Support 6655, 6636, 6618 Resistance 6672, 6685, 6708, 6732

Good morning. Well that was quite a bearish start to the month – it didn’t even manage to reach the pivot at 6708 for the short! However, despite the earlier long at 6655 getting stopped out for a small hit, the later long from 6638 is running well, and having taken some profit, the stop is at breakeven on the rest. I rarely hold trades overnight and certainly not a losing one, but hopefully we will get some more bull this morning! The US tech sector got downgraded by Morgan Stanley yesterday which saw Apple, Facebook and Twitter shares all drop sharply at the open. Apple had $30bn wiped off its value at the open! That dragged the S&P down, which looks like its still on its path to 2042, but is just testing the bottom of the 20 day Raff at the moment.

Asia Overnight from Bloomberg
Oil resumed declines after jumping from a five-year low amid the highest commodity-price volatility in two years. Asian stocks rebounded and South Korea’s won led emerging-market currencies higher.

West Texas Intermediate crude retreated 0.7 percent by 3:14 p.m. in Tokyo, after yesterday’s 4.3 percent surge from its lowest settlement since September 2009. Chinese stockssurged on speculation the central bank will increase stimulus, while mining and energy shares buoyed the MSCI Asia Pacific Index today. The won strengthened 0.6 percent.

The Bloomberg Commodity Index (BCOM), which rebounded off a five-year low yesterday, is swinging the most since October 2012, according to a 60-day measure of historic volatility. Prices for materials and energy plunged, fueling deflation concerns, on concern that supply is outstripping demand as estimates for global growth are downgraded. Australia and India held rates steady before the euro region reviews monetary policy later this week.

“The fall in oil prices is positive for some countries like the U.S. and Japan, but can also be negative for emerging markets, which in turn could cause exports to decline and drag down the global economy,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 39 trillion yen in assets. “In the grand scheme of things, central banks are continuing with stimulus so money is flowing into stocks and is supporting the bottom. While there are many concerns out there, excess liquidity will support the market.”

Rebound Retraced
The drop in oil prices will provide a net boost to the global economy while posing risks for energy-producing nations including Russia, International Monetary Fund Managing Director Christine Lagarde said. The IMF, citing rising geopolitical tension and lower volatility, in October cut its forecast for global growth in 2014 to 3.3 percent and to 3.8 percent next year.

WTI for January delivery dropped to $68.53 a barrel in electronic trading on the New YorkMercantile Exchange. The contract rose to $69 yesterday, retracing a loss of as much as 3.7 percent. Prices have decreased 30 percent this year.

Brent for January settlement was 0.5 percent lower at $72.15 a barrel on the London-based ICE Futures Europe exchange. Oil has collapsed into a bear market amid the fastest rate of U.S. production in more than three decades.

Asia Stocks
The MSCI Asia Pacific Index (MXAP) climbed for the first time in four days. A gauge of energy shares led gains, advancing 1.4 percent after closing yesterday at the lowest since May 2009.BHP Billiton Ltd. (BHP), the world’s largest mining company, climbed 3.9 percent and was the biggest support for a subindex of mining stocks, followed by Rio Tinto Ltd.

Hong Kong-listed Chinese brokerages were among the biggest gainers on the Asia-Pacific gauge. China Galaxy Securities Co. jumped 9.3 percent and Citic Securities Co. surged 7 percent amid speculation the People’s Bank of China, which reduced interest rates on Nov. 21, may be preparing to cut banks’ reserve ratio requirements.

China’s benchmark money-market rate fell for a second day as the central bank refrained from draining funds from the financial system.

“It looks like the market has reached consensus that it’s a bull market and fresh capital is flowing in,” Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai, said by phone today. “Brokerages are the biggest beneficiaries because of surging trading values. The possible window for a reserve-requirement ratio cut could be the end of the year or early next year.”

Composite Index
Hong Kong’s Hang Seng Index (HSI) added 0.8 percent after slumping 2.6 percent yesterday, while a gauge of Chinese shares in the city added 2.6 percent following a 2.9 percent rout yesterday. The Shanghai Composite Index increased 2.4 percent and is headed for its highest close since July 2011.

