Trade levels, help with trading and spread betting, support, resistance, prediction

Good morning I hope you had a good weekend. The Chinese news out on Saturday was actually positive for once, so is this the start of a cycle of more positive news flow? The FT100 has now fallen for 7 days in a row with a bit of a “blow out” on Friday with a fall of 2.2% and an overnight low at 5900. Unfortunately the bull/bear trading around the 6100 level recently was won by the bears and with little support the market nosedived. I guess it’s not too late for a Christmas rally but from these levels it will have to be very strong to get anywhere near 6400-6500 by the end of December. All in all a very negative week with most weakness resulting from weak oil and commodity prices, with eyes resting on China and its economic slowdown. The big news this week is the Fed on Wednesday and what Yellen is going to say and do with interest rates. Will they raise or not? Market is pricing in a 25bps rise.

US & Asia Overnight from Bloomberg
Asian stocks joined a global selloff as concern about turmoil in the credit and commodities markets ahead of this week’s Federal Reserve meeting overshadowed a batch of better-than-expected Chinese economic data.

The MSCI Asia Pacific Index dropped 1.4 percent to 127.69 as of 9:05 a.m. in Tokyo, falling for a fifth day in its longest stretch of declines since the measure’s August slump. The Standard & Poor’s 500 Index sank 1.9 percent on Friday as crude traded below $36 a barrel and asset managers were routed after a high-yield mutual fund suspended redemptions. Traders see a 74 percent chance the Fed will increase rates on Dec. 16, futures show.

“With the worries around the Fed rate hike, the retail investors have decided to all of a sudden pull out,” said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd, referring to what caused the U.S. high-yield fund suspensions. “This negative sentiment in the bond market is spreading across other markets.”

Third Avenue Management last week said it will liquidate a $788.5 million credit mutual fund and delaying distribution of investor money so it can avoid unloading securities at fire-sale prices. Stone Lion Capital Partners suspended redemptions in its $400 million high-yield fund.

The credit-market turmoil comes on the cusp of one of the most anticipated weeks of the year for investors. Tightening policy would solidify the Fed’s divergence from other major central banks, with policy makers in Europe and Japan still emphasizing measures to support growth.

China Economy
Investors are also weighing economic reports from China over the weekend that showed fresh evidence of stabilization in the world’s second-largest economy. Bloomberg’s monthly China gross domestic product tracker picked up to a 6.85 percent estimated growth pace for November, the best reading since June, after reports Saturday on industrial production, retail sales and fixed-asset investment all exceeded forecasts.

Japan’s Topix index fell 2.2 percent after the yen gained 0.5 percent against the dollar on Friday. The Tankan index of sentiment among large manufacturers held at 12 in the fourth quarter, the Bank of Japan said. Economists had expected a decline to 11.

South Korea’s Kospi index lost 1.2 percent. Australia’s S&P/ASX 200 Index retreated 1.5 percent, while New Zealand’s S&P/NZX 50 Index slid 0.9 percent. Markets in China and Hong Kong have yet to start trading.

E-mini futures on the Standard & Poor’s 500 Index added 0.1 percent on Monday. [Bloomberg]

FTSE Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

We have a pretty big week ahead with what could possibly be the first interest rate rise in the US for quite a while. The markets expecting a rate rise and has been pricing that in, though a lot of the weakness recently since the 6440 level has also come from the drop in commodity prices and China weakness. I am thinking though that Saturdays Chinese data marks the start of more positive news flow for the next couple of weeks as that often seems to be the pattern, few weeks where all news seems negative, few weeks where its more positive, then swap back. If thats the case then Fridays move down to 5900 might be the last flush to stop out any early bulls that thought they were buying into a Santa Rally. Its going to be a big ask to get 6500 though by the end of the year, but you never know – the first hurdle for the bulls is to get back above 6000 (there is resistance at 5985 first that needs to be broken). We have the 20 day Bianca at 5959 and the 10 day at 5902 as support today – I have put the 20day as support as I think that we will rise above this during the morning session to test the 5985 level. We have bounced off the 5900 low overnight so we may well see a bit of a charge from the bulls early this week. The key levels for today at 5985 for resistance and 5934 for support. If the support break then 5902 looks likely, if the resistance breaks then 6020, and 6075 are possible. Trading the breakouts will be worthwhile.

