Support 6368 6332 6327 6314 Resistance 6380 6399 6412 6447 6467

Good morning I hope you had a good weekend. NFP on Friday exceeded expectations by quite a margin, which in turn weighed on the markets as focus moved to the real possibility of rate rises sooner (in the US certainly). We had Mark Carney in the UK saying that the BoE wouldn’t be raising rates for a while yet (2017 was implied) – wouldn’t surprise me if thats just a red herring though. So, despite the spectre of rate rises, the FTSE has fought back from the 6330 low set after the news broke and has held onto its modest rise as well.

US & Asia Overnight from Bloomberg
Asian stocks outside Japan dropped as a strong U.S. payrolls report bolstered the case for higher interest rates this year and data showed Chinese exports fell for a fourth month. Japanese shares gained after the yen weakened.

The MSCI Asia Pacific Excluding Japan Index lost 0.7 percent to 420.57 as of 9:52 a.m. in Tokyo. Japan’s Topix index climbed 1.4 percent after the yen slid against the dollar on Friday, improving earnings prospects for the nation’s exporters. Odds on the Fed increasing its benchmark rate in December jumped to 68 percent after data showed a 271,000 gain in U.S. payrolls in October, the biggest this year and exceeding all estimates in a Bloomberg survey of economists.

“Strong U.S. jobs data for October supports the case for a December Fed rate hike,” said Shane Oliver, Sydney-based strategist at AMP Capital Investors Ltd., which oversees about A$156 billion ($110 billion). “The Fed is unlikely to do anything to threaten global growth and this in turn should help see the global economic recovery continue. As such, share markets are likely back in a broad rising trend.”

The jobless rate fell to a seven-year low of 5 percent and average hourly earnings over the past 12 months climbed by the most since 2009. The median forecast called for a 185,000 advance in payrolls. Estimates of 75 economists in the Bloomberg survey ranged from gains of 75,000 to 250,000. Revisions to prior reports added a total of 12,000 jobs to the August and September readings.

South Korea’s Kospi index lost 0.6 percent. New Zealand’s S&P NZX 50 Index gained 0.1 percent. Australia’s S&P/ASX 200 Index fell 1.4 percent. Markets in China and Hong Kong have yet to start trading.

China Trade
Futures on the FTSE China A50 Index of the nation’s biggest companies dropped 0.9 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index of mainland shares listed in Hong Kong fell 0.6 percent.

Overseas shipments dropped 6.9 percent in October in dollar terms, the customs administration said, a bigger decline than estimated by all 31 economists in a Bloomberg survey. Weaker demand for coal, iron and other commodities from declining heavy industries helped push imports down 18.8 percent, leaving a record trade surplus of $61.6 billion.

China will lift a five-month freeze on initial public offerings by the end of the year, removing one of its key measures of support for the stock market as equities recover from a $5 trillion rout. New share offerings will restart after improvements to the listing system, Deng Ge, a China Securities Regulatory Commission spokesman, said at a briefing in Beijing.

E-mini futures on the Standard & Poor’s 500 Index slid 0.1 percent on Monday. The underlying U.S. equity gauge slipped less than 0.1 percent on Friday. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

All fairly quiet on the news front over the weekend with it being remembrance Sunday. Given Fridays reaction to the NFP news I think the bulls have a bit of a job to push on to new highs at the moment, especially as the S&P has dipped back from its all time highs that it reached last week. The Bianca 10 day Channel is heading downwards, so I am still thinking that shorting the rallies is a good stance to have at the moment. We are sitting on the daily pivot as I write this, at 6367 so may see an initial rise this morning from this area, most likely to test the 6380 area, or maybe a little bit more as there is a declining 10 min channel with resistance at 6387 as well. The bulls will be hoping to break this level to reach the 6412 area where there is that 10 day channel top, but 6380ish looks key to watch first thing. If the bears hold that then a decline down to supports at 6355, 6340, and 6312 is on the cards. Considering the recent bullish vibes in the US, the FTSE is a long way from its recent 6700 level and also the 7100 tested at the beginning of the year.

83 Comments

  1. Morning.
    Pretty quiet again and no signs of any trends developing. I have a feeling this could continue till Christmas unless something major crops up, although I have no idea what that may be.
    Just 1 min 8 RSI trading off 80/20 entry this morning which has been quite nice, more pressure on 55 than 80 at the mo, with the down channel that Nick mentioned looking fairly established short term.

      1. It’s a bit of a bummer to start the week red but chin up, custard.
        This is not a market to chase imo, play the odds e.g. now at 74, a 12 either way short looks a reasonable shout, just like a 55 long did.
        I don’t think the Big One is there to be had right now.

          1. Morning WSF, China news seems to have been written off as pains associated with the “rebalancing” of their economy.
            It’s weird how the media and traders obsess on a subject then virtually ignore it, price of oil, China, Russian expansionism etc.etc.

            Took 10 on 74 short, watching for 960 on DAX to hold.

          2. Covered too early as usual, hard to get a rhythm, a small long at 53 for maybe 8 pt bounce. As soon as I’m seeing +5 profit I’m banging on a b/e stop, ugly but effective when it’s drifting about like this. If I’m not making much, I don’t want to lose anything.
            🙂

          1. Lol, low boredom threshhold.
            I’m hanging in there, get through 58, next target 66, sell there, buy the pullback.
            Sorted.

