Weak US personal spending data, 6155 resistance, 6116 support

Support 6120 6116 6102 6096
Resistance 6145 6156 6159 6169 6185 6193

Good morning.
Market Summary for Thursday 24th March 2016
The main driver for Thursday was the strengthening U.S. dollar after St Louis Fed President James Bullard said another U.S. interest rate hike “may not be far off.”
This knocked markets and drove down commodity and oil prices which tend to move in the opposite direction to the USD.
The mining sector dropped 1.9 percent and the oil and gas index dropped 2.1 percent as the prices of metals and oil weakened.
Additionally there was a rise in US crude stockpiles to another record so another downward pressure on the oil markets.

US & Asia Overnight from Bloomberg

  • Yellen speech in focus after weak U.S. personal spending data
  • Monday was slowest trading day on American exchanges this year

Asian stocks fell for the first time in three days as health-care companies led losses and more than two-thirds of the companies in Japan’s Topix index traded without the right to the next dividend.

The MSCI Asia Pacific Index slipped 0.4 percent to 127.55 as of 9:01 a.m. in Tokyo. The gauge is up 7.1 percent since the start of March, on course for the best month since October. The Topix slid 0.8 percent. Data Monday showed the Federal Reserve’s preferred measure of inflation slowed, clouding the outlook for higher interest rates in 2016. U.S. equity exchanges saw their slowest trading day of the year, while markets in Hong Kong and Australia reopen Tuesday.

“Much of Wall Street’s rebound, and indeed that of global markets, over the last five weeks has been driven by expectations for continued policy accommodation from the world’s central banks,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion. “It is no surprise that the market rally is showing signs of fatigue. A weak recovery despite record stimulus remains a tough environment for risk markets.”

Clues on the trajectory of U.S. interest rates will come this week from reports due on employment, manufacturing, housing and consumer confidence. Fed Chair Janet Yellen is due to speak at an event hosted by the Economic Club of New York on Tuesday.

Spending Slows
A report Monday showed American personal spending barely increased in February and the prior month’s advance was revised down as consumers saved more of their incomes. A separate measure showed contracts to purchase previously owned homes rebounded more than forecast in February as sales picked up in most of the U.S. Data Friday showed the U.S. economy grew at a faster pace in the fourth quarter than previously estimated.

Some 1,505 of the 1931 companies in the Topix go ex-dividend on Tuesday, equating to a 13.2 point drag on the Japanese benchmark measure.

South Korea’s Kospi index rose 0.1 percent. Australia’s S&P/ASX 200 Index fell 0.7 percent, while New Zealand’s S&P/NZX 50 Index added 0.1 percent. Australia & New Zealand Banking Group Ltd. declined 2.1 percent, adding to a 5.2 percent slump on Thursday after its surprise warning of a blowout in bad-debt charges.

E-mini futures on the Standard & Poor’s 500 Index were little changed after the underlying gauge eked out a 0.1 percent gain on Monday, climbing for the first time in four days. About 5.2 billion shares changed hands on U.S. exchanges, the fewest since Dec. 30. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

Going to be a tough one to call in advance today after the long weekend, however, with the US open yesterday things remained relatively stable, and holding onto the rise on Thursday from that 6090 level. We have had a weak Australian session though and sometimes that can give a clue as to what the FTSE is going to do. In terms of levels, we have the daily pivot at 6145 and then support from the Bianca channels at 6116 and 6102 so the bulls will be keen to hold onto this area. We are still in this 6100/6200 range at the moment but the 30min chart looks a bit weak to start the day with a cluster of resistance levels around the 6150 area. Therefore I an thinking a short around this level for a run down to the 6116 Bianca level to start things off. We also have the 25ema on the daily at 6114 so whilst its not the first touch of that support level it could survive an initial test today. The S&P has still failed to break through the 2050 level, and if the bears start going for it they will need to break 2031 and 2020 for a test of 1990. Overall, I am feeling more bearish at the moment.

89 Comments

  1. Morning all, hope you had a good break.
    Still stuck in the range, Nick’s 55 looks enough for the moment, the faintest hint of a down channel forming on the FTSE, may accelerate if the DAX tests 900/10 or be neutralised if they can get through 9950, both looking unlikely right now, I have a nasty feeling it’s another paint dry session.

          1. Ok, if it’s disappointing I feel that might be the catalyst for a bit of a collapse, the FTSE feels very vulnerable right now.

    2. Morning all,Morning tmfp,was just looking at your RSI setings on daily and Weekly with a Russia ETF and a Mining co.Thanks.Hope you had a good Easter.

        1. tmfp, do you actually know what that means in Russian? I’d better leave the translation of it out. Very unusual combination of words by the way, looks unfinished.

