Support 6090 6056 6028 5933 Resistance 6121 6136 6170 6177

Good morning. It was a “see-saw” day of trading yesterday on the FT100 with a strong open followed by a mid morning dip then a recovery into the close. This shows that views are quite polarised with bears selling into any rise and bulls buying and any dip producing a range of 6080-6145. Slightly annoying that it dipped below the stop on our long then bounced back but well done if you hopped back on. There will be a break soon of those main levels probably but whether it is to the upside or downside it is unclear but the momentum is more to the downside currently. The fallout from the China economic data and the governments intervention on liquidity points to possible problems ahead for the Chinese stock markets and economy. Sector wise commodities recovered some of yesterday’s falls and so appeared in the biggest risers list and a mixture of retail stocks were in the fallers list on domestic demand concerns.

US & Asia Overnight from Bloomberg
Asian stocks fell for a third day after China set a weaker fix for the yuan and Apple Inc. suppliers tumbled on a report it may cut production.

The MSCI Asia Pacific Index lost 0.9 percent to 127.24 as of 11:30 a.m. in Tokyo, with technology companies posting the largest declines. The new year has ushered in volatile trading as Chinese authorities intervened in a bid to stabilize domestic equities and reports showed weak manufacturing in the world’s two biggest economies. That was compounded Wednesday as the gap between China’s currency rate inside the country and that for the yuan traded offshore widened to a record, underscoring speculation the government faces pressure to devalue its currency to aid the economy.

“China is still a very underestimated risk,” Rainer Michael Preiss, a strategist at Taurus Wealth Advisors Ltd., told Bloomberg TV in Singapore. “The most elegant way out of a very complicated problem is to further devalue the currency and that would have a very negative impact on Asia in particular but also on other emerging markets. That’s not fully priced in.”

The Hang Seng Index declined 0.5 percent and the Hang Seng China Enterprises Index lost 0.9 percent. The Shanghai Composite Index gained 0.8 percent following a two-day 7.1 percent slide featuring a plunge on Monday that wiped out $590 billion of market value and triggered a trading halt.

“There’s a healthy dose of caution in our camp,” said Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, adding that he remains overweight equities. “There’s still quite a long list of things to worry about and this volatility is going to be with us for some time. We’re still cautious on China and think it gets worse before it gets better. It doesn’t help sentiment when you’re seeing such big moves.”

The People’s Bank of China lowered the yuan reference rate by 0.22 percent, the most since Nov. 3, to 6.5314 per dollar.

Asian suppliers of Apple Inc. phones sank after Japan’s Nikkei Asian Review reported the world’s biggest company would reduce the output of its latest iPhones by about 30 percent in the first quarter of 2016. Sharp Corp. slumped 2.5 percent, Japan Display Inc. lost 2.9 percent and Alps Electric Co. sank 4.2 percent.

New World China Land Ltd. jumped 21 percent to its highest intraday level since November 2007 in Hong Kong after parent New World Development Ltd. offered to take the company private for HK$21.5 billion.

Regional Gauges
Japan’s Topix index declined 1.2 percent. Australia’s S&P/ASX 200 Index dropped 1.2 percent and New Zealand’s S&P/NZX 50 Index slid 0.4 percent. Singapore’s Straits Times Index fell 0.6 percent and Taiwan’s Taiex Index retreated 1.1 percent.

South Korea’s Kospi index declined 0.7 percent. A 5.1-magnitude earthquake detected 19 kilometers from North Korea’s Sungjibaegam nuclear test site was “artificial,” according to South Korea’s YTN news agency. Officials in Seoul are checking the details of the earthquake with the meteorological office, a government official said. The government is convening an emergency meeting, according to the official Yonhap news agency.

Futures on the S&P 500 fell 0.7 percent Wednesday. The U.S. equities gauge rose 0.2 percent Tuesday after slipping 1.5 percent in the previous session. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have dropped off once again form the 6160 area overnight so today might quite possibly be the third test of the bottom of the 20 day Raff at 6090 and subsequent break. North Korea’s first successful test of a H bomb probably hasn’t helped the bulls case overnight, as well as Chinese markets still looking weak. The 30 min chart is showing a decent short at the 6121 area, and with the pivot at 6136 this area could be worth an initial short. The bullishness that appeared on the 2 hour chart yesterday with the bounce from 6080 to 6150 has disappeared and its looking bearish again on the higher timeframes, with a 10/25ema cross to bear brewing on the daily chart as well. If we do get an initial decline, I think there might be a bounce once again at the 6080 area, but it might be short lived and a decline to 6050 looks likely. There is a small divi today of 0.9 so bear that in mind for later as it will slightly effect open positions. If the bulls however do manage to break the 6136 daily pivot then 6167 looks the next area of resistance where we have the 200ema on the 30min and also the top of a declining channel on the 30min. Certainly been a volatile start to the year!

50 Comments

  2. Morning All,
    My order I posted last night L 6076 was filled.
    Drop to 6063 took it out.
    But I have gone L again at the same level 6076

    1. Hugh can I suggest smaller size and bigger stop,I have found the volatility makes up for small size GL buddy

      1. Hi Anstel – I hear what you’re saying – the entry point was good- maybe the S/L was a bit tight – but essentially it’s just a trade that got chopped up ! 🙂

        1. WSF made an interesting statement yesterday,he said it took him three winning trades to make up for 1 stopped out trade.Bloody hell Hugh it’s hard God knows I know that but getting stopped out in the noise repeatedly is going to crush your confidence in my opinion.Trouble is like tmfp says where do you draw the line,My guess is this will be back at 6150 later FWIW.

          1. Yep but that’s a RR of 1:3 rather than 3:1. My thought’s are focusing on 3:1, so essentially you can have 3 wrong’uns and the 4th would square.

