Trading Day

If June was depressing for stocks then July has so far been indecisive. The FTSE has traded in a narrow 200 point range. The wise thing would have been to just stay out and do nothing, as the intra-day volatility has increased so the indicators so useful in a trending market have been failing. A lesson for the future. The last time the FTSE did nothing for so long was last October, which just goes to show, if any more proof was needed, that we are at a decisive level. As bad news just piles on top of more bad news the support at this level seems to be purely technical. That doesn't mean the support is not real, just that historically the oversold indicators have predicted a reversal, even if temporary. For example, on 11 June the daily RSI showed an oversold market and the FTSE went up for 4 straight days before continuing its downward spiral. It could be as little as that or it could be much larger. The RSI gives no indication of the size of the reversal. As I've said before, it could be just enough to switch off the oversold red light. Fridays are usually volatile days, although if nothing much happens will hang on to the options till Monday as the Dow has been making significant moves in the last hour.

Trading Day

Nothing quite like a sucker's rally to brighten my morning! The Dow took a nosedive last night after Europe tried to rise. Perhaps time to decouple a little as the US and Europe are in slightly different economic cycles. Today will be the eighth trading day with indices stuck in this narrow range. We may end up with a similarly shaped day to Tuesday, with the FTSE and DAX having been pushed down overnight and slowly regaining their losses until the Dow opens. Nobody really knows! To short the FTSE again I want to see 5350.

Trading Day

A look at today's daily charts shows that some indexes have a bullish air about them. Perhaps all this talk of bottoms will stop being a fetish for a while. Also, I said before that the oversold indicator was likely to put a brake on the fall. Not because the market cannot fall further but just that technical analysts would expect some kind of rebound. The most telling moment was when the Dow hit 11150 bang on the nail and spiked up in what had all the hallmarks of automated computer trades.

So, the FTSE has hit the SAR and MACD is positive. One can never tell how far markets will move but the first test is the 30DMA at 5643, then the 5700 level. The whole thing could sink like a lead balloon if oil starts to rise again. There is one small crumb of comfort here in that the Chinese authorities have ordered all industry around Beijing to close during the Olympics, for fear of showing the world what a polluted capital they live in. So putting aside woeful corporate earnings, on just an energy point of view it is possible to have a month upwards.

TRADE
FTSE AUG 5750 CALL
BUY @ 60.3

The DAX has the same shape as the FTSE, the MACD is slightly positive but the SAR has not yet been taken out and stands at 6418.

The Dow also has the MACD positive but has hit the SAR on both the up and the downside in the last couple of days and I really would like to see it at 11400 before committing to more than excessive froth.

All three indices have come off their oversold indicators. The signs of an upswing are there in all three cases. However, I have only taken one call option out of the three. We should know this week if this is more than noise. Looking for FTSE above 5500, DAX above 6400 and Dow over 11400.

Trading Day

Half an hour ago IG Index was quoting the FTSE as opening 105 pts down, sitting at 5400. This seems to have more to do with the Asian collapse as the Dow is also quoted lower than last night's close. Now, we often see that the cash market needs to catch up with its out of hours prices, so with such a big drop I'm sticking my neck out.

TRADE
FTSE Daily
BUY 5420 call @ 26.6

Yesterday the FTSE was just 10 pts away from breaking the SAR indicator, which today stands at 5518. This is the first indicator to be flagged for any upward movement. The last few hours have shown it was wise it didn't touch it! The 30DMA is somewhat further away at 5645.

Trading Day

Another week, another bear market. A bright and sunny morning has quickly clouded over as FTSE heads for 5400 and the DAX 6300. Dow finally comes back into play later, and we shall see if it gives up on 11331. Talking of bears, the FTSE enters bear territory at 5400, hence has been flirting around this level for a week. The investment banks have been issuing conflicting advice of late. On the one hand we hear attempts at bullishness stating that equities are historically cheap and that much of the bad news has been factored in, and yet at the same time we see stocks downgraded on a daily basis. A case of watch what they do, not what they say.

From now on I will also be looking at the DAX. The FTSE and DAX have fairly similar shapes in the long term, but intra-day can behave somewhat differently. The DAX is largely composed of industrials and financials, without the heavy weighting in commodities. Hence, the DAX reactions to commodity and currency movements seems more clear cut than with the FTSE. We shall see if this continues to be the case.

