Support 6344 6334 6318 6289 Resistance 6388 6395 6410 6455 6522

Good morning. The FTSE and S&P shorts worked out well yesterday, with the FTSE having quite a dip form the 6362 area (which was nice!), though unfortunately went short on the Dax just a bit too early, getting stopped at 10185 before a 100 point drop. Frustrating that one sometimes! After the morning dip across the board the bus fought back and tested the 6350 are on the FTSE which has proved to be a fairly key area, acting like a magnet. Overnight Asia strength has pushed it back up to 6375, opening up the chance for 6410, the top of the 10 day Bianca channel. The Australian ASX200 put in a bullish performance today, so the FTSE may well follow suit – bearish morning then a bullish afternoon (again).

US & Asia Overnight from Bloomberg
Asian stocks rose with U.S. and U.K. equity-index futures as weak trade data from Japan bolstered speculation that central banks will add stimulus to address sliding global demand. Oil traded near $46 a barrel, while aluminum led industrial metals lower.

Shares in Tokyo and Jakarta led gains, driving the MSCI Asia Pacific Index to its first gain this week. The yen held near a one-week low as the slowest expansion in Japanese exports in more than a year sparked bets the central bank may boost its unprecedented asset-purchase program when it meets Oct. 30. Crude’s fall ahead of U.S. stockpiles data helped the Malaysian ringgit extend declines into a fourth day. Aluminum is heading for its longest losing streak in three months.[Japan’s QE program has underpinned stock gains]

Japan’s QE program has underpinned stock gains“Whenever we get negative economic news, hopes for additional monetary easing moves the market,” Takashi Aoki, a fund manager at Mizuho Asset Management Co., which manages the equivalent of about $33 billion, said by phone. “We’re starting to see hard evidence for our fears about the global economy being weak.”

The Japanese data add to a string of reports that highlighted how weakness in China’s economy is being transmitted to its trading partners. As the end-of-October Bank of Japan meeting looms, about a third of the economists surveyed by Bloomberg are predicting the stimulus program will be expanded. Traders have been paring back bets for a Federal Reserve interest-rate increase this year amid signs that the slowdown threatens the U.S. recovery and corporate earnings. The European Central Bank meets on Thursday.

Stocks
The MSCI Asia Pacific Index added 0.8 percent by 1:46 p.m. in Tokyo as Japan’s Topix index jumped 1.7 percent. Futures on the Standard & Poor’s 500 Index added 0.5 percent, after the U.S. benchmark gauge dropped 0.1 percent Tuesday, the second straight day it has closed little changed. Contract on London’s FTSE 100 Index advanced 0.4 percent.

Commodities
December futures on West Texas Intermediate crude slipped 0.5 percent to $46.04 a barrel. November contracts, which expired Tuesday, slipped 0.7 percent last session to $45.55, the lowest close since Oct. 2. Brent also fell, declining 0.3 percent to $48.59.

U.S. oil supplies expanded by 7.05 million barrels last week, the American Petroleum Institute was said to have reported Tuesday. Energy Information Administration data due Wednesday is forecast to show inventories rose by 3.75 million barrels, according to a Bloomberg survey.

Aluminum fell for a sixth day, headed for its longest losing streak in almost three months. The metal in London dropped 0.1 percent to $1,530 a metric ton after closing Tuesday at an eight-week low.

Nickel lost 0.1 percent and copper slid 0.3 percent as the Japan trade data compounded concerns about global demand after China, the world’s biggest commodities consumer, reported on Monday its weakest quarterly growth since the global financial crisis.

Gold extended gains, rising 0.2 percent to $1,177.92 an ounce as investors awaited next week’s Fed meeting. The precious metal sees greater demand when speculation over a rate increase is low as it doesn’t pay out interest like fixed-income assets.