96 Comments

  1. Morning all, I see the vets and dentists managed to get IG trading in the 5800’s Sunday.
    What a peach of a sell 10 was this morning, look at that 1 min 10 RSI formation around 0830, classic sell signal the way rsi declined as the attempts on a new high got feebler and feebler.
    Covered at 80 and a bit surprised by the extra leg down to currently 70, so neutral atm.
    It’s all down to Janet tomorrow, she’s painted herself into a corner, be interesting to see how she gets out of it. I’m going to be very careful for the next 48 hours, it could go mad out there.
    I see Nick’s “buy the dips” tweet and don’t disagree with it, it’s defining what is a ‘dip’ that’s the problem. 6300 was a ‘dip’.
    🙂

      1. If you’re looking at that for today, then do you have in your mind a post rate announcement rally tomorrow, or is it just very short term?
        Struggling a bit here at 90/DAX 400, small short stop 015.

          1. If DAX can get through 410 without posting lower lows in the meantime I think there’s a bit of upside alround.

          2. This time we go through or fail hard I reckon.
            Never buy in anticipation of a break out but…..long at 98 8 pt stop

        2. Well that goes down as a fail at 10, so atm potential double top, the Germans still not posting lower lows so nothing broke upside till they get down in the 80’s.
          Bullish feelings slowly evaporating, but it might be a grinder which I’m no good at spotting.

          3. Yeah good shout, I was blinded by positivity/delusion, there’s big downside available. Got your 45 long ready lol?
            In with you on a bounce of any sort.

          5. That 45 long, where do you get it from, if you don’t mind me asking?
            It’s just that it’s a couple of points below the cash lows and, as you say above, not much support till ~5900 if 34 goes, which it well might with the possible stop momentum coming with a break of 48 cash low.

      1. 5 is a bit tight unless you have a specific play in mind really mate.
        Especially when we’ve gone +40 -40 +40 -30 in less than 3 hours and your entry is in the middle.

  3. Been playing about with Gann fans recently, quite interesting.
    Nice conjunction at around 10200 of Gann 1 and 61.8% Fib pull back on DAX, rough FTSE equivalent 5900.

    A good case can be made for a medium term long attitude around 5900 with a 150 pt stop and short for 5200 if it fails.

  4. So, what’s Draghi going to say, a variation on “whatever it takes?”.
    He’s going to maybe get his weak Euro/a bit of inflation if the Fed raise rates, but it’s fake, it’s not inflation based on economic expansion, it’s a sleight of hand.
    Maybe a mildly bullish reaction immediately on the DAX if his words are honeyed enough?
    If they don’t like it and sell off, then it’s a good sentiment indicator of the possible reaction to whatever Yellen does, simply because the market fundamentally doesn’t like money supply manipulation.

    1. Out of short for nothing.
      Still looking for direction with one eye on a proper DAX break of 410, otherwise comatose till DOW. Come on Super Mario, give us something to play with.

    2. Half out for +10 av, I should be a ranting bear now, but there might be a little more upside before the DOW.

          2. Yes, a bit tricky around this level, R/R is poor for a short @50 but we have a fairly obvious down trend in play and another selloff before the DOW is quite possible.
            I just wish I could get this bullish feeling out of my head, started off so well then lost the plot a bit…

            Let’s have a small short at 55, 72 stop.

      2. Looking very dead catty, esp DAX, but I’ll stop it at 44 and still come out with a couple.
        Maybe sideways/rally for an hour, then see how weak the long’s’ hands are pre DOW.
        I don’t think it’s as bad as it looks, which is just as well because it looks terrible.
        Mid 70’s onward will be a struggle or obviously a break of the lows looks for 34 and then whatever.

  10. And onto the DOW, 17200-400, a break of either could continue.
    A sharp sell off at the opening could be a risky long.

          1. Good old rsi took 15 and short again at 50
            17214 cash looks well defended at the mo, but colour me purple if we don’t see the 100’s this session, albeit briefly maybe.

      1. wish I knew Senu 🙂
        I think 200 will hold, then rally, then sell off again to new lows, not sure about the timing though

        Took a bit more out at 900

          2. Not it’s not really, DC, if you’re looking at the cash not 24hr prices.
            Although we did go down briefly to 5768 on 24th Aug, today’s the lowest close for 3 years.
            Santa better get his skates on.

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