Support 6067 6055 6035 6030 5907 Resistance 6105 6115 6151 6155 6208

Good morning, I hope you had a good weekend. Fairly quiet on the news front over the weekend, though Friday evening saw that FTSE rally peter out at at the top of the 10 day Bianca level (6132 versus 6125 as the resistance) with a dip as the US closed to 6050. Has since bounced back to 6090 though. I expect the Labour conference this week will raise a few eyebrows with more controversial rhetoric (when in opposition you can pretty much say whatever you like it seems, without worrying about the finer details about how to pay for things!) Politics eh!

US & Asia Overnight from Bloomberg
Asian stocks fluctuated, with the regional benchmark index on course for its worst quarter in four years, as investors awaited data on Chinese industrial profits. Shares in Japan slid.

The MSCI Asia Pacific Index added less than 0.1 percent to 125.08 as of 9:04 a.m. in Tokyo after slipping as much as 0.1 percent. The regional gauge has slumped about 15 percent since the end of June, heading for its worst quarter since 2011, as the Federal Reserve prepares to raise interest rates with financial markets rattled by concern over the depth of China’s economic slowdown. Markets in Hong Kong, Taiwan and South Korea are closed for holidays Monday, while mainland China will be shut from Thursday for a week-long break.

“Everyone is super-sensitive to China at the moment,” Chris Weston, chief market strategist at IG Ltd., told Bloomberg TV. “I’m really specifically looking at U.S. data and how that drives implied probability around Fed pricing” for its first rate increase.

E-mini futures on the Standard & Poor’s 500 Index dropped 0.4 percent. A 2.7 percent slump in health-care stocks left the U.S. benchmark index down 0.1 percent on Friday.

U.S. House Speaker John Boehner will resign from Congress at the end of October, following clashes with conservative members of his Republican conference. For some traders, the move reduces the likelihood of a government shutdown as soon as October, while raising the specter of a stalemate later in 2015.

Regional Gauges
Japan’s Topix index lost 0.4 percent as more than 1,000 of its members traded without the right to receive the next dividend payment. Australia’s S&P/ASX 200 Index dropped 0.1 percent and New Zealand’s NZX 50 Index gained less than 0.1 percent.

Futures on the FTSE China A50 Index advanced 0.5 percent in Singapore, before the cash equity market opens. The Shanghai Composite Index sank 1.6 percent on Friday to end the week down 0.2 percent. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

The charts are looking alright for an initial rise this morning, with the moving averages on both the 10 and 30min in bullish mode. We have the daily pivot providing support at the 6067 level, with the 10min also showing that level as support. Below that 6055 looks favourable for a long entry on the 30min. If that sort of area holds then we might well get a rise towards the top of the 10 day Bianca at 6151, where we also have the top of the 10 day Raff. As such, the bulls might struggle a bit here, as a few longs will be getting backed here after the rise from 5950 I expect. I mentioned 6125 might be a good shorting area on Friday and it dropped off from there, the second touch of that channel at 6150 might well be worth a go today if seen. If we test the top of the 10 day channel again soon the third test might well break to the upside though. So, still cautiously bullish for the moment (though still don’t think we will see that 6400 in September after all). Don’t fall in love with the upside as they say, I still think we will see 5700 before long.

81 Comments

  1. Morning all.
    Good shout on the 6065 support area Nick.
    Most of my scale up shorts got triggered on Friday meant a bit of a nervous weekend, so I took advantage of this mornings dip to take profits at 65 against my 90 average. Replaced a little at 6090 and 6100 and quite bearish for today while that holds.
    I think 6065 will also be important, if it breaks I’d be looking for high 59’s again.
    Conversely a break of 6110 will probably run on for 40 more, but not a market to breakout trade for me, too many conflicting signals make false moves likely.

    I’m keeping it small and trading off the short side, taking profits on weakness and replacing on strength. Sounds easy lol.

        1. Missed 9524 for a try (I was out for the meeting this morning). But FTSE doesn’t look that bullish yet. I will have a look, but I will definitely try long later today.

  4. Covering short now low 60’s expecting this area to hold one more time, maybe briefly, a bounce to 80 for replacement.
    DAX has already taken out today’s low though…..

      1. I know you can find fibs retrospectively anywhere, but that was quite an after hours drop on Friday, 6130-6050, puts this morning’s bounce into context.
        Now 65’s gone, 40/50 really has to hold or there’s only fresh air till the 59’s for me.

    2. Lousy bounce, didn’t even qualify as a dead cat (dead mouse bounce?), I’m now in that invidious position of being all square, having taken profits too early, whilst the market does what I’d expected.
      Not going to beat myself up though, a profit’s a profit and less not more trading is the key these days I think.
      Patience, sell the bounces.
      🙂

        1. If 30ish holds for half an hour, maybe with a 10 point exhaustion blowoff down to low 20’s but straight back up again, I think there could be some upside before the DOW opens.

          A little long at 32 15 point stop.

          1. LOL classic example of the overtrading I was warning about. It’s a cheap 15 pt lesson on a monday if you remember it for the rest of the week.

            RSI falling off the scale atm so a long at 6007, the size of the bounce, or lack of it, will be a measure of the mood, right now looks like it could be a Black Monday coming up.

  6. Looking for a possible measured move drop to 6010-15. (Same size move as Friday’s after hours drop.) This would also hit Thursday’s 9pm closing price which I’m expecting to be hit today or tomorrow. Then we’ll see.

      1. Didn’t look like it was going to come down first thing this morning – just knew I had to be patient – not easy 🙂

    3. measured move down to 6012 now fulfilled. My ideal would be to see this start the next leg up, back up towards 6200. Have to wait and see where it forms some kind of base.

