Support 6383, 6340, 6238 Resistance 6435, 6475, 6530, 6580, 6625(!)

Bianca
Bianca

Good morning. Well, it managed to hold that 6440 support area during the day yesterday, but what the hell happened in the evening? When the dam gave way the floodgates opened and we dropped to the bottom of the 10 day Bianca at 6383 in one move virtually! Oil broke below $60 a barrel – no surprise there really. The bulls need to regain some ground today to keep the hopes for a Santa Rally alive, otherwise we are on a pretty slippery slope (and those predictions for a year end around 6900 from he banks will miss by miles!). The S&P managed to hold onto its 2020 support, just as well as it had a large range as well, hitting a high of 2055 during the session. Looking at the FTSE Bianca chart, below 6383 we have the 62% fib at 6340, daily key support here.

Asia Overnight from Bloomberg
Asian stocks pared gains after Chinese industrial-production data missed estimates, while U.S. equity-index futures slipped. Oil in New York extended declines below $60 a barrel, dragging Norway’s krone to an 11-year low.

The MSCI Asia Pacific Index increased 0.3 percent by 3:17 p.m. in Tokyo, paring the biggest weekly drop since Oct. 17 as Japanese shares gained before elections this weekend. Standard & Poor’s 500 Index futures slipped 0.2 percent, with the U.S. gauge set to snap a seven-week rising streak. West Texas Intermediate crude slumped 1.1 percent to $59.30. The krone weakened 0.5 percent after an interest-rate cut, while Indonesia’s rupiah slid 0.8 percent. Gold fell 0.5 percent.

Oil’s collapse has been exacerbated as Saudi Arabia, Iraq and Kuwait, OPEC’s three largest member, offered the deepest discounts to Asia in at least six years. While that’s hurting producers and fueling deflation fears for some central banks, it’s leaving more money in the pockets of U.S. consumers as hiring picks up and the Federal Reserve ponders the timing of any interest-rates increase. China’s industrial-production growth slowed more than estimated in November.

“Plummeting crude prices will benefit main oil consumers including the U.S., India and Indonesia, while hurting countries like Russia and those in the Middle East,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. In Seoul, said. “For Japan and European nations who are concerned about deflation, decreasing oil prices gives them room to more aggressively ease monetary policy.”

Japan Poll
Eight of the 10 industry groups on the MSCI Asia Pacific Index climbed today, as the measure heads for a 2 percent weekly drop.

The Topix index gained 0.2 percent and the Nikkei 225 Stock Average increased 0.7 percent. Japan heads for an election on Dec. 14 after Prime Minister Shinzo Abe last month called for a referendum on his economic policies.

Australia’s S&P/ASX 200 Index swung between gains and losses and South Korea’s Kospi index added 0.3 percent.

Hong Kong’s Hang Seng Index fluctuated and a gauge of Chinese companies listed in the city rose 0.2 percent, trimming its weekly loss to 2.8 percent. The Shanghai Composite Index was little changed.

Factory production rose 7.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing, down from 7.7 percent in October and less than the 7.5 percent median estimate in a Bloomberg News survey. Investment in fixed assets such as machinery expanded 15.8 percent in January through November from a year earlier, and retail sales gained 11.7 percent last month.

U.S. stocks closed higher after better-than-estimated economic data. The Standard & Poor’s 500 Index rose 0.5 percent at the close in New York, paring an earlier rally of 1.5 percent. Energy companies in the S&P 500 erased gains after surging 2.5 percent earlier in the day.

Retail Sales
Retail sales climbed 0.7 percent, matching the highest estimate of economists surveyed by Bloomberg. Jobless claims decreased by 3,000 to 294,000 in the week ended Dec. 6. Claims have been below 300,000 for 12 of the past 13 weeks.

The House of Representatives passed a $1.1 trillion spending bill after a day of disarray and just hours before U.S. government funding was set to run out. Senate Majority Leader Harry Reid of Nevada said the Senate would clear a short-term funding bill tonight and would begin debate on the long-term measure tomorrow.

The dollar snapped three days of losses yesterday as the U.S. economy’s strength contrasts with slowing growth in the rest of the world. The yen slipped 0.2 percent o 118.89 today after yesterday weakening as much as 1.3 percent to 119.30 per dollar. It had surged 3 percent during the previous three days.

