Support 6875, 6870, 6836, 6814 Resistance 6893, 6920, 6927, 6933, 7085

Good morning. Didn’t quite reach my selling level for the order but the long at 6880 took mid afternoon and I held to collect the 10.7 point divi as well, then closing as per that update email sent round. Since closing that trade its dropped back down, holding on support at 6875. The Greece situation rumbles on with the latest being a request for a loan extension. A fairly flat day yesterday would indicate some reluctance to buy, and some reluctance to sell! If Greece does default, the German people would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished. Markets would certainly get upset about that, especially (obviously) the Dax. Meanwhile there is a “real and present danger” that Vladimir Putin will launch a campaign of undercover attacks to destabilise the Baltic states on Nato’s eastern flank, the Defence Secretary has warned.

US & Asia Overnight from Bloomberg
(Bloomberg) — The Standard & Poor’s 500 Index erased a loss, after climbing to a record on Tuesday, as speculation that the Federal Reserve will keep rates lower for longer overshadowed a drop in energy shares.

The S&P 500 slipped less than 1 point to 2,099.68 at 4 p.m. in New York, after losing as much as 0.4 percent. The Dow Jones Industrial Average lost 17.73, or 0.1 percent, to 18,029.85. About 6.2 billion shares changed hands on U.S. exchanges, 11 percent below the three-month average.

Equities pared losses as minutes from the Fed’s latest meeting showed some policy makers argued for keeping rates low for longer amid risks facing the economy.

“The fact that they’re staying slow on moving up rates makes you think that the economy might not be as strong as we think it is,” Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. “We still haven’t gotten to the point where a stronger economy and the Fed considering moving rates is an explicit positive for the market.”

The Federal Open Market Committee, while considering risks to be “nearly balanced,” pointed to a strengthening dollar, international flash points from Greece to Ukraine, and slow wage growth as weakening the case for the first rate rise since 2006, according to a record of the Jan. 27-28 meeting.

The FOMC said after its last meeting it “can be patient” as it considers when to raise the benchmark interest rate, even as it described the labor market as “strong.” A report the following week showed payrolls rose more than forecast in January to cap the strongest three-month gain in 17 years.

Status Quo
“It’s evident that they’re going to stick with the patient theme,” Jeff Sica, president and CEO of advisory firm Circle Squared Alternative Investments, which oversees $1.5 billion, said in a phone interview. “This was a status quo message. They’re playing their cards very close to the vest because of the vulnerability in Europe and the potential of this Greek crisis getting worse.”

Speculation that a Greek debt impasse is easing helped the S&P 500 reach an all-time high yesterday, while European equities today rallied to their highest in seven years. A government official, speaking on condition of anonymity, said Greece will submit its request for a loan extension tomorrow.

Factory Production
Data today showed factory production in the U.S. rose less than forecast in January, held back by a decline in motor vehicle assemblies and weaker demand for construction materials.

A separate report on housing starts showed builders broke ground on fewer U.S. residential construction projects in January as demand for single-family homes cooled from an almost seven-year high. Wholesale prices in the U.S. fell more than forecast in January, led by plunging energy costs and signaling inflation remains tame even as the economy is expanding.

The route for stocks this year has been uneven — a 5.3 percent rally in February after the worst month in a year in January has evened out to a 2 percent gain for 2015, trailing most developed markets.

Energy companies in the S&P 500 dropped 1.5 percent, led by Diamond Offshore Drilling Inc.’s 7.5 percent retreat, as oil prices resumed a decline after three days of gains. West Texas Intermediate slipped 2.6 percent. Crude lost more than 3 percent Tuesday before rebounding to a 1.4 percent gain.

Exxon Mobil Corp. declined 2.2 percent after Warren Buffett’s Berkshire Hathaway Inc. exited a $3.7 billion investment in the company.

Some big hedge fund managers have cut their holdings in U.S. stocks in the fourth quarter and shifted assets globally as the slide in oil prices hammered energy holdings.

Greenlight Capital’s David Einhorn said he’s scaled back bets on stock gains after markets climbed and as a stronger dollar threatens to limit earnings of U.S. companies from operations overseas.