Ping An Insurance Group Co. of China jumped 6.3 percent and was the biggest support for the Hang Seng Index. Jack Ma, the billionaire founder of Alibaba Group, agreed to invest in part of its $4.75 billion share placement, people with knowledge of the matter said.

U.S. equity-index futures climbed after the Standard & Poor’s 500 Index slipped 0.7 percent yesterday. Online shopping rose 8.1 percent on Cyber Monday, slowing from last year as consumers spread their online purchases over more days. Shopping on smartphones and tablets accounted for about 20 percent of e-commerce sales, up from a total of 17 percent the previous year, according to IBM

Won Gains
The won strengthened to 1,106.75 per dollar, according to prices compiled by Bloomberg. The currency fell to 1,119.95 yesterday, the lowest level since August 2013.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed after falling 0.3 percent yesterday, the most in three weeks.

Australia’s dollar strengthened 0.4 percent to 85.20 U.S. cents as the central bank held rates at a record low and reiterated that it foresees a period of interest-rate stability.

The overnight cash rate target was held at 2.5 percent for a 16th month, according to a statement today from Governor Glenn Stevens following a board meeting in Sydney. The decision was predicted by all 30 economists surveyed by Bloomberg News and markets had priced almost no chance of a move. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Well initially today I am still running long from 6638 from yesterday so with any luck we will get an initial rise! to 6684 today, though we do have the daily pivot in the way at 6672. 6684 is the top of that 30 minute channel. Above that 6708 and 6732 are the next resistance levels, with the top of the 10 Day Bianca above that at 6762. Support wise, the bottom of the 10 day Bianca is 6655, whilst the bottom of the 20 day Raff is sitting at 6643 – just above the breakeven point on this long. So hopefully the early bull will pull the price away from those supports. 6684 is key though – i have plotted the preferred arrows to break through that, probably on a second test. But if it holds then that 30minute channel is the one to play for and a dip down to 6636 looks likely, and possible a bit lower. Cautiously bullish for today, at least till the US comes online anyway – mainly as we are at the bottom of the longer term 20 day Raffs on FTSE and S&P.

117 Comments

      1. I did short on Dow but managed to close b/e and started a school run, when I was back the price has gone up and I missed the entry. Typical morning. (The same at 3.30pm – moves are missed). Very hard really. Now no work basically here. it will be a long day, waiting for any pull back.

    2. Now every spike will be taken for Santa Rally. Give over, it’s just a spike as on any other month of the year.

    1. Not really, SMS went to members at 16:03 yesterday. We got on, rode the initial rise, held overnight, held this morning and all good.

  5. Trying to load up my shorts. My curse has come back 🙁 order in @40 but missed by 0.2 even though the market went beyond that! Should think about changing my broker…

    1. I don’t get it, how did you misse the order by 0.2 if market went beyond that price? Is it to do with spread, or they need exact landing on the price number? Weird, I think if it went beyond the point including spread they have to open the trade.

      1. Yeah it’s to do with the spread Jack. But even on this occasion the chart says it got to 40.3 with spread included! Getting onto them right now!

  7. Im glad I closed all DOW shorts last night when it fell to around 17765ish level, and as Nick says don’t like to hold overnight, but those that held a long overnight are doing very well today…what a change of a day!
    Was there any specific news for the sudden spike? FTSE was in bull race from start! Wonder how US will set the tone today…for now yes, 2 ftse shorts stopped at loss, a new final one running now @30

  9. I am wondering too, oil prices has rebounded a bit, but headlines would say huge rebound even though its a lot cheaper than last week…and other commodities might have stopped for a breather from their huge drops, they are all in bear market… Only thing I can think of is huge hopes of Central Banks this week as well Mr. Santa…, but believe Santa need a rest now to rally close to 7000 by year end…

    1. Agreed, the FTSE still needs a breather before the rally, this feels like the market is just pushing out all the shorts from yesterday

        1. Nothing unusual in that, this happened multiple times in the falls we had from 22nd September to 20th October

          There is the dividend trap coming up for tomorrow, everyone will see this short spike today and be BUY BUY BUY! Then wham fall again till the announcement on Thursday. That could then trigger the rally.