China
China lowered its planned gross domestic product growth target for next year at the Central Economic Work Conference which ended yesterday, China Business News reported, without saying by how much. The report cited “several authoritative channels.”

Ruble Rout
Russia’s ruble tumbled 2.9 percent yesterday to 56.44 per dollar, a record. Of 174 currencies monitored by Bloomberg, only Ukraine’s hryvnia has had a worse year versus the dollar.

Central bank Governor Elvira Nabiullina increased rates yesterday by 1 percentage point to 10.5 percent, only to see the ruble sink to an all-time low less than a minute later. A more drastic move would accelerate the economy’s downturn, with no guarantee of halting the currency’s slide if oil prices extend their 42 percent slump this year, according to Lars Christensen from Danske Bank A/S.

Anxiety that voters will kick out leaders committed to Greece’s bailout is wreaking havoc on that country’s markets, with a three-day slump in stocks making them this year’s worst performers behind Russia. The ASE Index is heading for its worst week since 1987 and has lost 29 percent this year.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Todays pivot is 6475 and a level hat would get the price back within the 20 day Bianca channel. Support is at 6383, the bottom of the 10 day channel, as well as the 20 day Raff at 6370. If this breaks then we are looking at 6238 where the next fib line is on the Bianca chart – the 76% one. Those fibs are calculated from the most recent lowest low and the most recent highest high. If the bulls can break above the pivot, 6475, then then we would most likely reach the next resistance at 6530, and possibly 6580 above that. Would have to be a very very very bullish Friday to enable that latter target to be reached. Think I will try a long around that 6370/6380 area today and see what it does, with a tight stop though as if it doesn’t hold then we are going for 6238. So flip to short. The bulls will want this week to close above 6450 to keep some optimism alive for next week.

71 Comments

  1. I declare Santa Rally Gone!!! We ain’t seeing Dec open price again in Dec!
    Dec open 6700 high 6750, we have fallen almost 6%, so much hype for a Christmas rally – as I said 2-3days ago, this is shaping up to be a different December…Probably at current rate worst December ever on record??
    We are below Dec 2013 lowest level!
    Problem is FTSE maybe low, but this time DAX and DOW will both push FTSE further down….Short till 6100. GLA

    1. Agree with the December high. This will definitely be a negative December barring a miraculous recovery which would need to be better than the October one! Interesting to see how the rest of today progresses as FTSE is oversold. Maybe a recovery today and more falls next week? My 6475 long looks pretty bad now even though its a small bet…

  2. Wow didn’t realise the commodity glut might affect FTSE this badly! Goodbye 7000 hello 6050?? No central bank comments I guess as they can’t fix a commodity issue! FTSE still giving a great yield above 3.5% so I think a bottom may be close. Can’t see 7000 in 2015 though at this rate.

  3. Good morning today with that volatility. Long from 6383 to 6420, then short 6430 down to 6390 (should have held this longer!)

    1. Well done Nick!
      Trend is down this December, so follow trend, short any up movement seems the right process…GLA

  4. As Nick pointed out yesterday, too many IG clients were long, market is in to close out those longs, before any move up. Further low RSI, or high RSI DOES NOT mean direction will change now, as market can continue in oversold or overbought conditions for longer than you think.

    Typical recent example, I shorted DOW around 17700 region few weeks ago, but then saw IG clients 80%+ were shorted, and we all know market went crazy further up. So more sells, markets moves more up! (That position was closed out at loss) Now recently number of shorts on DOW is about 50-60% region, which we all know, the index has now dropped.
    So with FTSE more buys (longs) will mean market goes further down…%long still high at IG. Funny how IG publish their clients majority view and majority losses….where do they find those clients? But yes its SAD if anyone losses hard cash, so stay safe. GLA

  5. My thoughts

    Santa Rally from next Tuesday.
    Drop and stagnation till then.
    Late 6xxx/7000 still possible.

