Support 6406 6400 6399 6339 6331 Resistance 6440 6443 6445 6489

Good morning. The main feature of the day was the news that UK Banks had passed the Bank of England (BoE) stress tests. As an added benefit the BoE governor Mark Carney said there was no new wave of capital regulation for banks in the pipeline. The banking sector lead the move up in the FT100 with Barclays being the top performer. 6400 is still a key level and all eyes are still on the ECB “easing” announcement on Thursday. Oscillation around this level may still persist until the market knows how the ECB will act. Not many of the trade plan orders triggered, with just the S&P long at 2088 running to target at 2097 – which was a good level as it promptly fell back to 2081 before climbing again.

US & Asia Overnight from Bloomberg
Asian stocks held Tuesday’s jump as an unexpected contraction in American manufacturing added to speculation that the pace of Federal Reserve rate increases will be gradual.

The MSCI Asia Pacific Index rose 0.1 percent to 134.25 as of 9:03 a.m. in Tokyo, with about the same number of shares gaining and falling. The measure climbed 1.8 percent on Tuesday to pare its 2015 drop to 2.7 percent. The Institute for Supply Management’s index of U.S. manufacturing dropped to 48.6, the lowest level since June 2009, as elevated inventories led to cutbacks in orders and production.

“The ISM manufacturing figures were terrible. They were at a level indicating a recession,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “The market’s focus is shifting to the pace of rate hikes in the U.S. That pace is likely to be gradual as the American economy doesn’t seem to be as strong as expected.”

Australian GDP
Australia’s S&P/ASX 200 Index slipped 0.5 percent ahead of a reading on the nation’s third-quarter economic growth. Gross domestic product increased 0.8 percent in the period from three months earlier, according to a Bloomberg survey of economists.

Japan’s Nikkei 225 Stock Average lost 0.2 percent after closing above 20,000 on Tuesday for the first time since August. The nation’s broader Topix index added 0.2 percent. South Korea’s Kospi index fell 0.2 percent, while New Zealand’s S&P/NZX 50 Index rose 0.1 percent.

Futures on Hong Kong’s Hang Seng Index added 0.3 percent in most recent trading, while contracts on the FTSE China A50 Index rose 0.4 percent. China’s official purchasing managers index for November was 49.6, a report showed Tuesday, missing economists estimates and coming in at the lowest in more than three years.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The underlying gauge rallied 1.1 percent on Tuesday, with healthcare shares leading gains. The odds of an interest rate increase later this month remained above 70 percent before government payrolls data due Friday.

Global shares have wrapped up the year with a monthly gain on all but five occasions since 1988, with December posting the biggest and most frequent increases of any month, data compiled by Bloomberg show. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have support at the 6400 area today to start with as the daily pivot is 6399, the bottom of the 30min channel is 6400 and the Hull moving averages on the 2 hour chart are showing support at 6406. Therefore a long at this level is worth a go, though we are probably going to have another fairly flat day as we head towards the ECB tomorrow. Todays dividend is tiny at 0.8 so there won’t be much of a rise just before the bell this time with the divi hunters. We have a pretty decent rising channel on the 30min chart and the moving averages are all currently bullish, with yesterdays initial charge by the bears firmly rebuffed now, though we do have some resistance at this 6420 area, with 6445 above that. As such I think we will get that initial dip to 6400 before more upside. We also have the commons debate on the bombing of Syria today, expected to be approved really (probably a foregone conclusion anyway). Next step will be boots on the ground.

If the bears break below the 6400 level then 6375 and 6340 are the next support areas to watch, being a fib level and bottom of the 10 day Bianca channel respectively. We also have the 25ema on the daily at 6330 so a long around this area is worth a go if it were to get that low. For the moment it all looks pretty bullish (famous last words!).

103 Comments

  1. Morning.
    The inevitable happened then, the DOW dragged us through the 6400 area pretty well, but 430+ early on was too much, although it set up that nice little buyable revisit to 400 at the opening.
    Next target 6489 high I guess with the catalysts lining up, moar QE, NFP’s and Fed meeting to follow, although the battered bears will be asking how much of the effects of those are already discounted in the recent strength.
    At 6417 I’m neutral, but a preference for buying dips looks logical for today.

