Support 6074 6072 6033 6002 Resistance 6087 6103 6118 6133 6139 6173

Good morning. There was some buying on the back of the FED announcement yesterday morning however most traders were already positioned at lower entry levels and so the FT100 quickly fell back having spiked up to 6150. The profit taking has been limited and so this shows the market is relatively strong in the run up to Christmas. World economy is still weak and this is shown by continued low oil and commodity prices and so the buying may be short lived.

The FED decision is more of a longer term signal suggesting that they think the US economy is strong enough to take an interest rate rise and so for the next year is a positive. Until commodity prices show signs of recovery then it will be difficult for markets to move up, especially the FT100 as it is weighted so highly in these sectors.

Financials do better in a higher interest rate environment and so yesterday the banks were some of the biggest gainers with oils and commodity sectors lagging near the bottom.

US & Asia Overnight from Bloomberg
Asian stocks fell, after a brief rebound from earlier losses, as a plan by the Bank of Japan to establish a new program to purchase exchange-traded funds disappointed investors.

The MSCI Asia Pacific Index slipped 0.7 percent to 129.57 as of 2:50 p.m. in Hong Kong, after jumping as much as 0.6 percent after the BOJ announcement. The BOJ said it will spend an additional 300 billion yen ($2.5 billion) for ETF purchases on top of the 3 trillion yen the bank already spends each year. Japan’s Topix index jumped as much as 2 percent, only to drop as investors took a closer look at the central bank’s plan.

“This is unexpected, but compared to the previous so-called QQE, the size is considerably different,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd. “At 300 billion yen, it’s on the scale of margin of error. The impact to the stock market will not be big.”

At 300 billion yen, it’s just a 10th of the size of the bank’s current ETF efforts. Not only that, it’s intended to offset the market impact as the central bank resumes selling stocks it purchased from financial institutions from April. The BOJ also said it would extend the average maturity of holdings of Japanese government bonds to 7-12 years, and increase the amount of individual Japanese real estate investment trusts it can own.

Weekly Gain
Asia’s benchmark index pared this week’s gain to less than 0.1 percent after jumping 3 percent over the past two days. The Standard & Poor’s 500 Index ended a three-day advance as a stronger dollar in the wake of the Federal Reserve’s interest-rate increase this week weighed on commodity shares, with crude tumbling below $35 a barrel.

The U.S. rate increase solidifies the Fed’s divergence from other major central banks, with policy makers in Europe and Japan still emphasizing measures to support growth. Following its two-day policy meeting, the BOJ kept its main target for monetary stimulus unchanged, indicating confidence in the economy after data from capital spending to business confidence and unemployment exceeded expectations. It will start the new ETF program in April.

Taiwan’s Taiex index slipped 0.8 percent. Singapore’s Straits Times Index declined 0.4 percent. South Korea’s Kospi was little changed and Australia’s S&P/ASX 200 Index added 0.1 percent. New Zealand’s S&P/NZX 50 Index increased 0.3 percent. Hong Kong’s Hang Seng Index and the Shanghai Composite Index were little changed.

E-mini futures on the S&P 500 Index dropped 0.3 percent. The underlying measure fell 1.5 percent on Thursday, halting its longest winning streak since October, as investors moved past the Fed’s first interest-rate increase in almost a decade and returned their focus on the commodities rout and prospects for global growth. Oil closed in New York at the lowest level in almost seven years after U.S. crude inventories surged. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Slightly frustrating day yesterday for the FTSE for me as I shorted just a bit too early at 6140, stopped out at 6160 only to watch it then pretty much follow my arrows and drop to 6100, bounce to 6130 then drop back below 6100 overnight. At least the gold short at 1069 netted a few points. For today we have the pivot at 6103 as initial resistance with a 30min PRT line and the coral just above that. I think a short around here is worth going for, despite the fact that we have already tested the pivot overnight and dropped back from it. Support is at 6073 initially this morning, but i am feeling a bit more bearish as we are nudging the top of the daily Raff/Bianca channels since the Fed news, and also the 2 hour chart has just turned bearish. I think we will get a dip down to the 6030 area (I don’t think the bears are going to break 6000 this side of Christmas) before more upside next week as we possibly get the Santa Rally kicking in. I’d rather trade of the technicals than pin my hopes on that rally though at the moment.

57 Comments

  1. Morning chaps.
    ‘Seeing like a beach ball at the moment’ as we used to say in cricket when a batsman was doing well, I had 6060/6100 range for the first half hour and bang on. 🙂
    A small left over short at 6100 right now, 20 either way.
    Want to be all square at 10.00 for the witching, working on scale up selling just for that, probably 20, 30 and 40 points above the market.

    2. Morning,well done with that short,think I will wait for Dax 700 to break or hold,almost wish there was something on the Calendar for today 🙂 Yellen cant live with her,cant live without her sort of thing.

    1. I’ve gone a bit lukewarm on that, was a loyalty short more than anything, taken 4, think we might have a little spike.

  3. Morning, it seems they shook the tree a little last night, like Nick I can’t see massive downside. Still nursing ftse long and waiting for my 6300 target. On the lash today so will be a watching brief.
    Sorry I didn’t answer last night, tmfp, FTSE vs Dow I was using 3:1 which is probably weighty and should be 2.75 ish to 1.

