Good morning. Well not so much luck with those 2 shorts yesterday and we had a pretty strong day on the FTSE overall, hitting a high at 6828, just shy of the 200ema on the daily. Positive vibes about Greece, though still awaiting a definite deal, mean that the bulls had something to cheer about, and took the Dax with them. Sense of relief probably. They will now be hoping that a deal does actually get done – 48 hours to go.
Greece
European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make the final push needed to satisfy creditors and end a five-month standoff over aid that risks splitting the euro.
Leaders from Greece’s 18 fellow euro-zone countries agreed that Tsipras’s government was finally getting serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.
The package of proposals represents “a certain step forward, but it was also said very clearly that we’re not yet where we need to be,” German Chancellor Angela Merkel told reporters in Brussels after an emergency summit Monday night. “Hours of the most intensive deliberations lie ahead of us.”
US & Asia Overnight from Bloomberg
Asian stocks rose, following a rally in global shares, as Greece’s new measures to appease its creditors fueled optimism a deal will soon be reached.
The MSCI Asia Pacific Index added 0.1 percent to 148.71 as of 9:00 a.m. in Tokyo after jumping the most in two months on Monday. Stocks in Europe and the U.S. gained on Monday after Greek Prime Minister Alexis Tsipras presented a fresh set of austerity proposals. European leaders gave Greece’s government 48 hours to make the final push needed to satisfy creditors and end the five-month standoff.
“They’ve got a short-term resolution,” said Mark Lister, Wellington-based head of private wealth research at Craigs Investment Partners Ltd., which manages about $7.2 billion. “We head for the edge, all the brinkmanship plays out, then there’s a deal at the last minute and there’s a relief rally. Then we do it all again for the next deadline. That will continue to be the way things work until you hit breaking point.”
European leaders agreed that Tsipras’s government was finally getting serious about striking a deal with the new set of measures, which included steps eliminate early retirement, raise the sales tax, increase surcharges to middle and high-income earners, and introduce levies on profitable companies. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.
Besides evaluating Greece’s new proposals, European creditors also focused on the nation’s debt burden as a second step in the aid talks. Finance chiefs are divided whether the current bailout should be extended for a short period to cover the disbursement of aid, or for a longer time to allow more discussion of follow-up arrangements, including a possible third bailout, an EU official said.
Market Reaction
South Korea’s Kospi index climbed 0.8 percent, while Japan’s Topix index added 0.6 percent. Australia’s S&P/ASX 200 Index increased 0.2 percent. New Zealand’s NZX 50 Index gained 0.2 percent.
Markets in mainland China reopen Tuesday after a holiday. Hong Kong’s Hang Seng China Enterprises Index, a gauge of mainland equities listed in the city, rose 1.5 percent Monday.
HSBC Holdings Plc and Markit Economics will release a preliminary June reading on their China manufacturing purchasing managers index Tuesday. Economists surveyed by Bloomberg are projecting a fourth month of contraction in the sector amid uneven global demand and a slowdown in Asia’s largest economy.
E-mini futures on the Standard & Poor’s 500 Index added 0.2 percent after the underlying measure advanced 0.6 percent on Monday. Data Monday showed U.S. homes sold at the fastest pace since 2009 in May. [Ref]
FTSE Outlook
We are just hitting the top of the daily Raffs around the 6820 area as I write this, and we have the top of the 10 day Bianca at 6828, coinciding with yesterday high. As such I think we might get a dip down to the pivot to start with at 6785 which could well hold as support. The other reason that we might get a dip is that we have the 200ema at 6831 on the daily, which can often act as resistance/support. So, this 6820/6830 area is pretty key – if the bulls break above that today, and fuelled by the hope of finally reaching some agreement on Greece, they could do later on (next 48 hours is pretty key regarding this) then a rise to 6950 is distinctly possible. Might even see 12000 on the Dax again soon at this rate! There is a pretty decent 30min channel in play for today with support below the pivot at 6750, and resistance at 6855 and then 6920ish (actual values are slightly different depending on when it would hit those channel lines, but you can see them in the chart below. So dip and rise really for today, with a long at 6785, which would also tally with a back test of the 20 day Bianca channel that we broke above yesterday.
what does everyone think, I would “expect” it to hit a wall at 6850 but I’m probably wrong
Quite possibly, moving averages still bullish, didn’t get an initial drop to the pivot which I thought it might. All waiting for Greece…..
its become like the china stock market,, 😉
up down up down will be glad when Greece done!!!
if it breaks below 6829 then we could get the pivot after all
There doesn’t appear to be much in the way if it does.
