Support 6101 6059 6052 6051 5999 5970 Resistance 6126 6138 6150 6187 6192

Good morning. The FT100 rose initially on the back of weakness in the pound, as data showed UK earnings grew at the slowest pace since the start of the year. Later in the day all eyes were on the FED which kept many shorters out of the market and so the index gradually moved its way up to the close. At 7pm(UK) the FED announced the expected 0.25% guidance increase and also provided guidance on the next year with probable 0.25% increases each quarter. This was in line with expectations and after an initial spike to 6133 on IG the FT100 fell back to a more stable 6080 at around 7:45pm and then started to move higher again. Slightly ironically the trade that did well yesterday was the 2060 S&P short!

How this will affect today’s trading is difficult to say, however with more certainty about the FED guidance it should provide positive support. A few days ago the 6400-6500 level looked a bit of a “pipe dream” but after recent rises it should not be ruled out by the end of 2015!

US & Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index heading toward its biggest two-day gain since early October, after the Federal Reserve raised U.S. interest rates for the first time in almost a decade and signaled a gradual pace for future increases.

The MSCI Asia Pacific Index climbed 0.9 percent to 130.73 as of 9:09 a.m. in Tokyo, heading for a two day advance of 3.2 percent, as banks and health-care shares led gains. The Standard & Poor’s 500 Index capped its biggest three-day rally since Oct. 5 as Fed Chair Janet Yellen expressed confidence the world’s largest economy is resilient enough to withstand future increases in borrowing costs.

“There’s a sense of relief that they finally raised rates,” Chris Green, an Auckland-based strategist at First NZ Capital Group Ltd., a brokerage and wealth management firm, said by phone. “This is a net positive in terms of market sentiment. It’s removed the point of liftoff from the discussion, we’re over that hurdle. Now the question is: how gradual is that normalization profile and where do the risks lie.”

In a move that was widely telegraphed, the Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.

Rate Divergence
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. The Bank of Japan starts Thursday a two-day meeting where policy makers are expected to maintain record stimulus.

Japan’s Topix index rallied 1.8 percent as the yen weakened, sending the gauge toward a two-day advance of 4.4 percent. Australia’s S&P/ASX 200 Index jumped 1.7 percent, while New Zealand’s S&P/NZX 50 Index increased 0.2 percent. South Korea’s Kospi added 0.9 percent. Markets in China and Hong Kong have yet to start trading.

Mainland Chinese stocks in Hong Kong rallied Wednesday by the most in a month after valuations on the gauge fell to their lowest level relative to global peers in 12 years. The Hang Seng China Enterprises Index climbed 2.1 percent, the steepest advance since Nov. 4, as PetroChina Co. and China Petroleum & Chemical Corp. surged after the government signaled it won’t cut fuel prices. The Shanghai Composite Index gained 0.2 percent.

E-mini futures on the S&P 500 Index slipped 0.1 percent after the underlying measure climbed 1.5 percent Wednesday on the Fed’s rate announcement.

The central bank’s action ends an era of unprecedented monetary stimulus that pushed U.S. stocks higher by more than 200 percent and added $15 trillion in value during the 6 1/2 year bull market. Investors will now find out how much stocks are worth in the absence of Fed support, and how high borrowing costs will be without the central bank stoking growth as aggressively. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

It could well be one of those funny days today, however the rate rise was largely as expected and thus we might well just get a bit of business as usual today. The daily pivot is support at 6101 to start with today, with the 6140 showing as initial resistance on the 10minute chart, so we may well get a dip back to start with today, down to the pivot before a bounce. However, the 30min chart might go bearish at that point so I expect we might well see some profits being banked from the recent longs. Generally it would appear that the Santa Rally has started on the 16th December once again. If the 30min does go bearish at that point then a dip down to 6050 looks possible today to consolidate some of the gains. Will we reach 6500 or more before the year end? Seems a bit of a big ask but you never know. We are just testing the top of the Raff channels at 6150 today with 6200 and 6280 as resistance levels above this on the daily chart, so the bulls have certainly got a job on their hands. Just moving back to todays possible route, there is a chance of a dip down to 6050, which looks like a good place for a long. The bulls will need to break 6150 on the upside to enable a push higher, but I think might be a bit of a day of the market catching its breath, albeit with a possible 100 point range!