      1. Yep, I noticed that, but I don’t trade from supports: when I will see long then I will go long. At the moment there’s no long. I have to wait.

          1. Hi Jack,

            It might get to 290 before dropping further. I’m just thinking if I should take half or leave it running anticipating a break of 240. Another attempt at 240 I might considering closing half or it may well be stopped out.

          2. I would have taken half definitely no matter what, that’s part of my strategy. It’s better be safe and add later if you have guts.

          3. 50 points profit qualifies to be as a take half situation. But it’s up to you. I take half and 10 or 20 sometimes.

  3. Took at Dax short this morning at 309 and still holding. I’m waiting to see if 240 will be broken if it did then 11150 a possibility. Daily charts are suggesting a drop before any upward movement. Stops in a b/e.

    1. Hi, RJ. I see you have sorted your strategy. Good trades recently. Are you still following your Fibs? Are you using EMA or any other indicator? Great entry today as well.

      1. Hi Jack,

        Fibs, EMA and Price Action and R/R. My strategy is to enter trades with a stop of 15 to 20 points sometimes 10 points, if it moves into profit hold it as long as possible until it reaches key levels. What I have understand from past experience is when you take profits quickly, you are always looking for next opportunity (not the right one) and end up losing what you have made. I also don’t have time to scalp and look at the screen as I work full time. It is more relaxing this way and they more you stay relaxed your account is growing 🙂

        1. I totally agree with your approach and that’s what I am working on too. EMA, Fibs, the same, impulse-pull back etc. However I am still struggling with a “holding” bit and mad entries syndrome (revenge entries, deliberate losing entries…) Also I struggle with a guilt syndrome, it’s something connected to a fear to enter the right trades.

          1. the only thing that is worked for me in holding is once I put on my trades with defined stop and target, I resisting my temptation to look at my screen. As I work full time, I find that a natural distraction from trading.

            I have taken another short at 328 – 20 point stop as I still think my analysis is valid until 350 is broken comfortably. This is also my last trade for the day.

          3. I have taken half for 50 points profit rest at b/e. I have set a greedy target of 11150 for the rest lets see.

  4. Yahoo shares up after hours on rumours of sell off of core holdings. Doesn’t make much sense. If they sell these of then what is left of the company? It becomes pretty worthless.theyre probably happy they’ve found buyers for it. I think Internet companies are again showing up ridiculous valuations. Just look at Facebook. People on social platforms are so fickle they could move on to the next big thing any moment. I’ve always believed FB will go the way of MySpace. It’s not like Google or Amazon, two companies with sustainable businesses. Amazon because it sells tangible products, Google because people refuse to use any search engine other them. And of course, Adwords, the biggest advertising platform online.

    1. Re: Amazon, I think I understand their business model, nothing new, based on the time honoured American principle of market share domination through aggressive pricing and profit reinvestment.
      However, I think online shoppers are just as fickle as social media users and Amazon have nothing which is not duplicatable or vulnerable to a killer app, so I’d be reluctant to put them in the same bracket as ‘conventional’ industry.
      Unless you have a locked in monopoly like Microsoft, I think the 800lb gorilla approach is old hat in retail and could be undermined by decentralised trading and post fiat adoption of crypto currencies, but that’s a bit of a ‘thing’ of mine.

      1. Facebook has already been largely deserted by the young in terms of active posts. My two daughters rarely ever post, just monitor.

        Facebook has had to keep itself current by buying up sites that the kids do still use though. eg whatsapp and instagram

  6. Morning,did nicely on my after hours long last night out for +18 making a total of 54 pts gain on Ftse yday,pleased with that and today I’m long from 23 at the moment,good luck all.

  7. So, I’m in profit today from the one remaining position I opened at 6415 weeks ago. If I hadn’t had sold off a chunk I’d be closing out now but as you know, I have this silly desire to reach 6,800.

    Now that, for the time being anyway, the values are positive, I’m finding it hard to not exit completely. This particular trade I’ve seen go from over £8k in the red to +£127 right now.

    What would you do?

    1. A suggestion, nothing more: close it out.
      Now you’re closed out and that’s history, do you want to go long?
      If yes, then go long, but maybe try and work out an exit strategy first which doesn’t involve the stress of running a huge paper loss if you’re wrong.
      GL. 🙂

      1. Good advice, thanks. Thinking what I’d have done there, decided I would want to have gone long so I’ve closed £10 off, leaving £10pp with a stop at 6240. Now I’m going to close it all and look on xmas day – no iphone, no chrome – just a surprise!

