Good morning. I hope you had a good weekend. Fairly bearish on Friday with that little bit of a rally after the bell but nothing really to write home about. It will be an interesting open today to see if the daily pivot at 6968 holds for any initial bullishness, the open could set the tone for the week and how we close out the month and also the end of Q1. The FTSE certainly feels a bit nervous at the moment, which could be a result of the looming election.I remain slightly optimistic for the moment and expecting a bit of a bounce, maybe from the bottom of the 20 day Raff at 6820 though (also the 10 day Bianca at 6822). Fairly quiet on the news front over the weekend, the repercussions from the plane crash, a bit about Greece and an earthquake off the coast of Papua New Guinea.
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks fell for a third day, trimming the biggest quarterly advance for the regional benchmark index since 2013, as energy and material shares led declines.
The MSCI Asia Pacific Index lost 0.3 percent to 146.2 as of 9:05 a.m. in Tokyo, paring its climb since Dec. 31 to 6 percent. Gains in global equities pushed valuations last week to the highest in five years, with markets in China, Japan and Europe poised for rallies of more than 10 percent in the first quarter.
“We are moving to the sidelines,” said Stewart Richardson, chief investment officer at RMG Wealth Management LLP in London. “We will be looking to buy into a reasonable correction. The main equity indexes are looking tired.”
Japan’s Topix index slipped 0.1 percent. South Korea’s Kospi index added 0.3 percent, and New Zealand’s NZX 50 Index fell 0.3 percent.
Australia’s S&P/ASX 200 Index slid 1.2 percent. Caltex Australia Ltd. led declines, slumping 9.7 percent after Chevron Corp. sold a 50 percent stake in the nation’s largest fuel supplier.
Futures on the FTSE China A50 Index lost 0.4 percent in Singapore. Markets in mainland China and Hong Kong are yet to open.
People’s Bank of China Governor Zhou Xiaochuan said in remarks at the Boao Forum for Asia that the nation’s growth rate has fallen “a bit” too much and that policy makers have scope to respond, underscoring forecasts for further monetary easing in the world’s second-largest economy.
A gauge of China manufacturing slid to an 11-month low in March, a private report showed last week. Economists surveyed by Bloomberg News expect the PBOC will lower both benchmark lending rates and banks’ required reserve ratios, adding to cuts made in recent months.
U.S. Futures
E-mini futures on the Standard & Poor’s 500 Index lost less than 0.1 percent. The underlying U.S. equity gauge capped a 2.2 percent weekly slide on Friday amid concern the stronger dollar will curb corporate profits for overseas earners.
Federal Reserve Chair Janet Yellen said Friday that she expects rates to be raised this year and that subsequent increases will be gradual without following a predictable path. [Ref]
FTSE Outlook
Looking at the 30minute chart for today we have had a cross over on the EMAs to a bullish mode, with the bounce from the 6840 low area on Friday. There is/was a bit of resistance at 6880 and the bulls will need to break this to push up to the 6910 area where there is the next resistance as the top of the falling 30minute channel (and also slightly past at 6917), followed by 6936 where we have the 200ema on the 30 minute. Above this sees 6960, with a move holding above 6950 good for the bulls and further rises. The daily EMAs haven’t actually crossed to bear as yet, though the S&P has, and has resistance at 2077, which would drag the FTSE down with it if it fell back from there.
The daily pivot today is 6868 so if this holds first thing then I expect we could be on for a bullish morning. We also have the 30 minute coral at 6860 to act as support. Below this then the next support is 6838 and then the 10 day Bianca at 6822,and the 20 day Raff at 6820 – a level thats worth a long. I’d panic if it broke 6795 though as if that goes we could be heading a lot lower, so we may find some support from the bulls here if all the others levels break.
Tough looking for an entry point this morning, I’m hoping for a bit of a bounce at around the 6870 mark, so I can enter back at around 6885 with a pull-out at maybe 6915
If anything, I would say that sentiment this morning leans to the more positive end of the scale, so I’d be quite surprised if this keeps dropping all morning. Will see what happens when the Dow opens, but I too am leaning towards a fairly bullish day at the moment.
FTSE only falling 🙁
It’s already R3 on Dow, will it go any higher? It looks like it could.
One thing is for sure, Dax looks suspiciously long. I’m telling you, it looks really long.
FTSE doesn’t look long atm, but it’s not the evening yet. Perhaps..
Yep, R3 didn’t hold the force. I wish I could be in a trading mode today. How can I? School holidays.
What price and when your entry was? curious.
Why this bounce?
OK, let it grow this week so we can short new week.
lols.. this FTSE bounces back after I book loss in long.
Senu, you enter trades too early, I noticed. Long was too early, you didn’t know support to which attach your sl. only at 2.20 support appeared as 6860 long from 6872 would be good. 12 points sl.
Wall will start easing off now for retrace too risky to try though.
Senu, what price and time your long entry was, just curious?