84 Comments

  1. Morning.
    A bit of a bear with a sore head this morning, courtesy of XO and the Fed.
    Also slightly sheepish at getting caught up in the option hype, but the week’s not over yet.
    Short at 160 from first thing and scale up selling at 190 and 220, stop 260.
    This corresponds to 50%-61.6% r/t of the 6444/5864 move.
    The DOW’s going nowhere until it breaks the magic number 18000 (also prev high 978) so I’m looking for an attempt on that and a fail. My stop roughly equates to a close over that.
    GL all, time for a remedial fry up.

    1. lol yeah, it’s quite amusing really, barely holding the 6000’s and it feels high.
      Did you dump some at 150 like you said?

      1. Yep, got pulled out this morning from the limit I’d left on last night. Still got some and if the Old Bearded Man goes missing for a day will look to replace what I sold at 6050-ish.

          1. Great pic! In fairness I think the most telling moment was last night as JY did her thing. In the good old days, you wait for an announcement and if it comes out in line with expectations first thing you do is move, hard, against what has happened in the past few days to see how strong that move really is. They smashed it hard and it rallied harder. Whilst I think he’ll have a rest at some stage, 6300 still does it for me.

  3. Morning all,fantastic day on the Dax,tempted to pop out and buy up all the Stollen and Gluhwein at my local Lidl 🙂

      1. The day before yesterday Dax one was only pence,sold it last night,Australia was better for me,had a few more last night there and this morning including one accidental double stake this morning,logged out and back in and the Platform went to my last trade size,so actually been a bit lucky there and will transfer it straight out.Euros 🙂 Just read Yoda or someone on Twitter saying,
        “The biggest trick Santa ever pulled was convincing the Mkt he didnt exist”
        Does feel like it.No open trades at the moment though,that rally from 10530 this morning needs to breathe I think,or maybe I do 🙂

  5. Good Morning All,

    Short from Dax 642 overnight worked out ok after being nearly stopped out b/e, glad I was not watching any of it. It got closed at 547 on that spike down which I had as it limit area between 50 and 61.8% retrace and above the resistance level at 544 on my charts.

    I had a plan to go long around that level but missed it as I overslept this morning.

    I have taken a short at 792 with a wider stop at 840. 780 is 50% retrace area so expecting a pullback

      1. That’s good trading mate, irrespective of what happens next.
        If it’s not doing what you thought or you realise the entry wasn’t good, getting out with no loss is just as important as making a profit.
        Boring repetition I know, but there’s always another trade.

        1. For you DAXers, a break of 10770 would indicate a bit of a short term top at 800 to me.
          Or of course, holding 80 would give it a base for a third time lucky attempt at moar new highs.

        2. Thanks tmfp, I didn’t like the PA, as well as I realised I was falling into the trap of taking a trade in the opposite direction just because I missed the move.

    1. Dead, the tick count’s flat lining.
      I think our next impetus might come from the DAX move I just posted ^.

  7. Morning Chaps,
    Does feel like a hangover here as well ….What a fiasco…last night as the IT finance charts hung last night 7:06 pm to 8:45 pm (or something like that).
    As has already been said – some resistance here – plenty of gaps below.
    There is still the big PRT Monthly 6182 Resistance on the charts present.

    1. Hi ya Hugh, what, no art for us this morning?
      I see you don’t post much Ichimoku anymore, a but too cerebral even for you?

      1. LoL – Tmfp 🙂
        – Wishing today was Friday TBH – feel knackered for some reason !
        Can barely be bothered to look at the charts let alone post one.

