Support 6237 6213 6200 6182 6138 6073 Resistance 6250 6285 6291 6315 6353 6365 6399 6465

Good morning. I said yesterday that it looked negative but never expected the “suckers rally” to get back to the 6450 followed by a fall to 6200! Was a bit annoying as I shorted the FTSE, Dax and S&P a bit too early with my orders on yesterdays email. At least Gold played ball for once with its rise from 1051. The 3 month FTSE high was quickly killed off by a European Central Bank policy update which fell well short of high hopes for extreme dovishness. While ECB President Mario Draghi added to stimulus, investors anticipated deeper cuts to the deposit rate and an increase in the amount of month bond purchases. This was the main news of the day in Europe and drove shares sharply lower throughout the afternoon. In the U.S., Federal Reserve Chair Janet Yellen reiterated her stance that the economy is strong enough to withstand tightening. She delivered a cautiously upbeat outlook for the economy, signaling for a second day that the conditions for higher interest rates have been met. This further fuelled the sell off! In after hours trading the FT100 has bounced off 6200, so maybe this is the bottom. The risers were constrained to a handful of special situations and fallers covered just about everything else with no standout sector.

US & Asia Overnight from Bloomberg
Emerging-market stocks declined for a third day and currencies of Asian developing nations strengthened after the European Central Bank’s stimulus disappointed some investors who had expected it to offset a likely increase in U.S. interest rates.

All 10 industry groups in the MSCI Emerging Markets Index fell, with technology companies including Samsung Electronics Co. leading the drop. A gauge of developing-nation currencies was steady after rising the most in seven weeks on Thursday, when the ECB cut its deposit rate by less than forecast and refrained from enlarging its bond-buying program. South Korea’s won headed for its first gain versus the dollar in seven days and the offshore yuan jumped as data showing slower growth in U.S. service industries supported the case for gradual monetary tightening by the Federal Reserve.

A divergence in policy outlooks in the U.S. and Europe sent the measure of emerging stocks to a record low earlier this year, and buoyed the dollar as the Fed draws closer to raising its near-zero interest rates that have supported demand for riskier assets. Fed Chair Janet Yellen signaled in her testimony before Congress Thursday that the world’s largest economy is almost ready for higher borrowing costs. While Asian currencieshave fallen versus the greenback in 2015, most have strengthened against the euro, giving European manufacturers of cars and electronics a competitive advantage.

“The ECB’s monetary easing has disappointed most investors,” said Warut Siwasariyanon, the head of research at Asia Wealth Securities Co. in Bangkok. “Yellen’s comments support the case for outflows from emerging markets, and equities should face further pressure from higher U.S. rates and the dollar’s overall strength.”

Stocks
The MSCI Emerging Markets Index dropped 0.5 percent Friday and 1.4 percent since Nov. 27 as of 1:51 p.m. in Hong Kong, poised for its second weekly loss. Chinese social media and gaming company Tencent Holdings Ltd. fell 2.9 percent, the biggest drag on the gauge, while Samsung Electronics retreated 1.5 percent. The measure has dropped 15 percent this year and traded at 12 times projected 12-month earnings. The MSCI World Index of developed nations has fallen 1.8 percent and is valued at a multiple of 17.

China’s stocks fell for the first time in five days, with the Shanghai Composite Index retreating 0.9 percent as financial companies declined as initial public offerings resumed after a five-month freeze. The gauge advanced 4.3 percent this week through Thursday on speculation the central bank will extend monetary easing as the government tackles the sharpest economic slowdown in a quarter of a century.

Ten Chinese companies began IPO subscriptions for IPOs this week, the first of 28 offerings this month that could tie up 3.4 trillion yuan, according to estimates compiled by Bloomberg. China Securities Regulatory Commission has approved a second batch of 10 IPOs, according to a statement on its official microblog. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong dropped 1.2 percent.

The Philippine Stock Exchange Index fell 1.1 percent, while the South Korea’s Kospi index lost 0.5 percent. Equities gauge in Indonesia, India, Thailand and Taiwan fell at least 0.6 percent.

Bonds
Most Asian government bonds fell following a selloff in U.S. and European debt sparked by the ECB’s announcement. The yield on South Korea’s 10-year sovereign notes climbed six basis points, the most in almost four weeks, to 2.32 percent, while the three-year yield rose three basis point to 1.79 percent. Thailand’s 2025 bonds also fell, with the yield adding three basis points, to 2.70 percent. India’s 10-year yields rose two basis points to 7.73 percent before an auction of 150 billion rupees ($2.2 billion) of government securities. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Quite a sell off yesterday and we have US jobs news out today at 13:30 with a forecast of 5% again for the unemployment rate and 200k for the change in NFP. Of course this data will be getting interpreted by the markets to see if Yellen can follow through on her talk yesterday about the economy being strong enough to warrant rate rises. There are quite a few support and resistance levels in play today after just a big swing yesterday, with PRT calculating the range at the moment between 6182 and 6444 – so worth a long at 6182 if seen. I think however that the 6215 might hold initially for a rise towards 6300, mainly as we are testing the bottom of the Raff channels on both the Dax and FTSE at 10700 and 6200 respectively. Initially the bulls need to break 6250 on the 30min chart as we have 25ema resistance here, and it would be the first touch since the cross to bear yesterday at the 6411 area. So, NFP Friday after a massive sell off so likely to be jittery, however the overnight low of 6200 has held and there is the possibility for a rise back to the 6300 level.