I took @ 12.05 @ 82, closed @ 72, 14:20
Same for me. I got in at 6878 just before 2pm, watched it drop 10 points so booked the loss. Soon as I did that it bounced.
if you entered there your sl should have been 6860 – 18 point sl. Just those extra 6 points would make a difference. now price is 97, 1:1 would be now. would take it or leave it? better take it.
I wonder what Nick’s long entry was….
Thanks for the pointer. I was being over cautious.
Being cautious is a great thing.
I don’t think dow will retrace after this huge gap open. It usually does not.
I see now. Where you took 6882, anybody could have taken there, I could, anyone.. If you take in such place you don’t know exactly your sl just usual 10 points which is fair enough.
But then it went to 6860 from 6882 which at some point you were -22, isn’t it? So you must have removed your 10 point sl to let it recover, fair enough, anybody would have done it and I would.
What I would do else, I would add at 13.00 to average, but it’s me, I would do so only once.
Ok, then it came back to 6872 (even 78) and you made the most brave and honest decision and closed -10, the sl you’ve missed.
That is sort of great. You see, the problem with such trades is that they are messing with your mind. By the time it started looking long you were glad to get out of pain being losing on a long. I hope you understand what I mean. Because it didn’t go according to a plan and you didn’t need that trade any more. I don’t know how to explain, I know that feeling stopped me from holding trades. Did I guess a little bit?
You are nearly there, I thought pivot will hold, but it went bit low. Will Dow and DAX gaining up, FTSE stupid didn’t come up. another day 🙁
With Dow back @18k and DAX @12K, FTSE is lagging a lot.
If FTSE lagging now it will catch up later.
Jack – I know you were talking to Senu, but what you described is EXACTLY what I feel. I take a position, then, if it goes against my plan for a time, I start to feel the pain and end up either closing early still in a losing position, or, possibly worse in terms of strategy, I close early as soon as the position turns to profit instead of waiting.
Something I need to work on…
Ash. That’s what I am doing at the moment. I’ve been working it out for the last 3 months, at least I started seeing it in hindsight. To get rid of pain is not possible, it’s emotion which comes even if we don’t want it. I watched webinars, they told me that there’s no point to fight this pain, you will never be able to control it. What I am trying to do now is to justify it in my actions thus it feels more endurable, basically you manage to tolerate this pain easier if you follow your instructions.
For example, you started a trade because of “that and that and that” (your set up rules basically). You set your stop loss. The trade goes wrong and it hits your stop loss but you say to yourself it’s fine, I was following my instruction. When it went wrong? Next time you do exactly the same, you enter the trade because of the same “that and that and that”, and it started winning. You follow your instruction and FOLLOW your trade/price until exit and then say, I did everything right. It doesn’t matter what the outcome of the trade will be – you did everything right, as you told yourself.
It’s not that easy as it seems. You are basically have to teach yourself to follow your instructions. One trade you do better than the other. Sometimes you feel more fear sometimes not.
And one more thing which might interest you. If the trade was a losing trade it doesn’t matter any more because the set up was wrong, no matter what you didn’t with it – opened sl and let it run and come back (but it might never come back) or sometimes it may turn into a winner. Does it matter what will happen to the trade? No, because the initial set up was wrong and it’s not a set up that might make this trade winning but luck… it’s not good enough.
That all makes sense, thanks for taking the time to post it. And you’re right; better to have a bad plan and stick to it than to not have a plan, or to change the plan part way through and just hope to be lucky.
I suppose I need to work on having a better plan really, more than the emotional side of things.
Dow is not going to retrace as it looks right now. It had a chance but it failed. That’s the problems with such shorts against the trend. Support 17954 for now.
The FTSE has been tracing out an ending diagonal pattern since the lows in October/December. If it gets to hit to top trend line again that’s going to be a great risk-reward short. Alternatively, if it fails to touch the upper trend line and then breaks down the rising bottom trend line – watch out below – it’s a long way down. According to Bulkowski’s pattern site the breakdown often retraces back to the beginning of the triangle which could be either 6295 or 6123.
http://i172.photobucket.com/albums/w9/zigzagger2/ftsechart2%2030.3.15_zpsqbbg7sj2.png
http://www.thepatternsite.com/EWDiagTriangle.html
Does anyone have some advice around holding positions over the easter holidays for the two strong days pre and post holiday. ?
Still holding long here. I wouldn’t expect any election weakness until the week of the election. Ftse certainly lagging here but it also lagged on the downside last week. Hoping for a pop north of 6950 over the next couple of days. Dax and Dow and more importantly S&P making their way back…
You could be right. But I wouldn’t rule out a mid-April top / test of the high. In 2010 the FTSE topped 2-3 weeks prior to the May 6 election. Certainly expecting 6983 to be hit either later this week or the week after. It could also test the high at around 7040 on this next cycle higher if the 6835 low stays intact and nothing on the geopolitical front sends it south.