        1. Hi Si,

          I Personally think there should be a pullback before it rallies to 6800 but how much I don’t know. Do you think the price you entered is cheap to hold onto or can you let this go and look for another opportunity. If I were you I would define logical stops on this trade and leave it run its course to see if gets to 6800. If you are mentally drained and won’t be comfortable taking any more loss, I would close this position or leave it at b/e, clear my head and look for a new opportunity. There is nothing like you will need to win all your money back exactly on this trade. There will plenty of opportunities

          1. Agree with RJ, I see pull back coming (FTSE). It’s like going long on the top – really wrong. Needs to see some sort of pull back first.

    2. Tough call that Si,it’s your funds so it has to be your decision,on the one hand we have ECB tomorrow,with the chance of further comments on more monetary stimulus which I think will be positive for Ftse and Dax,also we have the potential for maybe a mild Santa rally,Nicks poll suggests many expect 6500 by Xmas,against all that though we have the instability regarding Syria,it would only take some bad events to pull the rug out from under this lot again. If you want my opinion FWIW I’m looking for 6450 today,you could put a break even stop behind your position and trail behind your position if it goes up further,one thing for sure don’t lose what you have because you can trade with it ive got a lot of clawing back to do and I don’t even want to think how long it will take me if indeed I can do it.Good Luck Si.

    3. I’d get out and start again with smaller stakes. I have no idea how big your account is at the moment, if you are having (had) a running profit of £127 and your 8 grand are now intact so you must have had a bit more to cover margin etc. Let’s say 10 grand, for me £10pp is reasonable here. But it’s up to you of course.
      You had a narrow escape. Like my son says: “Phew, that was close” (he doesn’t mean your situation, he’s just 8 y.o.)

      1. Short term rsi can be used to decrease the value of an overall long, or increase the value of an overall short, it can indicate a temporary counter trend move which can be used to your advantage, a bit like the hedging that you’ve done in the past.
        A b/e stop usually means you won’t “miss the boat”.

        1. If you’re trading off of an overall position, go to 3min or 5min rsi, following the 1min for anything but scalping will leave you a twitching wreck. 🙂
          In that recent sequence, the 3 min would have given you a 36 sell at 80 rsi10 and the second attempt at 36 had markedly lower rsi indicating a possible fail (which it did), so you would now be looking around for a replacement long on a further pullback toward presumed support at 30 from the previous broken highs, and resumption of the up trend with a nothing lost (well -2) stop buy at 38.
          That’s the way I play it, fwiw.

          1. Just to close this, If you believe in the logic that 30 is now support after resisting earlier and want to replace your long there, then that’s +6 against a possible -2 if the 38 stop had activated, a R/R of 3:1 and you still have the original position.
            Not a particularly spectacular example, but that’s the theory and I use it frequently.

          2. You can read my mind that was off the 1 min RSI 10 but I have been changing to 3 and 5 min charts I’m favouring the 3 best along with the 15 min and hourly plus Dax 5min and Dow 15 min. When it’s positive momentum like I think it is now I think sometimes I could ignore it and ride the drop.

          4. I have to really think about what your telling me tmfp,what does this stop buy at 38 mean,are you trading manually like me or with orders using limits and stops?

          5. Thanks tmfp I’ve learnt something else ,the penny should have dropped earlier really,because my charts are only small I use the green and red mountain indicators on RSI because it’s easier to see and not the numeric values ,I know understand that if the numeric value of the second RSI overbought signal is less than the first the pullback may not be as pronounced thanks for explaining that.

          6. I trade manual stops unless I’m away from the computer, but I use a 3 x 1min close above the level confirmation criteria usually before operating one, which I find helps avoid exhaustion ‘blips’, but obviously can cost more in some circs.
            To see the wood for the trees: basically a market continues a trend by making new highs/lows as the case may be, when it stops doing that the possibility of a change of direction is indicated.
            Picking tops/bottoms really, trying to see the early signs. High risk, hence the v tight stops.

            Just closed that 36 short for +14 btw, o/s 1 min rsi and previous recent low reasoning.