37 Comments

  1. Morning.
    Congrats to last night’s bargain hunters who’ve made a turn overnight, what happens next?
    Probably bimble about not far out of the early range 6240/60 until the NFP’s, maybe more upside than down, so as usual I’m just playing the short term rsi here which is working ok atm.
    Ironically, this last NFP before the Fed probably won’t be as important as usual because most people (!) are discounting Yellen & co changing their mind about a hike, irrespective.
    Also going on is the OPEC meeting, mainly ignored as an equity influence, but things are jittery enough to react to anything unexpected, i.e. the Saudis and Russians actually agreeing on something.
    Buy the dips I guess, 10700/6240 for the time being.
    Bigger picture, I think a proper revisit to the 6100’s will be hard to bounce from and continue on to fill that big 6165/6210 cash gap.

    1. Morning tmfp –
      “Bigger picture, I think a proper revisit to the 6100’s will be hard to bounce from and continue on to fill that big 6165/6210 cash gap.”
      I’m having trouble understanding your figures here – is it a typo 🙂

      1. Morning Hugh, and I’m having trouble understanding you having trouble understanding… lol.
        A proper revisit means during cash trading hours, and on my cash chart there’s a ~45pt 16/17th November o/night gap. Is that not right?

        Basically if 6200 breaks in trading hours, 6165’s a bit of a magnet and, depending on momentum etc. could overrun to 6100, acid test time.

        1. I’m not sure that you’re right about that gap…
          It doesn’t matter to be honest ….(don’t want to spend any time on this!)
          I’m of the opinion that the markets are a reasonable place and let’s traders square out stuff, so far as possible, so a revisit of <6100 may well be possible – just as a revisit of 6350 is also..
          http://www.investing.com/indices/uk-100-historical-data
          Columns Close Open Hi Lo
          Nov 19, 2015 6329.93 6278.97 6366.85 6278.97
          Nov 18, 2015 6278.97 6268.76 6283.9 6228.15
          Nov 17, 2015 6268.76 6146.38 6269.44 6146.38
          Nov 16, 2015 6146.38 6118.28 6161.9 6079.79

          1. Sure, but may as well sort it.
            It’s the Nov 17 open/low on your list that’s at issue @ 6146.38.
            We actually 08.00 opened at 6222 and dipped to 6209 on that Tuesday, hence my ~45pt gap from Monday 16th 6162 high.
            I use Investing too, here’s the relevant 4 hour
            http://imgur.com/eSuPqMH

            Yes, a revisit of 6350 is also possible, like so many things….

          3. Gap art, yeah looks cool to me.
            Re stats etc. if you look at the LSE chart for the FTSE there’s never a gap, they always start the day on previous close. Why I don’t know.

    2. Morning tmpf, how was your chippy buffett?!
      Didn’t manage to get filled at 6200 sadly so sitting long at average of 6275. With NFP this afternoon if there is a bit of a bull run (to around 6300) I’ll let some go but still happy to pick up more at 6200 if we see that again. I might try the old 40 points either side of the middle trick for NFPs for fun.

      1. It was very nice thanks, we have a delivering chippie here and I had a humongeous piece of cod too. Meal of the Gods.
        Yeah that’s not a bad general pre announcement strategy, although there’s always going to be that day when….. 🙁
        Vaguely on that subject, I see the Chinese have reinstituted limit down/up on their exchanges. They should do what spreadbetters do here, just turn the computers off and unhook the phones.

        1. Bastard (not you Senu)!
          2 points too low on the autostop and even worse only 1 x 3min close over 74.
          I go out to earn 100 quid helping someone out and lose £340, hmmm….

          So, what’s happening….holding 6220 as support, DOW pretending nothing happened….

          What you doing chaps, long short indifferent?
          Guess what, looks like a **** to me lol.

          5. and a nice +24 to finish up with.
            Have a great weekend chaps, sorry to those I’ve offended and/or bored.
            See you in the 5***’s 🙂

  3. Got to go and do some work in a minute so NFP limits in, -@300 (for half of what I’ve got), + @200 (already got some at 250!). See you later.

    1. I knew it would be something like this on Dax so decided to leave it. When I came back it was exactly as I thought: no trend. Dow surprised though but it’s their NFP, they needed to react somehow.

  5. The levels I was looking for on Dax have been breached. I missed yesterday because of day long meetings. I have no planned trades on the Dax as it is all over the place at the moment. I’m have taken a short on Dow 735 now with a 50 point stop.

      1. I had it as resistance and it was a blind short tmfp. I closed it for 25 points. I’m thinking another test at 735.

  7. Went out for an hour and came back to find it’s “Christmas” and Draghi is all dovish and live on CNBC 🙂 🙂

    1. Hi WSF finally getting some results to mention my long on Dax from last night from 694 is up 163 points and I placed a second from 727 that’s up 131 points,

      1. Hi anstel,congratulations.I guess the Dow will finish with another Doji on the weekly,think we need some more News or something to stand a chance at finally getting through the 900’s,think it might be worth having a look at everything on Sunday night anyway though.I guess if the U.S can stay up then Europe could put a decent spurt in even with Oil etc etc Gold is having a good day for once.

  8. My trades tomorrow will be:
    Long 6276 – Tgt 6308 – Stop 6265.
    Long 6246 Target 6296 Stop 6229.
    Long 6182 Target 6199 – 6216 – 6233 (3:1) Stop 6165

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