Support 6746 6740 6739 6713 6684 Resistance 6772 6802 6807 6837 6850

Good morning. Well the FTSE was pretty resilient yesterday, with hat 6735 short stopping at 6720 (glad we took half of there) and then bouncing to 6765 (shame it didn’t quite reach that 6780 area for the top of the daily channels though). Everything else seemed especially weak, yet the FTSE remained pretty upbeat, even after the bell. Bit odd really! Its NFP Friday once again today, and employers are projected to have added 225,000 workers to payrolls in July after a 223,000 increase the month before, according to the Bloomberg survey median. So far this year, payrolls have grown by an average 208,000 each month. While that’s less than last year’s impressive pace of 260,000, it’s enough to keep reducing labor-market slack. For the Fed, it’s the continuance of that overall trend that matters. Markets, however, are going to be “intensely focused” on whether the data argue for a rate increase sooner or later.

US & Asia Overnight from Bloomberg
Asian stocks fell, following a slide in U.S. equities, ahead of a U.S. jobs report that may cement prospects that the Federal Reserve will raise interest rates as soon as next month.

The MSCI Asia Pacific Index declined 0.2 percent to 140.55 as of 9:01 a.m. in Tokyo. Japan’s Topix index slipped 0.2 percent ahead of a monetary policy decision by the Bank of Japan later today.

The Asia Pacific gauge is heading for a third week of decline before the U.S. government’s payrolls report and amid data Thursday that showed jobless claims near a four-decade low. Traders are pricing in a 48 percent probability that the Fed will raise interest rates in September.

There’s “a cautious tone in risk markets ahead of tonight’s non-farm payrolls,” said Matthew Sherwood, Sydney-based head of investment strategy at Perpetual Ltd., which manages about $22 billion. “Increased concern about what a strong report may mean saw equities out of favor and gold, safe haven currencies and government bonds edge higher.”

E-mini futures on the Standard & Poor’s 500 Index fell 0.1 percent after the underlying gauge on Thursday slid 0.8 percent.

South Korea’s Kospi index declined 0.3 percent and New Zealand’s NZX 50 Index slipped 0.4 percent. Australia’s S&P/ASX 200 Index sank 0.9 percent. Markets in Singapore are closed for a holiday.

Futures on Hong Kong’s Hang Seng Index declined 0.5 percent and contracts on the Hang Seng China Enterprises Index of mainland firms listed in the city slipped 0.5 percent in most recent trading.

In Japan, sixteen of 37 economists forecast the central bank won’t expand monetary stimulus at all, the most popular answer in the survey. Twelve expect the bank to add stimulus at its meeting on Oct. 30, unchanged from last month.[Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

NFP Friday so expect bit of weirdness, especially as the markets will be looking to the result to give as much of a clue as possible for a US rate rise in September. I have put a fairly bullish scenario for today, mainly as there are a cluster of fairly decent supports around the 6740 area, including the daily pivot at 6739.5. However, the sell off in Australia during Friday session does give a little bit of cause for concern as the FTSE has been tracking the ASX fairly well recently. So, if 6740 breaks then a dip down to 6713 is pretty likely where we have the bottom of the 10 day Bianca channel. Below that then the daily chart shows support at 6682, which is a level that is worth a tentative long. A break of this then we will get pretty bearish for a while I think, down to 6400 this month being distinctly possible. Anyway, for today, if the 6740 area holds then we could get a rise to 6770 area where we have a couple of resistance levels. The 30min channel is more optimistic with a channel top at 6850ish – not sure we will get that high either but you never know! I have plotted the arrow on the 10min chart today, so you can see that channel quite clearly. A break of that would lead to 6713 and possibly lower.

47 Comments

  8. I was thinking the same, the Dow keeps going for new lows and the ftse is going nowhere only up, I’m short 54 and it looks like it will take me 46 stop out, this is ridiculous

  10. If it does, it will take the FTSE to 7000!, I don’t trade the Dow but if it does get a bounce, it would be worth a short, because everything is pointing to a bear knocking on the door

  12. I have a strange feeling the market is going to do a u turn and start a strong bear market….probably in a couple of quarters

    2. So where do you see the market turning into a bear market
      6800 6900 7000 7200 any value on this

  13. Monthly 26 ema turning down should mark the start. I expect a clear break of 6400 should do it. Not now but after the fuse has made a high of 7150 before the turn of the year. Again this is based on how things stand today

    1. i also agree with you, but i get 7200 as the probable high
      it is a fib time projection leading to end of september
      which will tie in well with fed raising rates

      1. Are you saying we will see 7200 in the end of September? I think that might be too early but hey any things possible.

        Traditionally though, raising of interest rates has always coincided with the start of a new bull market 😉

        1. i agree with you
          but this low rate scenerio has been there for a long 7 years
          and the market has been used to it, any small increase
          over 3-6 months will have a very negative result
          so i reckon with yellan going for the first increase sept/oct
          followeed by another in dec will start the rollercoaster down

          1. I agree pjones. Trouble is when everyone is expecting it, just the opposite tends to happen. Just have to wait and watch

      1. No stop as I am constantly monitoring it. I might consider closing if we break day’s lows.
        And short eur/usd

          1. Yes of course! I think it might go till 350-360 ish. One final push and we’lol see what happens in the close.

            I think we are fast approaching into the oversold territory. 17600-800 seems possible atm over the next week or two

          2. Only problem I see with that trade is I entered using a lower timeframe than my preferred 30 min.

          6. Not happy with the trade. The tgt may be met overnight or before close but I entered too early.

            I think we will see bearishness early next week. I plan to short any rise up to 460. This should be the last leg down on the Dow and then a reversal(correction on the daily) trip to 600-800 and then we’ll see what’s next

    1. A combination of signals and timeframes really. In day trading a turn of macd around support levels and oversold rsi and price divergences on lower/higher timeframes

    1. I was just looking at the chart and saw a lot of support (bounces) around that area, though it did go down further to 277 it rose up another near hundred points.

  18. Perfect!! Targets met…wish I had held on for longer but it’s okay. This again is a confirmations of ongoing downtrend

    1. what target are your referring to? I thought you expect 350 but came out at 31 . What confirms the downward trend and where do you see it going?

  19. Well I was expecting a 50-60 point upside move from my entry. Those targets were met. Yes I closed at 31 because it was getting close to market close and I don’t trust the movements near the close.However,it all worked.

    re:the bottom of this decline, the intraday charts 1 hour and 30 min look overbought. Hence confirmation of continuing downtrend. But of you look at the 4hourly charts and daily, you will notice classic reversal candles. So I know the bottom is near or has already been reached.

  20. I am favoring bears atm as dax and ftse are overbought. So, some quick moves on those two should get the bulls moving.I suspect it will soon be time to start buying the dips. But lets wait and watch

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