        2. Yeah tmfp I have been watching it closely now for a few weeks it seems we get about three tests of the highs then the pullback.it always seems to be respected but to varying degrees.

        2. closed for 7. Cant beleive it hasn’t gone lower. Will look to get in at a higher level on the bounce

      1. Thanks Tmfp. No technical reason to close it before 150 except for a good blue number :). I will look to short again at 240 if it starts acting as resistance.

      1. Looks like the DAX has done the revisit to 240 and failed to break back scenario, might signal another look at ~200 support.

          2. You’re getting worse than I was recently, selling in anticipation of a support break that doesn’t come.
            Be Perma Bear by all means, but at least sell the strength mate, or this might end up being a dear end to the year for you, and nobody likes curdled custard. 😉

          2. No it’s alright tmfp I just have to get used to the lag after the RSI before it drops,I wanted to stay long but thought I could get back in lower and I didn’t think it was going to drop after I closed it.

      1. It seems to be a “take 10 and be happy” market for me at the mo Senu.
        No idea on that spike, stop hunting by the look, was a good short entry in hindsight.
        Both DOW and FTSE need to bounce from here (865 and 30), probably will, or it’s pressure into the close.

          1. Fair enough, 900’s got to go on the DOW to make any money out of that, fourth time lucky, let’s hope.

          3. None apparent from what I can see, DOW’s shaping for another go the 900’s.
            I don’t have figures, but my perception is the vast majority of recent 15.30-16.30 hours have seen + from the US.
            If we drop another 8 quickly from here 36 could be a different story for the MHH though

          4. That’s Senu stopped it’ll go up now. 🙁
            Actually, I don’t think it will, best out of it mate, maybe a bounce before the close is worth a quick short

          11. Re: DAX, it will be closing on its lows by the look of it.
            Hardly inspiring given that it’s more free euros day tomorrow.
            (Sour bear speaking).

          12. Can I say something tmfp? I think you said you trade the market reactively but your still bearish even when it’s very buoyant,and I’m still bullish when it’s bearish,all we have to do is be more flexible,what do you think?

        2. I’ve been bearish since I was born mate, it’s in my DNA.
          I trade the numbers, it’s not pretty or Gordon Gekko BUYSELL but it works. I think I said back a while I analysed my trades and it was 53% long profitable, so it doesn’t leak through into my trading too much.
          But yeah, there’s nothing like a raging bear market to get the juices flowing for me, it presses all those destruction and mayhem buttons deep within.

          1. LOL double Lol you crack me up :0) hey it’s a good job your not the top trader at JP Morgan,you could crash the world market before all the big boys have got their positions set up to profit from it,that would really piss them off lol!

          2. I was clerk to one of the biggest Silver traders on the LME when I was very young, and the Hunt brothers used us to start their attempt at cornering the world Silver market.
            Bunker phoned up early in the process post market and insisted we buy a huge amount within the next hour.
            We told him that it would be very difficult and expensive but he insisted and we got on the phones.
            I can’t remember the numbers now, but we pushed the price up by about 5% in a couple of hours, continually ringing round the other brokers.
            Being crooks, as soon as we had filled his order, we then rang round again selling small amounts for our own accounts and crashed the price by half its rise.
            I bought a BMW out of that day.

            Now that was a market 🙂
            http://goldsilverworlds.com/wp-content/uploads/2012/12/silver_price_SGS_CPI_adjusted.gif

          3. Hey bloody hell, top story, tell you what though……if you start thinking of changing your car can you give all the lads on here a heads up so we can close our longs :0)

          4. Yes and that explains that jump up on the Ftse at 3.20pm to 3448 that surprised Senu, its bloody Bunker having some fun from the other side,bet he’s having a right laugh :0)

  14. Nice trades for members today, #FTSE short at 6440, #Dax long 11260 for +60, #SPX short at 2105, #Gold short 1068

  16. Looks like I haven’t missed much, lets hope the pronouncements from ECB make it fly about a bit. Is it really a month ago that the FTSE was un sellable from 6400 all the way down to 6100?!!

        1. Bet tmfp is fuming,he’s been waiting for this all day and when he knocks off for the day that’s when it spits it’s dummy out,you just have to laugh at this lot really,:0)

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