highs 95, will keep this for the DOW hopefully, I think that late rally was nonsense yesterday and that they haven’t seen the last test of 17100 yet.

        2. Still a few trading days till then WSF, this is still vulnerable to a sell off then maybe a post Christmas flourish.
          Not nailed on by any means but worth a medium punt for me.
          Look at those dailys and show me one with any upside momentum, despite the increasingly desperate CB attempts to provide it.

          1. Oh I’d agree with that,just think we moved against Oil yesterday and I can see that a.m dip turning out to be an anomaly.I guess the US will tell us in an hour anyway,if the Dax doesnt sooner.I’d probably short the Dax now if it was January based on that 15min chart formation at the moment,but it doesnt feel right to me. 🙁

      2. Having said that, there is the possibility of continuing upside on the DOW at the opening which may well drag us with it, so I’m taking out the 95 stop and shorting more there instead, and at 6010, with a stop on all around 6130, budgeted for and not huge.

  7. Anyone else think that if this breaks 6060ish then we could be looking at another big drop? I’m short at 6074, not sure whether to hold, or get out now

    1. Yes, I think that’s reasonable mate, I’m short 81 too.
      Bit of a muted open on the DOW, I think activity will increase around our close then again later near theirs, both hopefully in the right direction.

      1. Cool, i’m going to hold for a little bit, maybe see about coming out if we bounce off the pivot for a 3rd time.

        Where’s your target mate? Got mine at 6035.

        1. We’re being led by the DOW, which I think has another test of its lows to go (17100).
          They may or may not hold, so if and when I’m making it up as I go along, probably IF we do get down to the 30’s banging in a 50 stop.

          2. Fair enough, i’m short on the dow as well at 17300 and i’m a little more confident about that one. Hopefully we can get into the 30s ont he ftse and 17100 on the dow and then i can forget about it all till after christmas.

  10. Well Senu, we live in hope! For my money I’m playing the short Dow on a run (vs my FTSE position) and nicking pennies each time, every little helps, but I was lucky with that one from 00 down to 80, just in time!

  12. I’m bottling this to a certain extent, because a) I’m not particularly happy with the action so far and b) because I’ve been told that I have to do some Christmas related stuff tonight and tomorrow
    So out of half the short at b/e and running the rest stop 6125.

  18. I phoned Merkel’s Premium line to ask if she could say something to push the Dax through 50,but when they heard my Visa card is RBS and British Gov backed they started laughing and hung up on me.

      1. The Dax only actually closed down by 9pts on the day everything else is still up,so the trend is still up.

Comments are closed.