The lows of 5750 have held from yesterday and we are back above 5800 now – looks like there was a spike down on open to take out a few stops so I am expecting more bullishness today. The 4 hour is certainly looking more positive and thanks to the price action tips posted by Jon on the comments section of yesterdays post, looks like we will be heading up. Thanks Jon! Barclays is rising today so someone is optimistic that the debt issue that is suposedly going to drop stock markets by 35%, and hammer banks, isn’t going to materialise. Usually when you start seeing headlines like that in the papers it is a red herring to shake people into selling so the institutions can pick up the shares cheaper than last week! Wouldn’t be surprised for the bulls to really kick in and add 1000 to the FSTE between now and the end of the year. In fact, while I have been writing this post the FTSE is now up 25 from the spike down point!
ftse daily trends
Great post Nick and I think you bring up one or two important points….. those damn spike downs for starters! The spread betting firms tend to do this ahead of a major movement in the markets so whilst it’s a complete pain in the arse if you get stopped out (essential to have some slack with your stops) it’s usually another indicator that market sentiment is changing. Spike downs by their very nature leave their imprint with price action and the longish pin tail (to the downside) today is therefore bullish price action. It represents rejection of a lower level.
With regards to newsflow, clearly the surging Dow (up 200+ points yesterday) was a result of the Obama administration coming to an agreement of reducing the US deficit by some 3.7 trillion dollars. Therefore, the bad news was more or less already clearly in the price.
With regards to the Euro situation, in my mind it’s the reason why we are hovering around the 5,800 region currently. If progress is made on Thursday, markets will storm ahead. If there is further chaos, the markets will drop back again but I always maintain the news is absorbed in the price action. It’s taken me a long time to accept this and to program my mind accordingly for trading purposes.
However, I expect markets to rise to a new high heading into the end of July fueled by the Euro resolution (or part resolution) and positive earnings on Wall Street. IBM and Coca-Cola posted strong earnings yesterday followed by Apple obliterating their forecasts and producing record revenues. This to me implies a positive market reaction to the general earnings season and further positive market reaction to developments. The markets have been undersold for a week or two so I expect the correction to continue.
Check out the latest John Hampson piece…..
http://amalgamator.co.uk/2011July19th.aspx
Thanks for that link John, i must get in the habit of looking at that site! Well seems we are all thinkign 5750 could be the low and we are rising from now on. I am sure all these “issues” will get sorted out and markets will resume their uptrends. They are naughty with those damn spikes arent they – but as long as you are prepared for them then that helps. Currently hovering around R3 so maybe a little pull back for a “buy the dip” for more rises. Theres no way the US will want to have its credit rating reduced so thats bound to get sorted out and I am sure that they will agree somethign tomorrow about Europe – thye wont just let it all implode I dont think. Though sometimes I think they should just let those overburdened people, companies, countries pay the price for their follies! But thats just me!
I couldn’t agree more with your opinions. Firstly, I am sufficiently long after adding on the opening bell this morning and agree that we may drop back a little today especially if nerves kick in ahead of tomorrow. But I do plan to keep adding small longs to my stockpile as we gradually head northwards. I tend to add small bets as we climb or add shorts during a declining bear stage like last week. Maximising profits is the name of the game and trading with the trend can never me ridiculed.
The US situation is a bit of a farce but I don’t complain too much on a personal level as it ensures that the markets remain volatile thus proving great trading opportunities for the like of us. I, like you, also believe the Euro project is perhaps a failed experiment and living in Madrid I get to see at first hand the mounting political, economic and worse…. social and cultural chaos. I think we are just throwing good money after bad and I’m sure we’ll look back in 20 years and scorn at the sheer waste that was evident, financially speaking of course. Greece should be left to default (as it is inevitable anyway) and left to sort out its own problems. Perhaps a little harsh but then where will it all end if every country needs rescuing?
And if it does all implode tomorrow…. then I have my stops
Sorry… a little off topic here.
Anyway Nick, the markets are interesting as ever and I stick to my principle of drip feeding ‘longs’ when we are at the lows like now and then drip feeding ‘shorts’ when we are at our highs like last week. These volatile markets are proving us great opportunities at the moment and I think in these changing times volatility is here to stay!! Now if only I could figure out this EUR/USD market!!
Enjoy your day!
It certainly would be nice to figure out the EUR/USD market and I’ve also wondered about cracking the Hang Seng, that would be serious!
I agree Sam… the EUR/USD is all over the place at the moment and it seems that whenever the Euro is destined to drop lower, the Chinese dump their dollars and buy Euros. Therefore, I’m simply just trading the range of 14,100-14,600. It’s not to difficult on the daily chart… I just need to have more patience. I have however been nibbling away with some long trades over the last couple of days thus building up a larger long position. Something tells me tomorrow will be extremely volatile though with this Euro meeting! The outcome may also affect the FTSE to some extent also!
Hi Jon, Talking about trading 14,100-14600, did you trade the pin bar on the daily chart for July 12th? Cheers Sam