Support 6400 6364 6360 6321 Resistance 6440 6477 6529

Good morning. It was a day of profit taking after recent rises kicked off in part by poor company results and a slightly more hawkish outcome of the US interest meeting than expected. Weaker than expected US data also kept markets down in the afternoon. Overnight the Bank of Japan have left monetary policy unchanged and refrained from adding further stimulus, waiting to see what the Fed does next I expect. We had a decent hold of the lower support area yesterday – 6370 where we had the 10 day Bianca channel, though the bulls made handwork of pulling away from it, and it did look like it was going to break for a while. However, once the market closed the US dragged the FTSE up, and back above 6400 as I am writing this, which is now a support level.

US & Asia Overnight from Bloomberg
Asian stocks stayed on track for their biggest monthly gain in five years as investors awaited a Bank of Japan decision on monetary policy.

The MSCI Asia Pacific Index was little changed at 133.85 as of 9:05 a.m. in Tokyo, with Australian banks dragging on the gauge while Samsung Electronics Co. jumped. The measure is up 8.1 percent in October, led by a rebound in energy shares. Economists are split on whether the BOJ will add to its unprecedented easing on Friday.

“The key question today is the BOJ and whether they will follow the European Central Bank lead in signaling or even delivering further policy stimulus,” Sharon Zollner, a senior economist at ANZ Bank New Zealand Ltd. in Auckland, said in a client note. “Further stimulus, or a promise thereof, would alter market dynamics, offsetting the Fed normalization pulse.”

Japan’s Topix index slipped 0.1 percent. Further easing would pit Japan and the European Central Bank, which indicated last week it would increase bond purchases should the economy require it, against the Fed, which signaled Wednesday that it’s prepared to raise borrowing costs as soon as December. It’s also a busy day for earnings reports in Japan, with more than 300 companies scheduled to publish figures.

South Korea’s Kospi index was little changed. Australia’s S&P/ASX 200 Index fell 0.8 percent and New Zealand’s NZX 50 Index lost 0.5 percent. Markets in China and Hong Kong have yet to start trading.

One-Child Policy
Chinese stocks posted their biggest three-day loss in a month in Hong Kong as earnings at some of the nation’s largest companies missed estimates, with the Hang Seng China Enterprises Index sliding 1.1 percent on Thursday.

At the end of the Communist Party’s four-day plenum, China abandoned the one-child policy that has shaped society since the late-1970s as the ruling Communist Party tries to boost a shrinking workforce and manage the country’s transition to an era of slower economic growth. The country needs annual growth of at least 6.53 percent in the next five years to meet the government’s goal of establishing a “moderately prosperous society,” Premier Li Keqiang said in an Oct. 23 speech to Communist Party members, according to people familiar with the matter who asked not to be named as the remarks weren’t public.

E-mini futures on the Standard & Poor’s 500 Index climbed 0.1 percent on Friday. The underlying gauge slipped less than 0.1 percent on Thursday. Odds the Federal Reserve will increase rates at their next meeting jumped to 50 percent from about 34 percent a week ago, based on futures prices, after officials signaled they’re prepared to tighten policy amid the waning impact of global market turbulence.

“The market continues to trade on every Fed utterance,” Michael Cuggino, the San Francisco-based president and portfolio manager at Permanent Portfolio Family of Funds Inc., said on Bloomberg TV. “By trying to be transparent and by trying to keep everybody informed, they’ve actually spoken so much through so many different voices that they’ve created uncertainty.” [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Initially the 6400 level looks to be fairly decent support so the bulls might be keen to built not he overnight rises for a push towards the top of the 30 minute channel at 6435ish, before more downside going into the weekend. If the bulls break this level the the top of the 10 day Bianca at 6477 is likely be hit, which would be just over 100 up from the touch of the bottom of 10 day channel yesterday. Thus a decent rise and area that could see a turn back down. On the daily chart we also have the 200ema at 6513, and the top of the Raffs at around the 6530 area though I am not expecting them to be seen today. 6435 looks fairly key now as resistance also worth a short off this area, and its also the area that we dropped off from yesterday with that early bearishness. If the bears break 6400 initially however, then a drop down to the 6365 area looks likely, where upon we would have a second test of the bottom of the 10 day channel. Whilst on the face of it, it appears bullish, I wouldn’t be surprised if we start another leg down shortly, before the end of the year sees another rise (thinking a year end close around the 6600 level). Its the last trading day of the month after some decent rises during October so we may well see some profit taking towards the end of the session.

