Support at 6610 after an initial dip?

Good morning. Fridays ended up hitting the 6635 area that I had highlight for a short but not until late Friday. Anyway, the short there took though I closed it at 6625 just before 9pm along with a few others still in the chat room. Good job as prices jumped that resistance area overnight on continued talk that tapering isn’t going to happen any time soon. (I did say this months and months ago that I very much doubted they would taper till 2014 at the earliest).  Overnight high was 6675 – bang on the top of the 10 day Bianca channel line from Friday’s chart, and has since dropped back, though its worth noting that we are testing both the 20 and 50 day area at this 6650 level. Will we get a little pull back before more upside as the momentum is still with the bulls currently? We have the delayed payrolls data due out tomorrow as well (delayed due to the government shut down) which is forecast to show employers added 180000 jobs.

Asia Overnight from Bloomberg

Asian stocks rose, with the regional benchmark index extending its advance from a five-month high, amid speculation the Federal Reserve will delay stimulus cuts.

The MSCI Asia Pacific Index added 0.2 percent to 143.76 as of 2:23 p.m. in Tokyo, with about three shares rising for every two that fell. The gauge climbed 1.8 percent last week after China’s economic growth accelerated and as investors shifted their focus from the resolution of the U.S. fiscal showdown to the timeline for the Fed reducing bond buying.

“The market will continue to rally based on improving economic fundamentals and a potential delay in tapering of the Federal Reserve’s stimulus,” Angus Gluskie, managing director at White Funds Management Ltd. in Sydney, where he helps oversee about $550 million, said by telephone. “While the U.S. government still needs to do more work on the debt issue and their budget, we’re going into 2014 with the likelihood of synchronized recovery in Europe, Asia and the U.S.”

Japan’s Topix index advanced 0.4 percent. The country’s exports rose 11.5 percent in September from a year earlier, according to a government report today. That was less than a median 15.6 percent growth estimate in a Bloomberg survey of economists.

U.S. Jobs

Payrolls data due tomorrow in the U.S. will probably show employers added 180,000 workers in September, the most since April, after a 169,000 gain in August, according to the median estimate of 93 economists surveyed by Bloomberg. The Labor Department report, originally due Oct. 4, was delayed by the Oct. 1-Oct. 17 partial government shutdown.

The Fed won’t taper its bond-purchasing program until March next year because the shutdown probably slowed fourth-quarter U.S. growth and also interrupted the flow of data, according to economists in a Bloomberg survey. The monthly pace of asset buying will be pared to $70 billion from $85 billion at the Fed’s March 18-19 meeting, the median of 40 estimates shows.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I feel that the Bianca 20 and 50 day channels will be in play first thing and with the drop off the 10 day from Friday at 6675 think we will drop to the daily pivot area and also the bottom of the 30 minute channel, around the 6610 area. However, the trends are up and if bulls can close above 6635 which has been a long term resistance level then we could be on for a decent push higher – I still have 6800 on the radar (I did have that for a year end close but it may actually come sooner). The bottom of the Bianca 10 day channel for today is 6556 so if the bears did break below that then it takes away the chance of 6800 on this leg. I have put an initial drop this morning, though the EMAs are still technically bullish. Then again, Monday mornings are a bit of a gamble anyway.

37 Comments

    1. good luck. i’m currently down on my short. not sure wether to close and take the loss or alternatively, wait and average down

  2. My post of last Saturday still carries the note, ‘Your comment is awaiting moderation’, so I take it that it hasn’t been published. Perhaps the two links to FTSE and Dow graphs have caused the problem. Thought I’d repeat the post below, minus the graph references –

    If we suspend our worries about the sanity of US lawmakers, and the inevitable finiteness of market-boosting monetary policies, perhaps the most obvious scenarios are that the Dow and FTSE build on recovery patterns observable now, the Dow heading for c15800 and the FTSE for c6800 in the near term. These values represent no more than the respective upper bounds of 2xstandard deviation channels between 1 May 2013 and the present. Both channels are approximately horizontal, so the series have fluctuated around central values without exhibiting any real growth over the period, despite huge stimulus being applied, in the case of the USA especially.

    So, the foundations of recovery might appear shaky; based on these few considerations at least. I am on the lookout for gravity-defying shares!

    2. 6610 was the trade to be long, not chasing the long trade as we are at the top of the daily channel. Uptrend is still intact from the 6300 area on this leg…

  7. Hi, did anyone else get stopped out at 6700 plus last night? There was a split second spike at 1pm and I had my short closed. This is with Capital Spreads. I’ve checked City Index and it spiked too to the same level 6712 as the two sites are linked. However IG Index shows high of 6682. My stop was 6666 but it took 6706. Absolute midnight robbery. I find the market usually finds its way to these spikes over the next couple of sessions so no reloading of shorts for me yet.

    Jon

    2. OMG, I look now on this spike (CityIndex) and the top is 6698.5 They had no right to take a stop higher than that (however the spread could add up to it).

    3. Site works OK with Chrome, though I get the main page displayed as a single narrow vertical paragraph in Firefox.

      1. OK thanks all. Seems it’s a bit temperamental. I have just made a tweak so hopefully that has sorted it

    1. Hi JonC,

      I put in an order on City Index to sell my long at 6,669 and the spike went straight past this and sold at 6,698 so I made more profit than expected which I know doesn’t help you but shows there were winners and losers.

      1. For this reason I got rules: Rule number one: Never leave trades over weekend, if you do – remove all stop losses (if you are in bit s… it doesn’t matter where the stop is). Rule number two: Never leave trades over New Year.
        LOL

  11. It’s been the norm for the last week ride and but the dip in the morning, works a treat, so are we gonna see 7000 on the ftse this year?

  12. Though that candlestick could possibly be the indicator that we may see a some decline before FED. Would work a treat,Javed

  14. I also had problems with Chrome & Firefox. Looks like latest versions don’t handle the images very well.

    Works as it should do in IE 9 though

  16. Could you help me. If I don’t want to have dividends deducted from my account on FTSE, on which FTSE market can I take a short? I see the options here:
    UK 100 Daily Future Tue Spread
    UK 100 Nov 13 spread
    UK100 Dec 13 spread
    UK100 Mar 13 spread
    UK 100 Year End 13 spread
    Which one is better to chose if I plan to hold short for at least 1 month?

    1. Jack, it makes no difference if you choose a daily bet or future in respect to the dividends. All of the above won’t be affected by divs, but instead have it factored into their price, ie.you will notice the further futures have a lower price to allow for expected dividends over those coming months. What DOES make a difference is the “cost” of your bet, daily bets have a daily interest charge which adds up over time… whereas futures have that cost factored into the “spread”. What you will find, and it varies by platform, is that a daily bet is cheapest up to about 2 weeks duration, anything held longer than that then the interest cost of the daily bet will be larger than the “spread” cost of using a futures bet…
      Hope that helps

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