Support 6320 6318 6286 Resistance 6381 6382 6429

Good morning. As expected the 8 day rally came to an end yesterday and with the US closed for Columbus day the movements were fairly small. Unfortunately the early morning spike to 6412 stopped just short of the short order at 6414 before dropping to a session low at 6350, before some strength came back. Still feels weak to me so shorting the rallies is still the preferred option, with a drop down towards 6300 likely. Dow managed t reach the 17150 level I have mentioned a few times and has dropped back from there, so could be at the start of a run down now. It was a bit ironic that the best trade yesterday was the 2019 S&P short, and that was the market that was closed!

US & Asia Overnight from Bloomberg
Asian stocks dropped, with the regional benchmark index retreating from a seven-week high, as Japanese shares slipped after a holiday and investors awaited China’s trade data.

The MSCI Asia Pacific Index fell 0.3 percent to 133.76 as of 9:00 a.m. in Tokyo after closing Monday at the highest since Aug. 20. The Standard & Poor’s 500 Index rose for a fourth day on Monday as speculation global central bankers will maintain stimulus, at least through the end of the year, underpins a recovery in equities. Data due Tuesday is expected to show ongoing contraction in Chinese exports and imports, potentially reigniting the concerns that fueled last quarter’s volatility or stoking bets on further easing.

“The market is trying to digest the recent rally,” Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd., which manages $112 billion, said on Bloomberg Television. “The broad picture is still one of ongoing recovery for share markets. We certainly will see more stimulus out of China.”

Japan’s Topix index lost 0.3 percent. South Korea’s Kospi index was little changed. New Zealand’s S&P/NZX 50 Index added 0.3 percent. Australia’s S&P/ASX 200 Index slipped 0.2 percent. Markets in China and Hong Kong have yet to start trading.

Shanghai Rally
The Shanghai Composite Index advanced 3.3 percent to its highest close since Aug. 21 on Monday amid speculation China’s government will take more steps to bolster economic growth. The People’s Bank of China announced over the weekend it will expand a relending trial to nine more cities and provinces, while Premier Li Keqiang said the government will increase fiscal support for shantytown redevelopment. Chinese policy makers are slated to meet to lay out a five-year economic plan Oct. 26-29, Xinhua reported.

Futures on the FTSE China A50 Index fell 0.6 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index lost 0.1 percent.

E-mini futures on the S&P 500 were little changed after the underlying gauge added 0.1 percent on Monday.

Investors are listening for further hints on the Federal Reserve’s policy intentions. Fed Bank of Atlanta President Dennis Lockhart, speaking Monday to a group of economists in Orlando, Florida, repeated his view that he backs the first rate increase since 2006 by the end of the year. That followed weekend comments by Fed Vice Chairman Stanley Fischer backing the case for an increase by year-end. Charles Evans of the Chicago Fed reiterated his view that a later liftoff may be the best policy as inflation struggles to gain traction.

Traders are now pricing in a chance of about 39 percent that rates will be raised by December. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I am still in short the rallies mode and looking to go short on a rise to the 6380 area. It was a shame that the 6414 order just missed yesterday (what is it with orders just missing at the moment!?) though the S&P from 2019 worked well. I expect us to get a drop down towards the 6320 area where we have the bottom of the 30min channel, and possibly a little bit below that around the 6290 area. The Dow has dropped off the 17150 level since that little spike up last night. The FTSE is just below the 10 day Bianca channel (bottom of that is at 6382) and with a bearish 2 hour chart the bottom of the 10 day Raff at 6320 would be a good level for a run down today. We have a pretty decent declining 30minute channel and if we do get an initial rise its worth shorting that.

78 Comments

        1. And a very nice little session for me comes to a temporaray end, closed 75% shorts at 12, still looking for another leg down but the blue ink was just toooo tempting.