    Call me an optimist 🙂

    1. With the large falls, some city analyst were calling Christmas rally off, due the steep falls recently, and if it continues. It has fallen another 100points now, so I think most will slowly call it off. Not looking good for FTSE at all….DAX and DOW still doing much better, and once they start really falling, FTSE will be on its knees below 6000. DAX is about 50pnts up on todays low, FTSE is 50pnts lower since DAX recovered 50pnts. Looking great to short FTSE and long DAX 🙂

  6. Just about touched 6340 level Nick highlighted – thanks!
    Next is 6240….until we close positive on a day, trend doesn’t change and unfortunately UK doesn’t have a FED or Mr.Draghi to help…
    Its Santa Bear raid 🙂

      1. yes, something might come from weekend Japan election etc, so will try closeany shorts before end of day sometime.

  7. Psychologically people are thinking, DAX and DOW is still high, so I missed FTSE short, so lets short DAX & DOW, and buy FTSE, however the truth is majority losses money on short term trading! That’s is true fact! Hence on any drop, DAX & DOW rises the most, and on any drops FTSE drops the most, the cycle has been ongoing all this week. In fact looking back, has been for few weeks, as FTSE has failed to make a new all time high, I didn’t realise this pattern last few weeks I admit. Anyway ignore this for any long-term trader, this is short-term view.

    Long-term ISA and SIPP, I think those purchasing with batches every now and than, has got an opportunity to top up FTSE with its yield…at current UK economy and low inflation, rates won’t go up in 2015 for UK, might follow about 6-7months after US.

  8. Does anyone know, what the record fall for December is? Although rare, I think we are sitting on largest December fall now 6%+

  9. Ravi are you shorting FTSE now or just waiting till next week Tuesday for buying?
    If you waiting on side-lines, agree sometimes best to just wait outside…till the right opportunity.

  10. Taking highest and lowest value, FTSE has recorded the biggest weekly fall for 2014…maybe sign of things to come…

  11. We are missing mlawrence who is our perma bear, how are your shorts doing?
    Also RC do let us know when you get next buy signal for FTSE, until then the last signal is assumed still active.

  12. Morning Senu, MLawrence ,Mali, Shane et all

    Just thought I’d pop in to see how things are.
    You guys seem to be doing some fantastic trades.

    Just a few thoughts from my charts in general ( not specific to today )
    There’s really no signs of this move Lower ending in the next few (3-4 ) days
    atleast. But there are the first signs of slowing in momentum. I will be surprised if the brakes will be able to do this before the 6130 – 6220 area.

    However this one way street is probably going to change – 4 days of downbars

    Ftse – I feel may have found a bottom for today, but US still
    looking negative. But hopefully will not move too much to drag ftse too
    much off the lows.
    Levels – T2 6350 T3 6300 T4 6293/88
    Also look for an overshoot of T2 to 6336

    levels are as per software.
    rest is my garbage interpretation – so take this part with a pinch of salt.

  13. FTSE 100 6,462 -38.34 -4.26
    FTSE 250 15,664 -74.00 -1.71
    FTSE techMARK Focus 3,406 -1.51 6.52
    Dow Jones 17,596 63.19 6.15
    Nasdaq 100 4,246 21.60 18.22
    S&P 500 2,035 9.19 10.12
    Euro Stoxx 50 3,159 8.16 1.61
    Dax 9,863 62.80 3.25
    Cac 40 4,226 -2.05 -1.63
    SMI 9,059 37.99 10.43
    Nikkei 225 17,372 114.18 6.63
    Hang Seng 23,335 22.69 0.12
    S&P-ASX 200 5,220 -11.40 -2.48

    Further supporting the sell side, FTSE 100 worst performing index in the major world…

  14. Markets falling, trend is down, shorts making the money, but IG index of longs gone up to 76% now, I was waiting for market bottom, with IG index longs at 50%, but that means keep those shorts going…:-)

  15. MY VIEW (Not for day traders).

    If you are not in the market stay out (the opportunity to short is gone).
    I am looking for a rebound around 6250-(to whatever the market is now).

    The initial signal has been given but need for a second confirmation. Soon as i see second signal i will try my best to post here (and will build up longs – medium to long term)
    Next year i am expecting a big year (in terms of my profit), looking for a repeat of market being range bound between 6000-6900.

    GL all.

      1. dont know.
        dont think anyone can predict that.
        but i would GUESS it wont be breaking the high not enough time or any data lined up to move the market that much.

        Last year same thing happened and i mentioned its stupid to be betting on SANTA RALLY… if there were such days/weeks in the year where profit was guaranteed then everyone would be rich trading once a year, just the santa rally.