6850 is near as dammit a 50% retracement from 7071 to 6625, also daily 10 rsi is 55.6, approaching the 60 lid for the last two months.
Ignoring out of hours, we have bounced off yesterday’s 28 high twice this morning so I’m playing it 28/50 for the time being.
Long at 30 atm, if we don’t get through 40 pdq I’m dumping it for a retest of 28.
is that the 10 period rsi on the daily charts, and are you saying its going back up to 60 first time in 2 months. thanks
Yes Milka 10 period.
What I’m saying is I see 60 rsi as possible resistance, as it failed there twice recently.
The two prior occasions it broke that level and went to ~70 were good shorts.
It doesn’t affect me much as I just day trade, but that and the 61.8% fib around 6905 would suggest to me shorting spikes would be in order.
That might fit nicely with euphoria on a Greek deal being cobbled together, then people realising not much has changed.
thanks, may I ask, on rsi signals how do you differentiate between false signals? E.g. in a price spike with rsi spiking to > 80, prices then drop a little but then continue to rally.
You could ask the same about trend lines and resistance areas as well, and there’s no real answer, use it in conjunction with other signals for confirmation.
With extreme RSI reading more often than not you hit pretty much the temporary top/bottom of a move which buys you a few points breathing space.
Like just now, I shorted at 6855 solely on 1min rsi hitting a high for the morning and was immediately up a couple of points (and just taken 6 pt profit).
Interesting, also shorted at 6855 for +10, off a resistance line
Thanks tmfp, new to all this and trying to make sense of it!
Nick, was that r3 on the 30 min chart?
R1 daily and also the rising trend line on the 10min chart as you can see here
http://td.md.it-finance.com/ProRealTime/display_chartimage.phtml?name=ckup7gljujlo41ol1b7sjj0l0&type=png
Thanks nick, I however got r1 on the daily as 10 points higher at 6864. I never get it right!
A real paint drying morning, it’s always a bad sign when IG goes to .2 increments.
They are still on 40 points for a guaranteed stop however.
I was looking at triple witching option expiry stats, following last Fridays.
The DOW has finished the following week (i.e. this week) higher than option expiry week, only three times in the last 23 years.
Does feel rather dull!
Interesting stat, thanks for that
Message for Si. If you are still short on Dow, stay with it. The rise in $ and Euro stocks back in favour will encourage ditching of US stocks in exchange for Euro stocks. Can see Dow sub 17800 within a few days.
how long do you reckon the euro stock rally will run!
Till Dax 12000 CAC 5200
Nice to be remembered! Still hanging in there from 16th! Very in the red, my limit is 18318.
17755 entry
Very underwater then 🙁
Always – it started rising the moment I went short. I can’t remember the last time it went in my direction…
It will Si, hang in there. How much a pip r u?
£15… It was £20 but I took a loss on Friday and chopped it back a bit. I am going to wait…
Why didn’t you jump out at 18000? I said it might get there and it did. If you had an opposing short from the top you could have reduced your position then.
Goodness me, £15 pp. I cannot even afford that. Why didn’t you just put a smaller bet first? I always put a small one first in case it will go wrong direction and give myself an opportunity to add.
Si. I have just gone £20 a point short on Dow and £5 a point on Tech 500
Got a short going on at 50, 10 either way
and a bit more at 46
on the dow?
No mate I only trade the FTSE.
Looking for weakness into the close, just a hunch not a system trade, not going quite as I hoped atm.
and out at 42 after all that
Si I’m short S&P up a couple of points. Painfully slow but I remember being say short at 2120 last month on a beach in St Ives panicking as it hit 2136. I closed with 4 points profit as it hadn’t really moved in a week. 2 weeks later it was more than 50 points lower and I had £1500pp on it?! It’s always darkest before the dawn. When you adding to it for a 17900 average?
£1500pp! I traded like that in 2008 – didn’t have a clue what I was doing. Lost over 700k.
Bloody hell! 700k?! Mine was S&P though mate not ftse! had a few swings these last few weeks. Took a stinger a week or so ago on the ftse drop but not to that extent. I always wondered who traded back in the crash. When it went down to 4500 ftse I would have lost a fortune/house trying to catch the bottom. Now seem to be looking for the top?! House hanging on!
Mine was GBP/EUR. I went to Paris and the Euro was reaching parity… Got home, opened an account with IG, made about 200k in one day, had a phone call inviting me out for lunch, ignored it and then went on to lose 700k over the next 3 months. Al got a bit crazy 🙂