  3. Hi All, Yep, got a nice Short entry thanks to Nick 6380 short, but I got out early at 54. Hard to let winners run…we planned a DAX short which just missed my few points would have been 100+pnts…anyway sell the rallies I guess…GLA 🙂

  5. Morning All I’m saying nothing this morning and keeping my little head down. Too many Matadors around for Mr Bull I’m afraid !

  6. Morning all,FWIW long CNA with the Directors buys last week at 2.35 looking for 2.55 or so early November.

  7. I’ve been quite impressed with my pre engulfing 3 min candle theory recently. Another example today at 09.15, range 6310-6328, those are the sideways action limits to use for scalping with easy stops and, in bigger picture, to keep an eye on for breakouts.
    Example scalping started at 10.00: shorted @ 24 10pt stop, covered at 12 and long 6 pt stop, out at 21.

    1. and long again @12 6pt stp, I’m sure you get the picture, the last trade will, by definition always be a loser, but if you’re lucky then the whole sequence will be overall +

      1. on these trades I use a platform stop, not my 3×1 thing.

        And out at 21 looking to short. Ad infinitum…..

          1. Yup, @28 with 6pt stop, covered at 12 long at 10 with 6pt stop. All gravy now.
            This ‘boring’ two hours of 20 pt range have yielded 50+ pts so far……
            Like any system it doesn’t always work, but good track record so far. Look for sizeable drops/rises with a longish exhaustion 3 min candle and try it sometime.

          4. Thanks, it’s good when you catch the rhythm, get in front and into a no fear situation unlike stand alone trades. I’m just pressing the button knowing that I can only lose c.6 points i.e. ~<10% of the sequence profit.

          6. Ta anstel.
            Make that +73 🙂
            I’m not trying to piss people off by boasting, just suggesting a tested simple system that can be lucrative with minimal risk in the right conditions.

            here we go again……

          7. Currently long @10 stop 02, expecting that to be hit as Europe gets a bit nervous about how the DOW’s going to react to this morning.
            Germans still holding though, all is not lost yet.

        2. Pleasantly surprised to be out for +8 and neutral now, looking for some indication of how the Americans are going to react.

  8. Basically Nick’s up arrow started which is against my comfort zone to trade (against 10 min ema trade)

    1. The 3min candle session came out at +81, but I’d also had a good morning off the short side (although ironically my first trade of the day was a long) up until then too.

      A Happy bunny today. 🙂

  14. Fancying a bit of a spec short around here (25). The DOW’s doing it’s usual opening run up and I don’t think it will last, maybe to 17100ish.

    1. It just has the feel of an American pump and dump, but they seem to have the bit between their teeth atm. If I can weather the storm for another hour, would like to think the short will come good this evening. Maybe.

    1. Thank you mate, a bit brutal these days.
      The FTSE is now two markets to day trade 0700-1400 and 1400-1700.

      1. Definitely time Yellen told Bullard and co to stop mouthing off at every opprtunity,hard to believe they arent trading on the back of it.

    1. Taking another 25% out for +20.
      I think the DOW could take a dump later, so I’ll sell it 17140+ I think.

      1. Good calls today tmfp,congrats.It was pulling teeth for me,barely more than I started with,actually had a better day yesterday 🙂 Thanks for pointing that Exhaustion candle out,I’ll keep an eye out for that.Have a good evening.

    1. I think the DOW looks overbought and overextended meself Jim 🙂
      Depending on its close we could see 6200’s in the morning imho.

  24. Ftse dropping off nicely, as you predicted Tmfp. I’m holding a short from 6344. Tempted to leave it overnight.

    1. Yes, good for you 🙂
      I’m thinking the same thing, what are the Asians going to make of this overnight…

      1. Not much of a flourish at the end, another 20 down would’ve been nice.
        I think I’ll leave 6325 stop and 6260 limit overnight.
        Cheers.

  26. Well China looking a bit high on the RSI. So may well head south. I’ll ask tomorrow how you get on, Tmfp. Night Again.

  28. Thanks for your response tmfp — FTSE 2hrs does look like it’ll trend down for a bit. What do you think; 200-150? (Dow still holding its ground pretty well.)

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