Arrived late to the party today and missed a nice 40 pt rally as indicated on the 3-min chart. Overnight the plunging Dow dragged the FTSE to 6150 but has now recovered to be pretty much flat from last night's close. I am sometimes puzzled by the FTSE's slavishness at following the Dow. There are certain economic similarities between the two countries but the profiles of the indices look very different. However, one back-of-an-envelope statistic sticks in my mind; that half the UK's trade is with Europe, but half of UK foreign investments are in the USA. What appears as slavishness is thus merely a reflection of the changing value of a large chunk of UK multinationals' portfolio. However, we are currently seeing the Dow and FTSE diverge somewhat. This seems wholly due to the differing weighting of commodity stocks in the two indices. With oil at $135 and rising, and gold peering up at $1000 again, on their own these rises are good for the FTSE's petrochemical and mining sectors. With the dollar also losing ground to sterling the consumer cost of these price rises is more limited in the UK than the US. IG Index have a FTSE-Wall St Differential market, which as the name suggests is just the difference between the two indices. Yesterday saw a huge drop and it now sits at the very bottom of its recent range. A slight structural decoupling will see this drop further.
Resistances
6500
6400
6300
6250
Supports
6150 (30DMA)
6100 (200DMA)
6040 (90DMA)
6000
30DMA was hit out of hours and held. Both 1-hour and 30-mins chart showing positive trends for this session. Buy signals were at about 6175.
22 May 2008
Trading Day
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I'm loath to do anything at the moment. The 6200 level is proving important this week and the FTSE is currently treading water waiting for new direction. Any downward movement and I still have the 6000 put option making money. The 30-min chart has been signalling a positive session but is now running out of steam. A break below 6175 will reverse the trend. A break upwards and my option will be losing money, but having missed the early morning signal I think it dangerous to wade in without a strong reason. At 13.30 BST we have the US jobless claims - they are probably as massaged as the UK jobless figures but, as usual, what is important is not their truth-value but the reaction to them.
ReplyDeleteThe art of waiting.
TRADE!
ReplyDeleteFTSE Daily
SELL 6190.8
STOP 15 pts
based on 3-min chart
yeah I know, this one's a bit risky hence a small stop.
Steady as she goes!
ReplyDeleteThought this was going to turn round and bite me in the arse, but is OK now. Very close to a reversal on the 30-mins chart, but stop moved down to 6195.
Stop moved down to 6180 - guarantees a small profit. I know this is tight but is an insurance, just in case the US jobless figures give the markets an upwards boost.
ReplyDeleteStopped out at 6180
ReplyDeletePROFIT = 6190.8 - 6180 = 10.8 pts
Modest profit. Probably set the stop too tightly but an average trade for a 3-min signal.
TRADE!
ReplyDeleteFTSE Daily
SELL @ 6175.5
STOP 20 pts
OK, closing at 6180 was a waste of time. Never mind - better than losing. Note that at this level both the 3-min and 30-min charts show downward trends. The 1-hour trend needs to go down to about 6160 to be confirmed.
I am being perhaps overly cautious today but a look at the Wall St charts may explain why. The Dow has already broken through all the usual daily moving averages and is staring at 12500. However, as EMAs turn from support to resistance there is often a move up just to test the ceiling. And if the FTSE gets dragged around by the Dow I don't want to be caught in any back-draught.
Let's see how this goes!
TRADE!
ReplyDeleteFTSE to keep in range -40 to +40
SELL @ 62.4
TRADE!
BUY @ 6285.5 to close
LOSS 6175.5 - 6185.5 = -10 pts
bailed out here. poor play!
With the above range bet I don't now really care which way it goes. It is very rare that the FTSE does not move 40 pts in any one direction during the day, so at over 60 it is worth a bet.
TRADE!
ReplyDeleteFTSE Daily
SELL @ 6199.3
The Tunnel is not looking good.
TRADE!
ReplyDeleteBUY @ 6199.8 to close
not hanging around here!
LOSS -0.5 pts
staying out now, and keeping an eye on my 40-Tunnel.
TRADE!
ReplyDeleteBUY @ 75.7
LOSS = 62.4 - 75.7 = -13.3 pts
took it as it spiked down as with 13 mins to close I don't trust this - not into miracles. My own stupidity at not paying closer attention to the actual Tunnel chart rather than just the FTSE.
P/L for the day is -13 pts.
Disappointing day, should be better tomorrow as followed by a long weekend.
TRADE!
ReplyDeleteFinish down > 30
BUY @ 2 pts
LMAO. That was just irresistible as the FTSE plummeted some 50 pts in 5 mins. Tried to close it at 9 pts but was 2 seconds too late. Will wait for the official close at 4.35pm.
ReplyDeleteLooks unlikely now...
oh well, -15pts for the day.
Closing Comments
ReplyDeleteWell, a pretty flat day with a narrow range of 6220-6175, and a rare feat of staying within 40 pts of its previous close.
The only really strong signal was the early morning one to buy. Now I suspect it will drop overnight, but at least have the option to make something in that eventuality. Dropping so sharply in the last 20 mins was not a bullish sign.