  4. Well here we are, another of my damp squibs probably. 🙂
    Short orders at 6125, 6135, 6145, small stakes no stops. No longs.

        2. Another one fizzles out
          No bounce back either but holding. got to go and do my Friday duties now so out for pennies, hopefully back for the DOW.
          Have fun
          🙂

          1. tmfp – are you waiting for someone to say ‘what chores’? and you come back with ‘double G&T please’

  5. Morning All,
    Back now – from one of my early morning stints !
    As per I put my trades last night on the board (See below)
    My (S) 6102 has been filled & just waiting for Target 1 filled 6090,
    now just going to wait for target 2 at 6053 (Stops moved to b/e)

    Hugh says:
    December 18, 2015 at 12:02 am
    I’ll be off out early tomorrow – again.
    The trades I have put on are as follows
    Trades Tomorrow
    18th December 2015

    Long 6043
    Targets 1 – 2 – 3 6062 – 6082 – 6101
    Stop 6023 (Just beneath Support)
    Or
    Short 6102 (Support inflection point)
    Targeting 1 – 2 – 3 6090 – 6053- 6035
    Stop 6108

    1. Hi Hugh,wondered if that Long triggered.Your night before,bigger picture,trades seem to have a good win rate have you done enough of them to have a win rate worked out yet ? I was reading about Monte Carlo,pros and cons,as a method for valuing System Trading using back testing,but I guess there are only so many hours in a day.Good luck.

      1. Hi WSF
        The 6043 was missed by a couple of points.
        Yes – “the bigger picture trades” have been good but I haven’t really come to any decision about them.
        They suit me better than watching every twist and turn .
        As I’m posting these the night before – TBH I wasn’t sure if anybody was looking at them ! 🙂
        I’m still getting the feel of them & I’m also doing the RR of 3 :1 With Target 1 – 2 – 3 based on the Stop . So if the stop is 20, for example, – Targets will be 20 – 40 -60 points from entry.
        (I’m thinking this 3:1 is very essential to the whole idea – Doing the maths – e.g. Risk 20 – To make Target 1 – 2- 3 – gives a total of 120 pips – a 16.6% return. (If I’m correct – that means you can have 6 wrong’uns to approach 100 % incorrect – which I think is unlikely!)
        Obviously – it’s a mental struggle to wait for target 2&3 !
        I didn’t bother posting the trades the night before On Wed – but yesterday (17th) I went Short 6155 – Targeting 6127 – 6098 -6070 . I lost my bottle at 6130. Shouda’ waited – Target 2&3 ( 6070) were met.
        I think over the Seasonal Break I’ll try and get some sort of spreadsheet together so that it’s easier to follow.
        Work in progress …I guess..

          1. Hi Senu – OK – I seem to sit down after 9pm to do these – so I seem to post them anytime between 10 and midnight.
            Wonder if 6053 will be touched !🙂

  6. Today is my last day of sort of trading and watching before New Year (we are all on hols now). I tried long instead on Dax, got out with 2 points but missed short. And it’s funny, I was thinking then at 11.35 it’s the time to go short, all stacking up correctly for my strategy which I polished in my head all night, but will it go there? 10 min later – it did. But terminal was closed and I didn’t feel like trading since I had a late morning. But I decided not to spoil my results if suddenly something goes wrong today. I want to have good spirits on Christmas. So wish you all a very Merry Christmas and lots of winnings next year! GL ALL.

      1. Thank you all. And Good Luck with Christmas rally, if any this year. I won’t see it until 29th now. 🙂 Next year should be good!!! I feel it.

    1. Hi Senu
      6053 got filled – so I’ve still got one open – with Stops at 6102 (b/e)
      (Three positions all equal – targeting T1 – T2 – T3)
      (I’m thinking 6094 may be the top for the time being)
      T1 >6102 -6090 = 12
      T2>6102 – 6053 = 49
      T3>6102 – ?? (Stops at b/e now)
      ( So far 9% Return on Stop (6) – just depends on what this 3rd one does )

  10. Hello again, 50ish looks to be holding for the time being doesn’t it?
    DOW’s impressive isn’t it? World’s largest etc.etc. really leading the way with their booming economy lol.
    Their close will be the most important thing today for me, a break of 17200 will really put the cat amongst the pigeons. They’ll probably manufacture one of their totally authentic 300 pt rallies out of nothing though.
    Short at 63 76 stop for a little punt on new DOW lows.

  12. Hard to believe,but after that Close City still have 89% FTSE,70% Dow as net client exposure long,basically where they started the week.

  15. Friday Cash Close 6052
    Futures Close 6001
    Monday’s Pivot 6070

    I am going to place the following orders tomorrow (21/12/15);

    Short 6044
    Stop 6050
    Target T1 6026 – T2 – 6006 T3 – 5987

    I have altered the “Stop” price lower to 6050 from 6064 which is the
    price that the targets have been calculated on.
    I moved the Stop level because there is another valid.

    Short 6064
    Stop 6075
    Target T1 – 6054 T2 – 6043 T3 – 6033

    Long 5969
    Stop 5957
    Target T1 – 5982 T2 – 5994 T3 – 6006

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