Support 6504 6487 6464 6436 Resistance 6520 6536 6550 6560 6567 6633

Good morning. China continues to be weak and weigh on the markets, with another bearish session on Wednesday. Today we have a 5 point divi and also the Fed releases their minutes later today, which will give a clue if a rate hike is coming in September. The FTSE has dropped a bit of course, though a few were expecting 6400 early in August and that hasn’t come as yet. As such the FTSE is holding up quite well really, and the S&P is still around 2100. So though it feels bearish its a slow drift down rather than a violent move, which given China dropped 6% at their close yesterday is quite good for the bulls. That said they can’t seem to make any of the rallies stick at the moment. We closed the first of the share screener stocks yesterday – Easyjet closed for +80 having bought on 31st July so a nice rise on that. More info on the share screener service can be found here

US & Asia Overnight from Bloomberg
Asian stocks fell a fourth day as a deepening commodities selloff raised concern growth may be slowing in China, and as investors await clues from the Federal Reserve on the timing of a U.S. interest-rate increase.

The MSCI Asia-Pacific Index dropped 0.1 percent to 136.83 as of 9:01 a.m. in Tokyo, extending a seven-month low. Crude oil resumed losses and copper dropped to the lowest since 2009 as concern mounted that slower growth in China will erode demand for raw materials. Minutes of the Federal Reserve’s last meeting will come under scrutiny Wednesday, with market expectations for a September rate hike falling to about 48 percent from around 50 percent last week.

“There’s a flow-on effect of the issues given concerns over the Chinese economic slowdown,” James Lindsay, who helps manage the equivalent of about $3 billion in assets at Nikko Asset Management NZ Ltd. in Auckland, said by phone. “The consensus is the Fed will raise rates in September, but there’s a potential for that to be pushed out amid increased market volatility.”

Japan’s Topix index fell 0.4 percent. South Korea’s Kospi index rose 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.1 percent. New Zealand’s NZX 50 Index climbed 0.2 percent. Markets in China and Hong Kong have yet to open.

The Bloomberg Commodity Index fell on Tuesday to the lowest level since February 2002. The gauge of 22 raw materials declined for a sixth day in the longest run of losses in more than a year. With China the world’s biggest consumer of industrial metals, Tuesday’s 6.2 percent slump in the Shanghai Composite Index rattled raw-material investors.

Chinese investors are cutting expectations for stimulus after data showed a stronger housing market and the central bank injected cash into the financial system. The securities regulator said Friday that China Securities Finance Corp., the state agency tasked with supporting share prices, will reduce buying as volatility falls.

Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent. The underlying measure slid 0.3 percent on Tuesday. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Looking at the 10min chart to start the day there is resistance at 6522, and if we drop from here then there is a decent looking 30minute channel in play. At 6am we have bounced off yesterdays low around the 6504 level and also near the lower fib 1 level. If the bears do have a go this morning first thing then 6488 looks decent initial support, though the daily channels are all a bit lower than that, at 6464 and 6436. If the bulls break 6522 on this current bounce as I am writing this, then the daily pivot at 6535.8 is a likely target for this rise from 6504. Above that the the 200ema at 6560ish is the next resistance. Divi is fairly small today at 5 points, so not likely to generate much divi hunter buying towards the bell, maybe just a small climb. Mostly its eyes on the Fed minutes today for clues as to rate hikes in September or not. I’m just looking at trading that 30min channel really.

136 Comments

    1. Nice one custard. Brave long, what are you looking for out of it? (apart from a bit of pain, by the look of it 🙁 )

    1. Did you buy that at 0834? I thought it might break on the upside too then, if that’s any consolation. My pre engulfing 3 min candle theory saved me from such impetuosity though.

      Those 2 x 3 min candles at 0903 and 0906 could be an exhaustion formation, if we don’t drop below 48 again you might do a Houdini.

  3. The 6436-40 area is an interesting confluence of potential supports. The March 2009 low (remember that?) and the Dec 14 low lines up there. It’s also a measured move of the 21-27 July decline and a previous low (8th July). It’s been my favoured area for a bottom though I know it’s equally capable of crashing through it.

    1. Hi ZZ, do you actually give much credence to a trend line with two reference points in six years?

      1. Masses 😉 You can tell my level of confidence in it by: ‘it’s equally capable of crashing through it’. Thought it was worth pointing out because it was a potential area of support to go along with Nick’s daily channel of support and the measured move analysis. I do find when you have two or three things suggesting it could be an area of support it’s worth paying attention. Will it hold? Maybe, maybe not.

