A quiet weekend on the economic news front and we are nearing the end of Feb now – been a strange month in terms of activity and a bit hard to call but still managed to net a few points. I am still running my June short entered at 5930 (cash price). I am still bearish, especially when you see headlines like this “UK has run out of money” http://www.telegraph.co.uk/news/politics/9107485/George-Osborne-UK-has-run-out-of-money.html. Still, don’t believe everything you read in the papers. The charts have been saying that we are due a down leg from around the 5930-5970 level for a while now to around 5750 and that’s what I am playing for at the moment. On a separate note, I watched the film “margin call” over the weekend and its worth a watch and has a good cast – suitable for us traders!
This from Bloomberg-
European equity futures and Asian stocks fell amid concern that rising energy costs will hurt corporate profits. Oil snapped a seven-day winning streak after the International Monetary Fund warned of an economic slowdown. Euro Stoxx 50 Index futures slid 0.7 percent as of 7:10 a.m. in London. The MSCI Asia Pacific Index (MXAP) lost 0.8 percent and Standard & Poor’s 500 Index futures retreated 0.3 percent. The yen advanced against all of its 16 major peers. Treasury 10-year yields fell two basis points to 1.96 percent. Oil slumped 0.5 percent to $109.19 a barrel.
The Nasdaq Composite and S&P 500 closed up Friday while the Dow Jones was unchanged. The health care equipment & services and software & services sectors traded on the upside while the banks and auto sectors were under pressure. The S&P 500 (1365.74) closed at its best level since June 05, 2008. The index holds above its 20d moving average (1344.3) and its 50d moving average (1301.5). The RSI14 (70.1) rose just above its overbought threshold (70) but continues to draw a bearish divergence with the index.
European markets are expected to start on a soft to weak note.
The 15 minute chart , and also the Bianca one, follow on neatly from Fridays post last week, which is that I would be looking to short around the top of the 10 day channel at the moment, certainly for a test of the bottom of the 20 day channel, today standing at 5880. If we break the 20 day channel (we will need a catalyst to do that, maybe Spain worries next?) then there is a lot of fresh air underneath, as the 50 day channel bottom is 5890. Basically, if the bears can break those 2 channels then there is a lot of downside. Resistance is 5958 again, and todays pivot point is 5941. The short term trend is down at the moment and it all hinges on whether those channel bottoms can hold. Might be worth a long at the 5880 level for a bounce off the 20 day channel – usually comes good. The 50 day channel tends to get breached and then come back, as you know the 20 day channel is my preferred one.