        1. Exactly, Santa Rally doesn’t exist, it’s just a myth to encourage traders to make wrong decisions. If the trend is up it will be up, if the trend is down it will be down. Any rally will be called Christmas or Santa (whatever you prefer) Rally even it it’s just a retracement. It’s just festive spirits which overwhelm the markets, nothing else. It just feels uplifting when the price is going up in this time.

  16. It will go and hit very low after market, as then it can easily be manipulated down and close out all those longs and then move up after that…a shock event like that might change direction for a bit…until then market can’t afford to go up, as %longs increasing…funny how more buyers means lower market…
    See oil, maybe more traders buying and its falling more, Saudi is not having that, and ignoring it all and said let the market speculators etc settle it out themselves….

    1. Wow, why do you believe that? What research or technical – please advice.
      I have written Santa Rally off this year…I cant see a rally happening anymore.

  17. Hi All

    just an update really to what I said earlier.

    Incase – ( US does not go down ) then the Natural Behavior
    of Ftse will Pull it up to these possible price levels.
    6388
    6408
    6417 ***
    6436
    6468
    ( so be careful ) But T2 /3 /4 still active

  18. US will play trick again today, US jumping up, then DOW falls later, dragging FTSE to new low…short DOW@17520

          1. Good news has been bad news, record braking jobs report, record braking retails sales, record braking Umich.,but sentiment is driving it all currently. In a bullish sentiment, we would have been flying up…but it will go down I think.

      1. thanks, that’s enough for this week, I didn’t expect this crazy fall, but what can you do? Nothing except follow the trend. Hope you all have a good weekend.

  19. Its official, in Telegraph article today, they say “There is definitely not a Santa rally this year”, just read online article. Poor end to the year, and might affect peoples mood during the festive season due to the crash, but what can be done….nothing…just follow trend, and stay safe…it is tough out there. GLA

        1. Agree! Christmas must be ruined, and oil and commodities keep falling, many small miners BK, many smaller oil co will go BK now too…Deflation is next problem, ie cheaper prices

  20. Well that’s amazing, I had that feeling at 4:07, and within 20min we drop below 6300 – spot on 🙂
    Don’t hope for bounce too quick, yes scalping up ok.
    But next targets DOW 17150, DAX 9200, FTSE 6100, but at least 6240 FTSE should be tested…

    I can’t believe those IG clients still 77%long, must cost them dear with all the margin and hope…and market there to close them out. As Nick said, keep an eye on that %long, wait for it to come down below 60%, then we might get a reversal on overall trend, until then….trend is your friend…:-)
    Have a good weekend!

  21. To be honest, I don’t like this trading game, where most are buyers and markets falls, and where most are sellers and markets rise…..how does that work? Not just indices, I have seen same with FTSE100 shares, where more buyers share price falls, and more sellers and price rises…? Any explanations – how it really works? (Just lucky to get my shorts right, as I thought might as well follow trend, but on Monday I could never have dreamed about hitting below 6300, not even below 6400 this week!)

    When we have lots of buyers for houses, house prices rise, more bidders etc, now when we have lots of sellers for houses, house prices decrease, more sellers – simple.

  22. Just a thought – big boys bringing down indices (mind you, gold didnt go up at all), and kick-off buying spree next week onwards.

  23. There is a lot of PI’s waiting till next week to go long, now expecting a bounce like October, but this time, will it come? Doubt it now, we might see FTSE touch 6100 then rebound to 6300/400, but that’s not a Santa Rally is it?
    The worst December was -5%+, but that month index fell 10%+, so we could go a lot lower 6100/6000, then back to 6300, but that’s a Santa bear rally.

    1. Let’s see, so far SPX 2011/2000 is holding, if that breaks, should set off panic selling in the markets.

    1. Hi Sam

      Signals & Targets are generally there for market hours.
      T4 was hit at exactly 4.30. From the past signals / targets
      I have found that it generally stops being active especially
      if there are no Targets left.

      Read it however you want to.

      1. T4 – 6292 / 88
      2. Signal given at 8 am.
      3. Hits at close 4.30.
      4. That’s 145 points away.
      Scary = Absolutely.
      The simple answer – I don’t know.

    2. PS The less I interfere/interpret it – the better it is.
      Generally – price seems to want to get there.
      Scary – Yes

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