    1. Good luck Argyle, now it’s broken 800 on the upside I would think it might have turned into support personally, bounced off it ominously.

  9. Yes, agree, I think 845 is on the cards. You will have to consider yourself lucky if turns before hitting your stop.

  12. Oh, gosh. Dax gave a runner. I missed all that due to carol service at church where my children performed. But it was worth going there. I am just so glad I didn’t take short yesterday at the close.

  13. Hey, action!
    DAX rejects 10830, unlucky Argyle, and we double top at 60! SELLSELLSELL! End of the world is nigh!

    This is not investment advice and should not be construed as such.

  14. Still trying to get funding for the new grandstand. Manager needs bigger budget for promotion this season. Transfer window opening soon. Plenty of interest in some of our players. May be a bit of dealing needed.

    Kind of lost interest in this for a while. Anyway back to annoy as many as I can. Seriously though can see FTSE >6500 By new year

    1. took 10 on that, looking to cover some more of the big short on further weakness, not sure what those crazy yanks will get up to.

      1. Next support I see for them is around 70 which should correspond to ~30 for us and a place to take a little more profit.

        1. I had this problem yesterday, Senu. Believed there would be more upside but it did sink down a lot first. So I found myself losing all yesterday’s profits. Consider to myself I had 15 points profits the day before and took the day off yesterday. Took day off today too: the last day of school, too many pop up friends today. LOL

  19. So DOW, what to expect?
    An attempt on previous recent highs around 17900 would appear logical, now they have Janet powered momentum. Anything less than that would be weak to me.

    Covered 60% of short now, for more bullets into a big rise.

  20. Looking a bit dead cattish short 19 10 pt stop The US really wants to hold 17700, a bit psychological after yesterday

    1. We are surprisingly resilient considering we’re only up here because of them.
      Would the slightly stronger dollar make £ stocks more attractive to them? I suppose so. Bit of a sentiment disconnect even though.
      Out of that for pennies.

      1. By the same token US investments become less attractive to foreign capital so really a strong dollar’s negative side effect for US equities.
        Never mind, it’ll make their stock buybacks cheaper, fuller troughs.

  21. I think Dax is not willing to drop easily after such a rally, Ema’re strong so no point to fight with them today.

    1. I think there’s a rally and a short between here and the close so out for +16.
      Wary of a long though, DOW’s hangover is worse than mine by the look of it.

  23. Well a bit of profit taking this afternoon, Dow about to power up and pull FTSE back to 6150 in the morning

  25. Dunno whether you are still there tmfp but for interest I’ve been playing the short Dow vs Ftse game today and vice versa. It is a bit bonkers but managed to nick 75 points out of one and a cheeky 10 out of another. Essentially, difference of 11,490 ish up to 11,650 ish. Going to stop now before I catch a proper cold.

    1. Yeah it’s fun. I suggest watching the reversion to mean on a shared chart, otherwise you can get a bit wood for trees..
      Are you 2:1 stakes FTSE/DOW?
      At the beginning of the year I made a good January excellent by long DAX/FTSE on the basis of QE.

  26. Ooops.
    It’s never a good sign when DOW closes on its lows and then drops another 50 points straight after hours.
    Hang On to your Hat Friday coming up.
    Goodnight.
    🙂

  27. Trades Tomorrow
    18th December 2015

    Long
    6043
    Targets 1 – 2 – 3 6062 – 6082 – 6101
    Stop 6023 (Just beneath Support)
    http://td.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=tfdn398takxep1bw172o7s2kx&type=png&purpose=file

    Or

    Short
    6089 (PRT Line) 0r 6102 (Support inflection point)
    Targeting 1 – 2 – 3 6090 – 6053- 6035
    Stop 6108
    http://td.md.it-finance.com/ProRealTime_V10_2/display_chartimage.phtml?name=biv89mzbt3ku7vvxmzxtr36h3&type=png&purpose=file

  28. 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

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