  10. Oh sorry forgot to say, yesterday Longs got stopped, today Shorts getting stopped, market likes to do that!

    1. Don’t use stops Mali? When you get stopped is the time you should be adding! True yesterday and will likely be true today… I’m short @00 @20 @40

      2. Agree on that! Yes, and need to have margin to be able to play like yourself, but don’t like holding overnight…like this morning DAX was 10,000 while a sleep?

    2. FTSE moves more with S&P’s They’re the best indicator you could use. They’re not moving so FTSE not moving. They could push for 2070 this afternoon and send the FTSE up further. Will switch off again around there though maybe. Or could switch off straight away. Either way i’m prepared.

      1. Yes, if short, you have to be prepared for spikes like you mention 2070 on S&P, I think I will add a short order for that…
        Also last few days FTSE been falling while DAX hasn’t, so maybe just rebalancing things…GLA

  12. Re: the reasons behind this morning’s strength, there aren’t any really, any more than there were reasons behind yesterday’s weakness.
    I treat the ‘news’ as noise. It’s impossible to say “If X event happens, then prices will go up/down by Y”.
    The most bullish sounding news in the world won’t move the price a penny unless people act on it.
    That’s what we have charts and indicators for.
    Basically, don’t try to mix fundamental and technical analysis, it’ll just drive you mad.

  14. Bought a little DAX @ 9950 against my FTSE short, on the basis that if we finally struggle through 42 then the DAX will probably be back at 10000.

  16. I’m not in loss, but all since last week was hopping DAX should go over 10,000, and then I will short it big time, now it went today, but with the spike up got a bit nervous and never shorted it big time….plan was there, but emotions/fears kicked in! Anyway just thought I share…

    1. I actually like them, although have to DYOR to evaluate which ones of them will occur, its not everyday all of them come spot on, but Nick has been spot on some days and it gives an overall sense of possibilities.

        1. Id like to join in the new year nick , in my first year, I nearly broke even but got reckless and greedy and made bad trade after bad trade , need to work on my patience

      1. Oh, goodness, I have just read the posts regarding my remark of Nick’s arrows. Thanks you for your thoughts. I could not read them as just now recovered on Dow long and now -11 for the day.
        I am tired of losing every day, these 2 weeks I am down 72 points, bit by bit, and I do use stop losses. Just don’t know what to do really, everything I try goes against me. I enter too early or enter wrong direction. Frustrated. I had lots of losses before I got to £1pp again just to get my head round. And I used to be going into profits slowly, something went wrong and now looking back to my experience I think I would be better getting a real job in Tesco and that would work out better than this. Total 5 grand gone sine several years I started, bit by bit, but really it’s not a good result.
        Maybe trading is not for me after all. It could be down to emotions, and recent losses, plus little time to commit. But I get frustrated so apologize if I said something in anger (I was losing on long which I took early as usual).
        And I do get confused with Nick’s arrows and probably I rely on they so much.

        2. Sorry to hear Jack2, I know how it feels, I guess there is so many variables to consider, and if you are getting few losing trades in a row…stop! Take time, research and learn from the mistake, rushing to chasing loses is very risky.
          Few things I have learnt losing money is don’t gamble, if you do it like a roll of a dice with no clue of your entry and exit levels than forget it. Have a diary, clear strategy, entry & exit to start with, but just check today and yesterdays trading levels for FTSE, DAX, DOW – its crazy up and down…it is tough!

      1. Not sure, but possible probability lol, I am waiting for US direction, and dam, I thought DOW 17840ish would held till US open, as was planning to short DOW today, but now just watching, as its fallen well below 17800 now. Sometimes even though plan etc there, you feel not confident to take on too much risk, I guess a good trader doesn’t take on too much risk, as you can never be or shouldn’t be too confident in your plan, and want to maintain your trading balance.