56 Comments

    1. Expected that too Jim, thought they would build on that overnight strength a bit more to at least try for 6435 again

        1. Dow on the day chart hasnt changed the way it has been moving yet though and we are further from 700 than we were yesterday.

  2. We tried a long 6402, and stopped at 90, seems last few days all our orders have been stopped….end of month today maybe people banking their monthly profits or do we go for strong end on a strong month….I guess yanks will decide

    1. Hi Senu,bloody disaster,I stayed up last night was doing great my target was 6413.3 for 40pts it was about 4.45 am and I bloody noodled off it just hit it as well,I’m a clown I should have put a limit on it but hey ho,Cocked up what can I tell you!!!!!!

      2. I’m just debating where to go from here, I have half of my positions in or thereabouts profit,I’m really not sure where this is going,I was going to shut at b/e but I’m beginning to think it may go back up,playing it by ear,how about you ?

          1. We are about the same my average is 73.3 but I have as low as 58 and as hi as 79 in my positions so I can unload risk without loss if need be, let’s have 6450 I don’t see why not to be honest if we get a boost of positive sentiment :0)

          2. The Japanese decided to save ink and paper and not add to the mess so in the real world that’s actually really sensible,be interesting to see how the market plays out today bearing that in mind.

          6. Senu that stop replacement was really good so far,I think it spiked down to 58 then retraced well done.

    1. Have a good weekend Senu,unlucky there,but definitely right not to shift the time frame you were working in and move the stop.

      1. anstel,FWIW comparing the Dow to Yesterday I cant see a close below 700,so I think that EOD is the best indicator for the FTSE next week and that longs are still in play.The Dow is still 200 + points over it’s 200 sma and like Nick said it is the end of the month + the FTSE Bianca channels have moved into Bullish alignment.

        1. Thanks WSF I’m committed to holding this long,I think it’s the right position for me,if things get difficult later I will hedge the position.Very best of luck if you are trading.

          1. There doesn’t seem to be any strength in the Ftse at the moment at all,from a buying point of view compared to the Dax and the Dow it’s the one I would be buying,my feeling is and has been it’s going to jump up but when I have no idea.

          3. Yes,out of Sync,but that move in the Dax was to +800 and with that and everything else … Larry Levin had this in his Daily Commentary on the U.S,” With tighter ranges in most stocks, we could see a move made this morning. While the afternoon maybe quiet, we should see active trading early in the session. I am looking for a slight rebound today. It looks like the time to buy is now and moving forward until the end of the year. Markets are not allowed to drop at the moment, and buyers look to be in control.” and it is too early to say he is definitely wrong,up or down we are still in consolidation and all of the cynical reasons seem to be saying we wont revisit Aug lows this year.

        2. I have just added at 38 WSF they say don’t add to a losing position but it looks so damn cheap to me.

          1. I’ve been tempted all afternoon.I still have my Dow Hedge,need it a bit higher or a lot lower to open it and let one side run,only costing me 3points a night now,so not too bad,but I have had it for a lot longer than I expected.I’ll probably go long into the U.K close and leave it over the weekend.The way the Dax retook 800 and has held it seems positive.

  5. Hi guys,

    What’s the best free charting software available? I would like to be able to do the following on the same chart – look at a chart using different timelines, plot moving averages, plot trend lines e.g, tramlines, compare price against other indices or other companies, etc. I am not a pro, a beginner, so would like free access if possible to any good free charting tools out there. I am only interested in UK indices and stocks mostly. Appreciate it. Thanks

    1. I’m probably the least qualified to comment but no ones said hello to you so I would say that the charts and platforms that are available to you free from any broker will do the basics of what you need.