        2. RSX,funnily enough it’s on the Cityindex platform too,should have looked at it a few months ago,but going to keep an eye on it for now.

          2. Yes,but I fancy it as a ltbh was thinking I’d watch what happens at 14.I bought a few hundred HGM last week though so I’m going all Buffett with the underlying value thing.

  2. Read two stories this morning about unfunded pension liabilities, £800m-£2trillion in private defined benefit schemes and £1.4 trillion public, mainly down to 600,000 Sir Humphries. Both doubled in the last ten years, who said zero interest rates aren’t a good idea?
    Second bit of info down to John Ward’s The Slog site, sort of a cross between old style Private Eye and Zerohedge, always worth a read.

    Maybe getting sucked in here, but looking to add to this morning’s short for 6000’s later.

    1. When reducing the debt became reducing the rate at which it increases and nobody questioned the labelling we were lost,always going to be a cost from making Funds buy more Govt Securities “for safety” when the Govt Securities return nothing.
      Talking of bad mgmt how many times has Bullard nodded along at meetings and said the opposite a week later anyway,there are 13yr olds running Bike theft Gangs near me who know more about Managing criminal enterprises than Yellen.Time she gave him a slap.

      1. +1.
        When I see his name I read “Bulltard”, which is a non PC crypto name for ‘to the moon’ type thinkers.

    1. Afternoon tmfp, good spot, especially since there seems to be some crowing from the “Hackers”. Just had a look and out of hours they haven’t really spanked it will be interesting to see whether they do.
      I’d like to see a reasonable tonk if nothing else than to get my VIX back in the money! No other positions at the mo.

      1. I shorted it for fun, see how it goes.
        Yeah, the VIX has been a nice earner this last year, don’t think anyone expected this sideways stuff to continue this long, obviously kills the options market which puts pressure on the banks to earn somewhere else. Lots of P45’s flying about in investment banking, leased Ferrari’s deffo a bear market. 🙂

  4. Whatever the Japs said didn’t go down too well, this has got 6080 written all over it,
    but I’ll take out half at the big number.
    If we bounce at all from here 10, I’ll average down with more short I think.

      1. Blue ink beckons, another 1/3 out at 98, maybe that’s it for a couple of hours on the downside.

  5. Morning Chaps,hope you all had a good break…….well this lot is weak…looks like my Easter master plan has not laid any eggs yet!……going to do something constructive today unless this lot starts to look a bit more positive….good luck all.

      1. Morning tmfp Yeah 800 Lady Luck has granted me a reprieve so far ….just looked it’s still an open position…..looks like it dropped to 06.got a few jobs to do so I may be a bit scarce today….this is your environment tmfp when it’s weak so best of luck.Have a good day.

  7. I have my eye on those two recent lows of 747 and 757 later, they’re quite important I think, especially with my Apple theory.
    It’s the first time for a while we have had this ‘step down’ action, been all ‘step up’, with no bounce retrace on the moves.

  8. morning all,
    i leave my desk for an hour and the FTSE goes down the pan:)
    no trade made though…bummer

  11. Sold a bit of Apple at 10468, if the Feds did jailbreak that mobile I don’t think the fanbois will like that, plus DOW should open weak with the Yellen Show set to chunter on.

  12. Getting up near this morning’s 3 min downtrend about 06, worth a short for me with a 10 stop for a higher high.

        1. I’ll sit with my 04 for a little while I think, average short now 21 b/e stop and a good few in the bank this morning so far, still fancy some more downside.

          1. If this drop doesn’t retrace asap then I think this may be the visit to 80ish then a rally before the DOW.

          3. Nice, FTSE might test 6050/40s low this afternoon.
            I was short this morning from 6156 and my limit was triggered at 6100 🙂

          5. Yes, it’s oversold short term.
            Oil is below 40 again as well and my 89 long looks bit vulnerable!

    1. 10 stop’s a bit close but you should be alright. I’ve got fixated on waiting for 80 maybe 75 to long for some obscure reason.
      I think I’ll cover the remaining short by 14.10 whatever.

      1. Oh finally moving north, I was going to close this for -2 lol.
        Out for nothing now, I think I will stick to shorts for today!

          2. Quite likely, but I’ve stopped trying to second guess the DOW opening. I would think if it goes outside 17410/17530 in the first hour it will probably keep going.
            We’re back at our morning downtrend at 92, DAX has already broken their shorter one.

  15. 2 main things driving the market today.

    Firstly the BoE’s gloomy assessment of the economy and the impacts of Brexit (fair enough – only an economic fool could actually vote for Brexit …..er…um…step forward chief buffoon Boris), and anticipation of Yellen’s speech. Not sure what more she can possibly say that she didn’t already a couple of weeks ago? What could have possibly changed since the FOMC? The Fed even laid out a “dot plot”. Can no one follow the dots now?