Hedge Funds
David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40 percent drop from the previous quarter. Soros Fund Management, the family office of billionaire hedge fund manager George Soros, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy.

Some managers, such as Leon Cooperman, 71, remain bullish on the U.S., while predicting bigger gains elsewhere.

“We expect the European and Japanese equity markets to outperform the U.S. in the coming year,” Cooperman, who runs Omega Advisors, wrote in an investor letter last month.

Earnings Season
The Chicago Board Options Exchange Volatility Index fell 2.2 percent to 15.45. The gauge, know as the VIX, fell 15 percent last week.

Fossil Group Inc. tumbled 16 percent. The maker of watches, handbags and other accessories posted fourth-quarter sales and an annual forecast that trailed analysts’ estimates. Earnings this year won’t exceed $6.05, the company said. Analysts estimated $7.52.

Bank stocks fell, with the KBW Bank Index’s 1.4 percent drop marking its biggest decline this month, after Fed minutes signaled interest rates will remain low for longer. Bank of America Corp. slid 2 percent and Comerica Inc. lost 2.3 percent.

Boston Scientific jumped 12 percent. The company said it will pay $600 million to Johnson & Johnson to settle a lawsuit over its $27.5 billion acquisition of Guidant Corp. almost a decade ago.

Deere & Co. climbed 3.2 percent after Berkshire Hathaway more than doubled its stake in the company in the fourth quarter, to 17.1 million shares.

Utility companies were the S&P 500’s best performers Wednesday, rising 2.4 percent after falling 4.5 percent over the previous four sessions. [Ref]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

6870 is the first line of support for today and if that holds then I expect that the bulls will try for the pivot at 6893, and then Wednesday’s high at 6920. Above that we have the 10 day Bianca at 6927 and the 20 day at 6933 – once again an area worth shorting from. Below the 6870 support area we have the bottom of the 10 day Bianca at 6836 – though there is a PRT support line at 6850 first, which may well hold. However, if not then the 6836 are as worth a long, as if it stays flat in the absence of anything definitive, we may well rise back to 6900. So, the main areas I am watching today at 6920 and 6870, a fairly tight range still. Of course, news one way or the other re Greece will break out from those areas. I must admit, from these levels, especially around the 6920/30 I am favouring shorts, based mainly on the daily channels playing ball.

88 Comments

  1. My opinion of today is that FTSE will rebound up to 6880 to 6890 before massive falls as the Bears take over. If you listen to Jim you will be well out of pocket. Forget charts etc these markets are very high and once it starts we know how quick they can drop.

    2. Good call Argyle.

      I’ve just whacked a short in at 6877 after the initial rise. We’ll see what happens.

  4. Ahwab good too see you back mate … The dax has topped around this mark loads of times it’s either going to give up or smash though it, come March and the new bout of QE I will more than likey find another index to trade as feel the Dax will become like the Dow overpriced with already lowered earnings… Been playing with the Aux200 had and nice lump of that last night.

    1. I think the times where i used to use the DOW as indicator for the ftse/DAX or vice versa are gone, they all seem to move independent of each other… DAX/DOW new highs ftse static…
      Saw you racking up some mega pips with those shorts – in and out =)

    1. Not sure Senu, but long is a risky position to be. Keep the stops tight, cuz when it blows it’s going to move quick.

    2. Your long is quite a sensible idea, I just think 93 is a bit late, it would be better from 80 of course at 9.16. But never mind. It might wave down up again and again, and the rise will possibly creep slowly. But how far, don’t know. 900 looks like a strong resistance. just imho.

        1. Good call, Senu. There was no other option but long here. Either long or nothing when you entered. Look on 1 hour folks, it travels to the top of the channel.

  9. This is a very serious rise, it won’t be stopped easily. It may continue for a while. But then at some moment it will stall and turn, it may turn fast on the spot or take several days.

    1. It`s rising likely due so many shorting in expectation thus pushing it up. But being long now is very risky indeed only one excuse from the big boys to dump it out on those going long.

      2. Agree. long was risky then but possible if you had your trailing stop with you, you might bag a few pips. I didn’t have long, I just commented on Senu’s idea and worried a bit about the way the long progressed.