      1. Sorry Anton,that is all I can say too,a free Demo account with any of them,the platforms are all basically the same.

  6. Hello chaps, looking pretty naff, isn’t it?
    Getting a bit oversold on the daily, that’s about all it’s got going for it that I can see…
    Nothing irrepairably damaged for the bulls though, with support around 6300 and then the big one for me, 6250.
    Still ranging sideways really, no clear direction.

    Looking for a small long into the close I think, maybe 20 pts on the upside from here (6338).

      1. Lol, hi anstel.
        Don’t know about leader, can hardly walk at the mo after a week of grandson and football in the park.

        Here comes the short covering, don’t expect it to last, taken +12 on half.

          1. Sounds like you have had an exhausting week, I’m operating about 9 points behind enemy lines at the moment so I’m doing a late shift if I can keep my eyes open! Have a great weekend :0)

      2. Hi tmfp 🙂 that is what I was thinking,only thinking of leaving it over the weekend.
        Was childminding more tiring than Trading?

        1. In a different way mate, rewarding in a different way too. 🙂

          As you probably gathered, I rarely take overnight, let alone over weekend positions, but if you’re happy long then fair enough, there’s no reason to expect the Spanish Inquisition.
          China would unsettle me a bit though, they are coming out with some weird sh*t right now (e.g. 1 child) and I don’t think it would take much to spook the Yanks and take us down to test 6250.
          If you are bullish but unsure of timing, then maybe think of buying call options on any further weakness?

          1. Cheers.I guess a change is as good as a rest and anyway this will probably be one of the most memorable weeks for you when you look back at 2015,so that can only be good.I’m hoping the Dax is indicating something.

    1. Sure Jim, looks as strong as hell, but surely must start soon running into some resistance from that big top, 17800-18200?
      August was the first monthly lower low they’ve posted in six years and if they don’t break 18400, then it’s a lower high too.

        1. As you know Jim, my idea of a long term trade is when my cup of tea goes cold before closing it out, so this is to a certain extent just theoretical for me, but if that weekly DOW chart was a 3 minute, then I’d be looking for loss of momentum soon and a sharp downward retrace.
          As for the FTSE, deceased feline a gogo.
          🙂

          3. WSF — “The deal also adds $31 billion into an emergency war fund for the Pentagon.” Makes our Trident issue seem trivial!

          4. What a depressing read WSF 🙁

            Sorry anstel, but just look at the 1-3 hours charts.
            Breaking 6360 and closing below it was not what a strong market should do, especially after forming what now looks like double top at 6460.
            I know you’re not a great fan of charts, but surely you can see the importance I attach to 6300 and 6250: under 6250 there is nothing until the 5000’s.

          6. Hi tmfp I have a 1 hr 2 hr and 4 hr, I can see your 6250 about 14th October on the 4 hr ,it just doesn’t sit right with me,I am not experienced like you but the sma s are lagging indicators and with the Dow and Dax at their present levels my money has to be long.You are quite right to short the market if you look at it rationally but it’s not a rational market.if you remember I mentioned to you when I first started posting here I think the market has one more push up left in it and my views havn’t changed since then. Ŵe all trade are viewpoints and believes really,I would like the learn more of the technical stuff though for sure.

          7. Sure, as I said up there ^^, it’s ranging, we can all agree on that, and until 6250 breaks then all is possible on the upside. The same can be said of 6460 for the downside.
            One or the other will prove be the top/bottom of the next move, you pays your money and you takes your chance.
            If you dismiss logic based analysis by saying “it’s not a rational market so logic doesn’t apply” what do you have left? Hunches?
            May as well play roulette……
            🙂

          8. Yes I think it is like roulette because you never know when we get the next pump and dump.! Funny thing is I’ve never gambled at a casino and only ever placed a handful of bets in the betting office.oh well we can only do our best,have a great weekend.

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