  7. Morning All,
    Bit late this morning …
    RSI Trio at 9:05 – about 6445
    Wondering if this could be slow grind higher ….

    1. IF we break 60, say run up to 66+, get a bit overbought and retrace, I’ll probably add to my long.

        1. The theory was that there would be a bit of fresh air between a break of 60 i.e. 62/3 and 50% retrace i.e. 70/2. It would get a bit rsi overbought 66+ and then come back to test the break 60/2 like a healthy market should, before continuing the rise.
          But it didn’t do any of those things lol.

      2. That’s a bit of a fail really at 60 but may as well hang in there, 770+ on the DAX would help.

  10. Agree hugh. Looks like we are afterall in a strong downtrend.

    but now it feels like its overdone, so a bounce to 6600 might be due

  11. 6600 ! Not sure what will take us there …
    At the moment – I’m kind of watching to see if it can keep it’s head above 6445.
    Did some stuff last night – to much to go into detail here but from this I’m getting a build up of Shorts – which isn’t a great…still running this so it’s still in development !

    1. Yes – see what you mean but maybe test <6418 first .
      B. pain as I am a stock holder ! Don't how many of us are left now days.

  15. I have a question which I am hoping I will get an answer for in this forum. We have seen Dow Falling during an active trading session. We gave seen Asia falling in active trading sessions. But the falls in europe have mainly been before the start of the session. How are the traders making money here? Surely, we will see new highs soon elsewhere and a sell off in europe? just food for thought….

  18. No Hugh I am not counting that entirely. As it is still Asian session And nor start of ftse session.

    1. icarus – I for one am wondering what you’re driving at – Asia down – UK moved with this.
      What I think you’re asking is what’s next ??

          2. The moment has gone I think, not enough volume at lunchtime or it would have cracked.
            Out at 59

    1. Not sure what you mean ?
      Perhaps you’re referring to the 50 EMA …yes, my trading has good bits and bad bits & there’s room for improvement! The trades that seem to be working for me are the kind that tmpf is doing -small points here and there. Tryin’ to position yourself for bigger moves always seems to be mired with issues.

  26. Are we at a meaningful bottom or not? Well here’s my incredibly complicated system for deciding. The last two significant bottoms (8th July and 27 July) both had exactly the same angle of ascent on the hourly off the bottom. My red line in the sand is a similar angled line on the hourly. Crude but simple.
    8 July chart: http://s172.photobucket.com/user/zigzagger2/media/19.08.15a_zpsoahvjlr0.png.html
    27 July chart: http://s172.photobucket.com/user/zigzagger2/media/19.08.15b_zpsc8nlutuy.png.html
    Today: http://s172.photobucket.com/user/zigzagger2/media/19.08.15c_zps7wsrhwes.png.html

    1. Yeah, I got bored with waiting for it, but it seems to have gone now.
      Looks like a regulation 61.8% dead cat 6510/6433/6481.

      I’m getting majorly bearish again, looking for FTSE <6420, DAX <10650, DOW <17300 this week. Then we'll see what they're made of.
      If it gets remotely near 6500 before these b*llsh*t minutes I'll be shorting it big style.
      A good limited risk trade is long Aug VIX around 14.00 imo.

      1. And of course, 6454 is ~61.8% of 6433/6481, hence the bounce which should, in the spirit of 61.8%, reach 6471 and then Mr. F disappears up his own a*se.
        🙂

        2. Well, it got to 68 which was 50% rt and the 12.30 bounce high (69.50) and had an attack of nausea.
          55/75 range, whichever breaks will be worth 20 more?

          I wonder what the Yanks will make of yet another crap European morning, especially if they look at Yellen with different eyes i.e. not as a deeply thoughtful saviour of their mortally ill economy, more as a clueless bureaucrat doing what she’s told.
          The minutes could turn into hours lol.

  31. well ftse is going up & dow down
    so as ftse follows dow – reckon any move up is to short it

    2. LOL, you are SO full of sh*t Argyle, not one of those targets was hit.

      Ignore him Paul, he’s trolling.

  39. Hey guys. IF any of you are short, What are your targets now that 6430 has been finally broken.
    6400 seems to obvious

    1. Just missed a short by 2 points at 6464
      But looking oversold
      But for expert advise – ask Argyle, he has a Strong Buy on Ftse !!!
      and Dax, and Cac and Dow !!