  15. Gold on the move upwards. Looks like the big fall could be starting today. Ignore Jim and Jack and all their fancy charts. Use your common sense lads and lasses. Go short on any indice of your choice. They are all going to tumble big time

      2. Hi Senu. Gold up, Dollar up always leads to shares down. Favourite saying of J B Lweington. This morning guess what, Dollar up, gold up and guess what happens next.

  17. Bizarre but I see it as a retest of 17982. I missed my long 17985 – was looking for my market and wasted a couple of secs, it was 18000 when I found it, decided to leave it. But SL was 10 points. Aimed it as a possible bounce till the back of trend line 18024 or so.

    1. might see that reverberate through the market when DOW opens. Funny though how DAX went up a few hundred points on rumours alone…and yet we get a drop then stop -.-

  20. Ahwab was thinking that yesterday normally buy the rumours sell the facts but not with some indices. The problem is when the next crash happens it’s going to be brutal the higher they are the harder the fall & there is only central banks that can be blamed for this keep giving cheap money and the banks will keep abusing it… No chance of them lending to custermers

    1. yes, DAX is really lagging. I noticed when I was trying to push my short on Dow, it was slow that I almost gave up. But indicators were ok… so carried on.

        1. Well, I’m short from 17905 so it’s been a very long wait. I’m not sure whether to keep holding on or take a loss.

  25. Another technical bounce on Dow off 17924, the last seen on 17 Feb. It’s hard to say if it will break 17925 as it is S3 as well. I would say 17925 was a nice price to close part or all the short position for now.

  27. Senu and Ahwab — Thank you for your support earlier today. Much appreciated. It’s good to know that there are some I do not rile! So, we wait, and wait for 6840, or 6750 or even 6600 … … LOL 😀

      1. Don’t know about that mate, while all the big hitters are waiting for the major drama moves, me and my little RSI system took 65 points out of today, never running more than 10 points against me.
        Horses for courses…. 🙂

        1. Hello tmfp. Would you be willing to email me a screenshot of your rsi system, so i can see how it looks? Been trying to learn a bit about it, but cant quite see how it works…Thanks.

          1. Hey mrbenson
            I’m flattered by the request, but not quite that simple because it’s something that I’ve nailed together and, although it’s logical and sometimes counter intuitive, the interpretation of it is still subjective. I also spread it over three screens (and use bits of paper!).
            Do what I suggested to Zahir further down the page and you have basically duplicated my ‘system’.
            It’s then down to you to develop a feel for how to weight it, without using it to justify random trading.
            One of the weaknesses of RSI trading has been that you get murdered on a trending day, but by comparing different timescales and settings you can get an early warning and on ranging days you can make hay.
            Good Luck..

    2. Don’t think you Rile anyone Jim. I think the majority have worked out you spout a load of rubbish and treat your comments as a bit of a joke. You are welcome to lose your money but not wise to encourage others to follow you.

        1. My guess at the moment Senu is that it falls back towards 6800 tomorrow — but let’s see what Nick says!

  30. Hi tmfp
    How do you trade with rsi what do u look for and what time frame do you trade.
    Sorry am a newbie I want to learn thanks

    1. Hi Zahir
      Just get used to watching RSI and stochastic indicators and the way they move in different time frames. Do some paper trading based on them and get a feel for what they tell you.
      My basic scalping RSI setting are 30 min 6 period, 10 min 14, 3 min 10 and 1 min 10. I watch for them confirming each other or diverging along with stochastic info and support/resistance levels and formations like double tops/bottoms.
      Just read up and keep watching real time. It suits me and what I want from trading, certainly not for everyone.
      Good Luck.

        1. That’s basic default levels in a ranging market libbo, but only part of it, it’s just as important how it gets there. Divergences are important too, between price/rsi and rsi/rsi different time periods.

          1. Divergence is one of the great things. I also use RSI and Stoch, but Macd is my general indicator, it gives so much more to me. Divergences there are also cool.

  31. Hi All, just done a little update to the look and feel of the site, nothing too massive. Let me know what you think or if you find any issues please!

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