  20. Jack2

    I don’t generally get involved in politics, but in this case I really do need to comment in reference to the Arrows.
    1. I have tried for many years to “predict” the market – Its next to impossible.
    2. Nick does give a Clear explanation of the reasons for his arrows.
    3. To hold a “prediction” prior to market open – is suicidal – & Nick does a bloody good job of it
    4. If you use his analysis as a platform – then it can be useful or at the least a check on your own thoughts
    5. But if you cannot do your own research and totally rely on the arrows – then perhaps you should step back and examine your trading

    I am sure your comments on this is not going to be pleasant reading, but credit should be given where it deserves

    1. Thanks RC, nicely surmised. Thats exactly the point, it’s just me and what I think. Take it as you wish, do with it as you wish. Its just what I am doing and thinking.

          4. Yep 49.99 I can’t afford it, I am losing enough money as it is. It’s 50 points gone without trading.

    2. Lol if you take Zerohedge too seriously you would be living in the woods with guns, cans of beans and a huge pile of gold, waiting for Armageddon.

  25. Crazy morning, what happened to ftse?! DAX breached that 10000 mark, but im safe with my 2 pips =). Though the scalper in me and saying just take and run when in profit take time…
    Can see S&P moving up today with the DOW.

    1. good one ahwab. very surprised that DAX did not participate this up move with FTSE. have you booked both the positions?

      1. unfortunately not with the DAX, my DOW closed for 3 pips before yesterdays close. Tbh restricting myself haven`t really `adjusted?` myself to this market.
        Without any significant data out today, can only see this as being an up day.

  26. Yes, as usual US pushing up…
    Yes, indexes been up and below pivots, so not sure of final direction, better be careful with small positions. I am still waiting for higher DOW before shorting DOW today…or till open atleast

          1. Keep up guys i’ve been shorting all morning :p.
            Short of 3. Highest is @6740 will reduce @6710. Might get there might not. Just the price i’m setting based on my own book. Will add @60.

  28. Jack just lower your bet? Even go for just 10p a point?!
    You will learn to trade without emotion and will just let the market run its course. You can adjust your strategy, start making winning trades and get your confidence back. All the while not worrying about losses.
    As i always say you need to learn what you need to do not what the market’s going to do. If we could really predict that we’d all be millionaires.

      1. Well done Senu! I’m still holding for 10.
        Looks like Sandps trying for that push back towards 2070 as i mentioned earlier and taking FTSE with it. Let’s see what happens from there.

  31. Lucky long, but because I was recovering losses again I am only -5.6 points pound for the day. I was long dow 803. otherwise was a nice 33 points move.

        1. No more trades for today. Got emotions above me today. If I controlled myself it would be much better. Let’s see what another day may bring. I need to step back and think.

  34. FTSE awesome performance especially after yesterday’s dip, which was a trap 🙂 where is it heading now for the year end.

  35. Jim, if it does, plan to add DOW short…waiting
    FTSE continues up, maybe will fall with Autumn statement tomorrow? and BE announcement, which I expected to be no change at all to UK policy.

  36. US, Japanese and Chinese futures all up… Could well turn off again by the morning. Again sell high buy low…

  38. The question now is can the FTSE carry on this momentum? It had its first dip in weeks last week and of course started this month very bearish. A lot will depend on the outcome of the ECB meeting which will give the market direction and could be the rocket required to make a push to 7000.

    Options expire on Friday 19th and after that you might as well go home till we are singing about old acquaintances that may or may not have been forgotten. That is not to say we won’t see some moves. Most likely slow and steady squeezes up…..consistently 10-20 a day.

    First though let’s see where we are on Friday….6850 or 6650? If the former then 7000 could still be on as an outside bet……

  39. The 7000 mark is either going to be advertised as the biggest open secret of the year if it gets hit, or the biggest trap/con of the year.

  40. Yes Senu…..still holding. Been a rollercoaster. Bought at 6625……went down to below 6100……and now hoping to close above 6900.

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