  43. Paul, i went long because there was a strong chance of upmove. I expect higher from here but I may close for a loss if we see new lows. Dow certainly looks weak. O was expecting 325 yesterday and then a rise up….
    lets see

    1. Ok just asked to see if there was any technicals for your long call.
      As a forum, always good to hear opposing views, but an argument
      for the calls a member makes would help the others to just question
      their own argument
      I was seeing a short and placed an order at 6464 ( just missed it )
      so wondered if I had not seen something that you had seen
      Personally – if you are long – if it gets to anywhere near 6435 I would
      probably evaluate your Long

  46. Its unlikely the US will rise rates now, so does anybody know what happens then, this can’t keep selling off, can it?

  47. Closed second long for +20.
    Expecting to close first long at be by close. If no more downside

  51. As a matter of interest, what price levels would the DOW and the FTSE have to get to, for you to consider the 2009- bull market over?

  53. Tmfp…good question 🙂
    you may have noticed, I am usually a bear at the highs and a bull at the lows.
    In my view which is based on a weekly chart, I need a retest of highs 18350 on Dow and 7100 in ftse to qualify for a bear market confirmation

    1. OK, you mean you would want a double top to form, or some other recognised pattern like a head and shoulders?
      So, if we rallied from here to the highs and failed, then you would see us coming back down and breaking these levels, 6400, 17300, as confirmation that a bear market had begun?
      But until we get a formation like that, you see any further declines from here as just a bull market correction?

  55. Tmfp, it most certainly won’t look like a double top or h&s
    it would be based on a spike up on news etc so won’t be recognizable. I use other indicators like Macd etc so, should be easy to identify

  56. I see failure to break highs with insufficient bull power to use as a confirmation of bear market

    1. Of course this is a bull market. Look at a monthly chart.
      Most definitions of a change of trend seem to specify 20% or more over at least couple of months.
      That’s about 5700 on the FTSE to qualify, or <15000 on the DOW, long way to go yet.

      1. Evening,
        Interesting chatter..
        Not sure if anyone has read this..
        http://thepatternsite.com/12MonthMA.html
        The chart runs ’til 2010 – if you put a chart up like this – I was surprised at the result.

        It’s a huge site and it’s possible to spend days reading all the info on here. Enjoy !

  61. Agreed tmfp. But as things stand, price would have to make new highs before we touch 15000. That is based on a launch price of circa 16000

  62. If I had q million pound account I would be trading the monthly chart. but I don’t, so I need to trade short term movements which is both longs and shorts.
    if you go back and check the rise in Dow today, you will find that the move happened because of a handful of stocks, not because everyone is bullish

    1. I think it can be safely said that today’s DOW price action had nothing to do with everyone being bullish 🙂

      1. Evening,
        Interesting chatter..
        Not sure if anyone has read this..
        http://thepatternsite.com/12MonthMA.html
        The chart runs ’til 2010 – if you put a chart up like this – I was surprised at the result.

        It’s a huge site and it’s possible to spend days reading all the info on here. Enjoy !

        1. Cheers Hugh. Looks interesting for a read.
          If the last correction (D) was lower than (C) , where are we going to drop to this time around 🙂

        1. I for one don’t want prices to fall ! So I have a slight bias in my outlook. Never the less, I’m paying heed to what you are saying tmfp, particularly, as quite a few commentators are talking these markets higher.
          Also – there is still value in equities & we do need companies to be strong for everyone’s future.
          Whilst I’m better positioned than I was in the past – I still feel as though I’ve missed this move – but as pointed out, there is plenty of scope for movement, up or down, especially when you look at the monthly chart.

          1. It’s not a question of ‘wanting’ prices to fall Hugh, more that equity prices should reflect the real value of the underlying assets: I don’t think that they do, and that chronic overvaluation for short term and political reasons damages the integrity of the capitalist system, as well as causing societal injustice and imbalance.
            So there.

      3. Not long back from a day out in the rain — please see my 09:16 post. 😀
        Yours,
        The elephant in the room

        2. Yeah, nice one Jim, I thought at the time it was apposite 🙂

          While we’re blowing our own trumpets, have a gander at my 1.23…
          “I’m getting majorly bearish again, looking for FTSE <6420, DAX <10650, DOW <17300".

        3. Welcome home Jim.
          I looked at it – but “two hour” charts are just too long a time frame for us lot – as I mentioned – I suffer from ADHD – so two hours is way out… LoL….

  64. Paul, just realised I wanted to reply earlier but couldnt. Reason for entry was purely a technical one. Price divergences on 5 min chart was the reason for entry.
    Entry itself was crap which caused all the pain :-).
    Reason for such an entry – was rushing to a damn meeting at office

  65. Tmfp, had a look at the monthly charts as it’s been a while since I traded, only started recently after a 2 year gap.

    The monthly shows the top on ftse and my retest criteria has been met. This would mean a grind down to 4700 over the next year or so

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