  7. Hi Everyone,
    Tempting here isn’t it because it’s come off..
    Possible Long here between here 6019 and 6000 – although there is still no visual reason that the trend has reversed.
    RDSB Filling it’s GAP ….(poor news as well)
    6000 Is an obvious area of Support…

    My own bias is that I don’t really want to be “Long” of indicies…still…
    http://tc.md.it-finance.com/ProRealTime/display_chartimage.phtml?name=spzci8wi3qku4zs8rvvym2b4y&type=png&purpose=file

          1. One thing I always seem to regret of late, is changing my trade direction – mid trade- e.g Long then Short or Short then Long…
            It’s happened a few times now..
            Had I stuck to my guns Long then another Long or vice versa – the trade would have picked up.
            This probably illustrates why these markets can be a pain in the ass and then some more ….
            Just me thinking aloud !

      2. Patience required but I’ve got upside targets at 6076 and 6160. (No idea when they’ll be hit – here’s hoping for a bull Tuesday.)

          1. Yes – I did. Because I’m swing trading I’ve got a stop at 6940. A drop below that would invalidate my idea of a another leg up (straight away). I think this may take a while to go back up though (just like it took a while to come down on Friday – so we could chop around for quite a bit.)

          3. Decided to set the 6012 to break-even. Going to watch after that and decide on a point to re-enter if it’s stopped out. Hourly / 2-hourly have potential to drop further (if it wants to).

          4. possible double bottom at 6003 – trying long again – needs to hold above 6020 for it to be convincing.

    2. I’m not sure it’s a good idea being short around 6000 either. Everytime it’s spent much time below 6000 it’s been swiftly bought up – not been able to have two consecutive days closing below 6000 yet. Suggests it’s an area where the bears chicken out and the bulls step in.

  9. So, c. 100 point drop in about three hours and we’re all pretty blase about it lol.
    Concensus seems that 6000 ish is support so how high’s it going to bounce?
    Obvious resistance would be around 50/60% rt, but if it can’t even do 30+ convincingly, it doesn’t say much about how long 6000 will last, does it?

    1. Let’s be positive ….Tgt initally 6039 area !
      (There’s a Weekly PRT S & R line at 6029 – so if we can break that ! Phew!)
      Just looking at the gainers & losers…
      Glencore down again 19.79% – there are issues here about their credit rating.
      Dragging the rest of the miners down….

  10. Hi All,
    Shorted DAX this morning and bailed out with just 15pnts, then the bloody thing really falls….so volatile, thought FTSE up from 6065 region too, but glad didn’t hold long there, as we are testing close to 6000 level. Agree with you all, if 6000 holds good chance of bounce later or tomorrow, or else 59xx…now waiting for yanks…as they will be directing.
    BTW Audi admitted today as well about emission cheating, who is next?

    1. Don’t even know why I went for a bloody long when there’s no long. EMA shorty, crap basically. 9568 didn’t break, had enough waiting, risk is too high.

      1. And here we go, it looks like I would be losing this trade now. It crossed my line of exit, I would have lost now.

  15. So, we got what was likely, now how far down is it going?
    We have two scenarios imo
    1) Dow takes it on the chin, rebounds and closes positive.
    2) Dow melts down.

    Answers on a postcard please.

  16. I would have thought FTSE 6000, would hold today, but got that wrong…not sure now, but if 6000 is reclaimed then further up maybe, otherwise not much hope

      1. LOL, brave call!
        Sure, look at Bollinger Bands if you want to play reversion to mean and yeah, we’re out there on the edge.
        As matter of interest, last month was the first for seven years to close outside a 2.0 deviation, that’s how bearish things are.

        1. LOL… My brave call !
          Forget forecasting 20 – 30 points – what about just picking off a few points e.g. Is it possible we may ever see 5985 or 5967 and in which order …..!
          tmpf – Would have thought you would have been an RSI2 trader..

          1. No, you end up crazy trading like that, it was always the coke heads playing short term RTM strategies, snapping pencils and throwing telephones lol.

      2. Not sure how to play this, so half out at 70, there may be some shortcovering before the bell, but I expect weak again after.

        2. Just knew there was some more downside, if I didn’t have man flu I’d trade this tonight, the DOW’s obviously got the 15000’s in its sights today, which should put us at new lows..

  19. 100% bear market – need a long term view in order to trade short term – even if it rallies 300 points sell into it, remove stops and get short. Rallies in a bear market v scary and get shot down quickly as we’ve all seen. Go back to fundamentals. Barclay’s said there will be no growth next year – Low growth is the reality = stocks are over valued and funds will need to reduce. DOW has been a dream.

      1. I’ll be surprised if son of QE or something doesn’t show up by the end of the year to get the US through their Election.

  20. I wasn’t pleased with Nick’s prediction today at all. Nearly managed to escape with -2.5 points for the day. What if the price on Dow wouldn’t have come up and I didn’t double up? I should have left with the idea that there was no long indicated but no, I thought those arrows will turn things out. Was my fault here not to trust them.

    1. +3.5 for the day now. Call it a day. Shorts were all around: should have taken that short mentioned earlier.

  21. People are getting cleaned out left right centre and will lose confidence in investing if this keeps happening, saying that I still expect this yoyo behaviour to settle and the market to shoot as we proceed to the eventual news of US rate hikes by December. This is just a way of the banks profiteering before they have to take a small hit themselves.

  23. 5900-20 is a very tempting area to go long, given how oversold we are. Also close to the parallel support line so good risk/reward. Could still drop but worth a punt.

      1. hourly rsi 10 hasn’t been this low since we hit 5768. Gotta be good for some sort of retrace … like 10 points 🙂

        1. You’re right, I should think, although it depends on the way Asia interprets the DOW tonight.
          A good time to cover shorts. If we had any. 🙁

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