  2. Morning All,
    I’ve had so many deadlines to meet of late – I needed to keep my head
    down ! Hopefully cleared the decks of much of it…. for a while.
    Been following my usual trio stuff – even that has been quiet !
    Slightly impatient trade here (RSI 6 & 17) – Gone Long 6359 in anticipation of small bounce to 70+ (Stop 6343)

    1. Hi Hugh you haven’t missed much, even the old reliable RSI has been given false signals due to the lack of fluidity, I’ve been using P&F as well for a change.

    2. Came out for diddly squat – nothing happening.
      I’ve been thinking about ways to filter the Trio signals .
      In summary – some signals are good – some not so good (b/e trades)…
      The better one’s seem to be when they occur with a trend line or S & R Line.
      Best approach – is just to accept this – use Stops and run your book..

  4. Thinking – Can’t really see that it’s worth a trade until we arrive at <6340 from a RR perspective.

    1. There was a nice bit of 1min rsi/price divergence there for a long, 50/20 then 47/30, no brainer 6 pt stop.

  6. Must mean something when supposedly Billionaire Steel Ind bosses are jumping out of London Penthouses,oil is 44usd,Refugees are trying to get into Europe,we are at the base of the previous uptrend and we still cant fall with enthusiasm.

  7. Anyone interested in Bitcoin?
    I’m fascinated by the blockchain protocol and the trading environment is like the Wild West.
    I picked up a few for fun, then longed a bit (pun) on IG, had a very nice spike up to $500, now looking to relong around $300.
    Could be big, but certainly fun.

      1. It’s one big cyber risk story lol.
        The big plus is that it’s peer to peer decentralised, so if you get your personal security right, offline cold storage etc. the actual blockchain is totally transparent and hack proof.

        Long 47 4 pt stop, nothing like taking risks…

        1. Yeah, up till them most mining operations have been private and selling hashrate for lump sums and then returning on investment, though in practice it’s an area full of scammers.
          There’s quite a bit of VC coming into Bitcoin from the traditional sources, but my approach to it has been simply to buy some and keep, although I got tempted with 100% profit.
          Whatever happens to Bitcoin itself, the blockchain ledger system is damn clever, would make banking back offices superfluous.

  8. 3 minute downtrend now around 58 and rsi would overdone, will lose my long shortly if we continue straight up.

    1. Last higher high/low was nearly 5 hours ago….a break of 58 would at least change that. Stop at b/e, so I think I’ll hold for the (successful) attempt.
      The excitement………..

  9. So, if anyone’s still awake, the DOW opening soon.
    IG are saying around 870 which should keep us above 50, although that downtrend line I keep on about is now around 54, so their usual spike could take us through that, how far who knows….

      2. That’s new lows for them then since 1st Nov, getting a little oversold, depends if they have any momentum left.
        Done a couple of longs for 10 but short on the trendline at 46 and holding for the mo

  13. So where does it stop? On the Nov lows now, but DOW driven, not much there for me till 17600 but would be pretty oversold by then.

    1. Getting close to the bottom of my downward channel now 6300 and oversold, one more step down and a long methinks

      1. LoL
        I was just typing more or less the same thing ..
        “It’s difficult fine tuning an entry”
        I’ve put my Limit at 6336.
        Have to be patient I think…..

  14. MHH soon, the selling seems to have dissipated for the time being but no strong bounce, breaking 40 was pretty clinical so I’d reshort if we got anywhere near there, which seems unlikely right now.
    Conversely, there will be a few shaky London longs who may want out before the close so some bargains may be had 6300ish.
    Difficult.

        1. I agree totally on the range, but when you’re looking for 20+- the entries are crucial. I’m doing nothing here, maybe a little long on a local sell off to 6300 at the close if the DOW doesn’t follow.

          1. it came a bit early, long at 99 didn’t expect to be trading in the 200’s today, don’t trust it though and think I’ve missed the bounce (now 02 again)

          4. I’m not really WSF, just we’re at the lower end of the range, a bargain or two about if you get the entry right

          5. The selling doesn’t feel like new shorting though, more disappointed long liquidation.
            Squeezed +5 out of that 99

          6. You dont think it will test the 200ma on the Dow ?
            Funny really because I’m looking for a long too.

          7. Which 200ma WSF? The hourly is about 17800 which is resistance from the top and daily 200 is about 17520, just about its neckline, so I’d expect that to be its range to break out of.

  15. We are too strong here going into the close compared to DOW, would expect sub 6300 by a margin soon after close

  16. The worst close for nearly a month.
    Still a 6250/6450 market at the mo though.
    First chink of weakness in the DOW for a while, 17540/17600 is going to be their version of our 6250.
    Typical of a ranging market, as soon as the lower levels are reached the bears salivate about a break through, the same as the bulls did at 6400.
    Catch you tmrw.
    🙂

    1. Me neither although Friday was probably a clue with the FTSE and it was a lower weeky close there too (just).

  18. Yes Senu I will just wait it out,before I put a position on I work out what I consider to be a worst case scenario with regards how many points it goes against me then I work out the number of contracts that I feel comfortable holding. The way I see it as it drops there’s people thinking that looks cheap and once the trend changes they jump back in.We can’t control the market we can only control our execution,good luck everyone.

    1. FWIW custard i think it will go back up,I’m long from 815 and if I didn’t think that I’d be out good luck

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