  4. Who knows until what level Dax will get before another drop will start? Is it 240, 255 or 277?

      1. Did you mean 243? I thought about it, but it seems to be stalled at the moment. Maybe it will start moving closer to 13.00?

        2. Hi Jack – Guess the theory is – use them as S & R Lines – So Short Resistance or Long Support . Can also be used as Stops.
          (So if you’re approaching S & R – S or L using them as S/L)
          As I think you’ve picked up the levels of each are on the right hand side. As they are oblique trend lines – the values change over time – depending on their angle.
          The horizontal lines – the values remain static.

  5. FTSE 6050
    RSI T around this level
    Entry 6038 (Nick has 6028 as a Supp level) I’m thinking would yield some + results

  6. Long on Dow 16897 – 12 point stop and Dax 10120 – 10 point stop. Resistance line that I had on FTSE – 6036, Dax 10119 and Dow 16885 all hit simultaneously, expecting a bounce.

    1. Good morning. Did you get shorts on Dax today? I did several, but if I had guts to hold it would be better profits of course. Fear today.

      1. Good Morning, I had one from 260 Jack first trade in the morning and took 60 points it hit my target at 200 as I was driving. I was expecting a bounce to 300 before 119 so didn’t try any short. Now that it has hit 119, I have gone long. Lets see how this works out.

        I’m planning to hold it till Dow open, if it doesn’t get stopped out.

          1. “As I mentioned before, it works best when you don’t look into your trades after you place the trades and set profit targets and S/L. ”

            RJ – Couldn’t agree more 🙂

        2. I took 248 short from 8.05 but didn’t manage to hold to my target 201, nerves, children, school. Don’t know, it’s my second day of trading and I feel a bit insecure. Maybe problems at home. I felt my stop loss 290 was too high risk and it got me nervous. But later I had 2 short scalps 9.25, 10.15 I don’t know, I feel I cannot control greed at the moment, cannot allow losing trades. Placed stop loss seems like an enemy. Felt easier back on old stake though. But want to try higher stake. How do you manage to hold, it’s just beyond me. You must be having a special attitude to losses. But thanks for reply.

          1. As I mentioned before, it works best when you don’t look into your trades after you place the trades and set profit targets and S/L.

            I read two books last year which has helped me.
            Reminiscences of a stock operator
            Trading in the Zone

            There is a lot you can learn from reminiscences, a couple of things I always remind myself from Reminiscences

            “There is nothing like losing all you have in the world for teaching you what not to do,” he says. “And when you know what not to do in order not to lose money, you begin to learn what to do in order to win.”

            “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!”

            I have been practicing two things, cut losses short which works well with my 10-15 point stop strategy and if it shows profit keep it. From my past trades, whenever I’m winning, on average its more than 50 points of my original stake and some trades get stopped b/e.

            Taken half position for 30 points on the Dow

        3. Midday Lull –
          Has everyone been beaten into submission !
          Obviously Oversold here – but little strength to the upside.
          Short term maybe one final push lower (6028) for a re-tracement to 6070 or thereabouts.

  7. RJ, Keep It seems like a golden rule. I think I just need to get a grip.
    I just got Reminiscences book online, some free version. I will have a look. Thanks for advising on an average profit idea.

  9. Afternoon chaps. Yep, Ftse is holding up against Dow, or Dow ran too far against Ftse before! Roughly speaking Dow down an extra per cent since the top at the back end of ’15. To steal tmfp’s thunder I think it is because the Ftse has got more to fall.
    Rules of gambling….chippy style – 1. You never make a loss by taking a profit, 2. First cut is the cheapest, 3. Don’t bet unless you are certain you are going to win.
    P.S. I couldn’t read a chart if my life depended on it!

    1. Wonder where tmfp has gone? All Answers and suggestions accepted !i think I will take a wild guess at the Canary islands.

  10. Feels as if that may have been a the classic re-tracement to Support.
    Let’s see what is does on this 50% pull back at 6037 – 6040 & where we go from here.

  11. Not convinced the Fed Minutes will do much,but think I’ll leave it until then anyway.Have a good evening everyone.

  12. Happy (LOADS OF PIPS) New year to all guys,
    here is the results for Dec 15 – Jan 2016
    Total return: +390.0%
    Monthly return: +244.2%
    Weekly return: +34.2%
    Peak drawdown: -1.9%
    Trade win %: 84.1%
    Profit factor: 4.78
    Pips: 1,173.6
    Trades per day: 1.9
    History: 37 days
    http://www.fxblue.com/users/goldsignal

  14. Is there no end to commodities moving lower – apparently not.
    Rio Closing on a low – break of 1800 would be lower.
    BHP – Not quite at it’s low – Low 665p
    Glencore – Another breach of 75p would target a low of annual low or 67p
    & <.
    Ticker “HG” High Grade Copper is actually holding it’s own – breach of
    2000p would make some waves.
    Ticker “CL” Oil – US Crude closes as a new low 3486p. ( 2009 Low was 3350 – 2001 Low 1720 – now that would be the trade!)

    So what of tomorrow’s action:
    Anyone’s guess TBH.
    Reference:
    Long’s 6030 – 6019
    Shorts 6076 (Pivot point) – 6090 – 6114.
    Sensible Stops.
    Difficult to see what will motivate enough momentum to make any
    significant moves to the upside.

  15. Wow a 600 point drop on tha A50,seems to have stablished and regained about 100 pts as of 2.30 am, what will happen next remains to be seen.

  16. Looking at the Dow weekly when it collapsed in Aug last year it bounced off the 200 sma,if it were to do the same again it could hit the 15750 mark approx

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