    Sometimes the US market’s short-termism can drive you nuts if you let it. Enjoy the ride.

    1. What she can say is either the same as she said last time or she can endorse what Bullard said a week after she last spoke,either would have an effect.

      1. Agreed. However picking the bones out of what they both said – rate rises are data dependent (which is hardly rocket science). The data hasn’t nor could it change drastically in a couple of weeks. The dot plot which was presented after the FOMC has to be our best guess of the future path of rates otherwise the Fed completely mucked up it’s forecasts just 2 weeks ago.

        1. Yes,this can get depressing if you think about it as a game of responding to incompetents who arent even penalised for poor performance,but on the other hand thats true of life in general 🙁 at least we arent quite sitting on a Plane hijacked by some bloke who wont accept his exwife is never going to love him yet lol.

          1. Haha.

            We’ve all done crazy things for love I’m sure – like cooking a meal, talking politely to the mother in law and even perhaps some things which any sane minded male shouldn’t do – like watching a Hugh Grant RomCom.

            Not quite on the scale of hijacking a domestic flight to another country though.

          2. 🙂 Dog Day Afternoon,Al Pacino,that’s a true story about doing something stupid before easy credit was around. Never light fires when robbing banks is just one of its lessons.

  16. Everything’s going down apart from Apl lol.
    looking for a long low 60’s, depending on DOW holding 410.

    1. The thing with Apple was that everyone knew at the time it was a bogus test case. The FBI already had the technology to crack into Iphones (with the help of a 3rd party tech firm) but wanted to use this opportunity to change the law / set a precedence. No better opportunity than a “terrorist.”

      Hey presto a few days later – “we’ve managed to unlock the phone anyway”…..mmmmm

      1. Everyone but me lol.
        My understanding was/is that they can’t break the encryption but can brute force it with different firmware.
        Anyway, don’t take flyers on ‘news’ stories is the moral I take from that little flutter..

      1. They’ll be talking all afternoon. That range I mentioned earlier is still intact, 17410/530 and probably will stay like that.
        Had a good day, not going to spoil it with any more American indiscretions 🙂
        GL

    1. Thanks Nick,that survey thing I do had this week as + for S&P by the comp forecast,majority of the people who answered were anticipating a down week,interestingly in the what to watch for bit the americans were all saying manipulatipn of the end of month close.

  22. Evening all……luckily my Dax is still in the game …..I have just closed my Dow long from 535 from last week at 620 for 85pts………..mindful of your comment chippy leave a bit for the other guy….not the best trade as I had to finance it over the long weekend but never the less a profit…….let’s have that Dax up at 10100 next :0) good night all.

      1. It’s very possible but I’m glad to be out at 620 for now Senu……GL. I don’t think we will get much further up till possible Friday NFP….famous last words!

          1. Nothing wrong with +10 it’s plus 10 you didn’t have earlier…….the Dow seems to have to keep pushing ever higher to influence the Ftse and Dax it seems ……unless we get a strong push up tonight..I think the A50 could provide an excuse for the Dax and FTSE to get a bit more in step overnight…..just a guess .GL.

  23. I take it from a quick look at the prices that Yellen has been whispering the right sweet nothings in the collective lughole then?

    1. They released her speech a few mins before she gave it too,so she really went out of her way to help the people who pay for After Dinner Speakers make a few quid.That was the first rise.Bullard got put in his place,although I still think she should have his nearest and dearest checked out for suspicious Trading patterns 🙂

  25. “With regard to the Federal Reserve’s balance sheet, the FOMC could increase its size by resuming large-scale purchases of longer-term Treasury securities and agency mortgage-backed securities. ”

    Forever and ever.

    1. “For an overview of the macroeconomic effects of the Federal Reserve’s unconventional policies after the financial crisis, see Engen, Laubach, and Reifschneider (2015)”

      Engen, Laubach, and Reifschneider……who they?
      Ah, economists.
      Economists who work for…..the Fed.

      Land of the Free. Home of the Brave.

      1. What did Shakespeare say?….he protesteth too much……ummn..can’t help thinking someone’s going to pull the plug on this lot…And Im Mr optimistic.

        1. I always thought it had one more push in it tmfp…..I mentioned it last year at some point but now I think this could be the last bull run before it does drop……….can’t see it collapsing before the election but probably that’s what most people think so call me cynical but it just might collapse before…..no one would expect that…….oh well that’s enough opinion…I’ll shut up now and get back to the daily stuff that’s in front of us now….GL.

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