Bonds
A gauge of U.S. sovereign bond market volatility dropped to 71 basis points this week, from 95 basis points as recently as August, as futures traders predict the Fed will be sidelined until March. The lowest level this year was 70 basis points at the end of July. Yields on benchmark 10-year notes have hovered near 2 percent since the start of this month. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Looking at the 30min chart I think we could get a little dip of the channel at the 6390 area to start the day, however, I think the bulls want to test 6410 where we have the top of the 10 day Bianca. A pullback from that level could well be a good place to short, as the bulls have recently failed to hold on above 6400. Maybe it will be third time lucky and the top of the 10 day Raff at 6455 is possible – so tight stops on the 6410 short. We have a divi of 8.9 for the FTSE today so bear that in mind for position open at the close (if your platform applies them at 16:30) as that will effect open positions. Probably won’t see too much divi hunter action int he run up to the bell though for only 8.9 points. So, generally today I am now thinking we will get a run at 6410 to test the daily channel, but I think the bears will have a go there, as the top of the 10 day channel has been adjusting lower each day this week (possible start of downtrend).

44 Comments

  1. Morning.
    Well, switched on computers and kettle at 06.55 as usual and before it had boiled was short at 78.
    Will take half out at 20 and run the rest for 6200’s later. (Stop b/e just in case I’m getting carried away.)
    As I said last night, the conditions were right for the DOW to finally put in a storming upside move yesterday, Bull Tuesday and all that, and imo they failed miserably.
    The overnight Asian strength seems to be the Japs interpreting their dismal figures as time for more QE.
    This is junkie thinking. If the equities markets are now purely reliant on CB money printing and zero interest rates for support then it will all end in major tears.
    The bear is awake again.
    🙂

  2. For the last 4 days markets became very unpredictable, no trend at all just bounces up and down and doesn’t go anywhere. Very difficult to get my type of signal.

    2. Ranging markets can be profitable too though, but you must get your head around “buy the weakness, sell the strength” and be prepared for the inevitable loss when finally the range breaks and a trend develops.
      The trouble is, when the extremes are reached, we tend to anticipate a breakout because it looks so weak/strong and miss a good entry.

      2. Yes,the way you do that is very inspirational,hopefully I’t’ll be clearer to me to in the end.Thanks.

      3. Look at my original post for an example of that anticipatory thinking: “Will take half out at 20 and run the rest for 6200’s later.”

        No reason to expect the recent range support at 20 to break, apart from early morning bearhead.
        Took a nice +58 on half, now rueing not closing all and longing.
        Do what I say not do what I do……
        🙁

        A little short at 58, 10 either way. pure rsi.

        1. Making a bit of a habit of this, bad, but not stopped it out yet and shorted a little more at 70, hopefully momentum is waning, stop on both (and original 78) to 81

          3. I try to get into the momentum of a move WSF and rsi is a good way of estimating that.
            It was essentially defensive to average up the 58 and I have just reduced the position by 50% at 64 b/e.
            This is very short term stuff and basically, making it up as I go along.
            If I want to take a longer term position then I try to do it on my terms, as opposed to allocating a left over/failed short term trade.
            Re now: DAX on a mission by the look of it….. 🙁

          5. Yeah, stopped out simply defensively for a rethink now that the DAX’s has fairly convincingly broken 10200, the lid for 10 days now.
            This is where the counter intuitive bit comes in though: I’ll still short 6400+ despite it looking very strong.

  3. Hi All,
    Agree Jack2, quite tricky and no real direction and ranges being tight soon it will break one way or the other. We took long at 45, which stopped -15pnts, managed to scalp back myself so still just above water. Took long ftse@30 and 22, but not doing much at all. DAX instead was 115 around ftse low time, but has managed 160+….typical FTSE slow when I try a long…anyway GLA 🙂

    1. Agree, it’s been ultra difficult to get any decent rally nowadays. It shows on my profits which is b/e this week, more or less. One profit kills on another loss. Any decent tiny moves seem to be missed by me or wasn’t approved by me. Like today I was thinking of long on Dax at 9.20ish but other things didn’t stuck up in my strategy and I didn’t put my neck on the line, although I received a half signal for that long, with lots of cons against it. So didn’t take that long.
      Maybe I should have, but… I just want to get a better signal.

  5. And nearly time for the DOW after three hours of tedium.
    Will it build on yesterday’s half assed break of 17200? 17400 next stop?
    Or will it surprise everyone (but me) and fall out of bed?

      1. Lol, hello Jim.
        I got out the bear side mate.
        Still kicking myself for bottling out of my shorts earlier, bad trading. These sideways days are quite unforgiving, especially with the periods of tedium in between moves.
        What’s the word according to Jim then?

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