Little bit of a strange day yesterday, we got the rise and dip, but the rise took a while to get going, fell just short of the 6682 short order (high was 6673), then dropped all the way to a low of 6585. Reality is starting to hit the tech shares in the US with their crazy valuations for companies that make no money. Hence, the Nasdaq 100 has taken a pasting the past few sessions.
I think the penny is finally dropping! The recovery in shares prices is mostly underpinned by share buy backs as well, so plenty of reason to remain cautious. I am still bearish for this week, especially with the drop off the 6700 area on Friday, being the 10 day Bianca channel top.
We are going into earning season now in the US and that usually makes things a little bit choppy.
We have a few bits of production data out at 09:30 though not particularly market moving usually but will give a feel for recovery sustainability again, so decent figures might get the bulls going. We have the divi today, only small at 1.8, but will the usual bull Tuesday pattern repeat - dip first, then rise?
FTSE Outlook
Today's pivot is 6644, so I expect that will act as resistance to any early rise, if there is one. We overshot the bottom of the 10 day Bianca channel with yesterday's bearishness, which was a little surprising, as we only tested the top on Friday. As such, if 6602 holds today then the bulls are still in with a shout.
The "usual" (I say that slightly tongue in cheek, as it's never quite that predictable) bull Tuesday pattern is dip and rise so I am about 75% expecting that today. The 30 minute chart certainly looks better positioned for a bit of a bounce, looking at the EMAs that are about to cross. Upside resistance levels to watch are the pivot at 6644 and also 6657, so I think that 6650 area will be a possible shorting area. Should the bulls break 6657, then I think revisit of 6700 and possibly the top of the Bianca channels around 6720.
Yesterday's drop could well have just been overdone and considering the bearishness on the S&P/Dow the FTSE has held up pretty well. The S&P 500 tested the bottom of the Raff yesterdays and todays 20 day channel has support at 1842. I think a climb there to 1875ish before more downside, which would carry the FTSE up with it.
If the FTSE 100 is going to drop initially, I think the low seen yesterday at 6585 will act as support, as we also have some green ProTrend lines in that area.
Daily Raff Channels
Bianca Trends
Gold
Despite the US bearishness, Gold still hovered around 1300. I think it will test 1307 today which where that ProTrend daily line is. Support is 1294 and 1290. It seems to be building a base still to push upwards, but taking its time!
S&P
As mentioned above the S&P 500 is testing the bottom of the 20 day Raff still (as is the Dow 30, so on the bigger picture we have decent support on the ones I am watching - 20 day S&P and DAX, 10 day FTSE for Raffs, 10 day Bianca for FTSE.
If the S&P can break 1853 then that opens up some upside targets namely 1862 and 1873.
Support wise, the bottom of the Raff at 1842 is worth a long with a stop at 1838. If that breaks then 1809 is likely. I'd be hopeful of a rise from 1842 if see and expect to see 1875 before 1809.
DAX
The DAX is testing the bottom of its 20 day Raff channel so there is support here at 9470ish. If yesterdays low of 9450 breaks then 9365 looks possible, certainly the bottom of the 10 day Raff at 9400ish. If however 9460 holds as support today (and that seems to be the case so far, though a long here would be worthwhile if seen later) then a rise to 9538 (daily pivot) and should 9550 break then 9600 is possible. Buy the dip today.