Trading Day

Yesterday was another roller-coaster ride but today is the 4th of July and usually the FTSE is fairly quiet. The last couple of years have seen a small 40-50 pt range. But today is also a Friday, so I think will give a chance for the UK and Europe to think about their own economies. The paroxysms of the last few days are signs that this market will move sharply again - in which direction is a matter of speculation. The FTSE has fallen over 1000 points in six weeks - well oversold. The daily FTSE SAR is down to 5598 so within touching distance. Ironically, we may need to wait for the oversold warning light to switch off before a further leg down - this just requires a bit of sideways movement for a week.

Trading Day

Last night we officially entered a bear market for the Dow - 20% down from its peak. Such labels may be merely cosmetic, but must have some psychological effect in that the bears can now look smug. The whole bulls and bears narrative sounds more like some forgotten mythology than a description of financial markets. I don't really give a damn about which way the market moves so long as I can find signals that catch those moves early enough to make a profit. But in the big wide world with lots more money to lose than me, many people have a vested interest in giving their unbiased advice. I really don't trust broker and bank recommendations as they just smell of self interest - there should be more independent monitoring services. Just take General Motors as an example. Two days ago the news was saying that the Dow's 200 point late rally was due to GM's better than expected sales. Their sales figures still sucked big time, but not as much as expected. Actually, that rally looked more like a reaction to oil coming sharply off its highs. Anyway, 24 hours later GM gets downgraded and its shares crumble - no new announcements, just another pump-and-dump play from the oh-so-wise big boys.

Well, last night was interesting in that oil did not retreat late in the day but remained stubbornly high, prompting the Dow to finally give up its bull dream. I expect this is in anticipation of the ECB hiking rates today, which will further weaken the Dollar against the Euro and thereby increase dollar denominated commodities such as oil and gold. Looks too easy a play so we shall see what will happen. I imagine much of the moves have already happened this week.

FTSE

Not so many support levels left to break. Looks like 5300 and 5100. The 5100 level may prove a bouncing off point as was the Feb 2005 high (5080) and then the Oct 2005 low (5130).

The ECB interest rate announcement is at 12:45 BST with a news conference later at 13:30 BST.

Trading Day

FTSE

Well, last night we seem to have had the customary pump-and-dump in crude oil. It closed higher but nearly $3 off its high. This gave the opportunity to the Dow to rally 200 points and save itself from a technical bear market at 11331.

All this froth just goes to show that these are important levels and one best be careful not to end up in the market the wrong way round. FTSE SAR down to 5689 and the MACD weakly negative. Yesterday the FTSE touched the same March low and only thanks to the Dow's overnight rally is it back to 5500. I think at the moment best use the 1-hour or 30-mins chart for daily trades. Seem to be working fairly well with just one or two trades a day.

Gold

Gold, oil and the dollar have been playing out their merry dance on a daily basis. This makes it difficult to keep hold of long-term trades as the last hour often sees a turnaround in fortunes. Having said that, gold is up some $60 in just 5 sessions. The 1-hour chart currently showing downward pressure.

Trading Day

FTSE

The FTSE has bounced off 5500, just as it did at 5700. The daily SAR sits at 5725, so won't call a rally until it hits that. It could, of course, be back below 5500 by the end of the week. For today, it currently sits at 5620 at pre-market and the 1-hour chart shows possible downward movement but am waiting for the SAR at 5615 to be touched. The market still seems fixated with oil as the fuel for inflation and a general economic slowdown, and not surprising as it hits record prices every couple of days.

Dow

Wall St has fallen further than the FTSE, due to its lower weighting in commodities. It is now almost at its January low. The first upward trigger is the SAR at 11625. On a daily basis the 1-hour chart still looks positive but very early for the Dow.

Gold

Gold has reached its May high of $935 then came off sharply to now sit at $923. Both the 30DMA and 100DMA are at about $900. Apart from a general weakness in its demand from jewellers gold's fate has been back in the hands of oil and the dollar.

IG Index has reduced its minimum bet size from £10 a point to £1. This means a $1 move in gold could be a £1 move in a trade - not a huge amount of money to be made with such small bets but useful to practise with real trades without breaking the bank.

Trading Day

Back online now! I know, nobody has missed me, hence am changing slightly the way I write these Trading Days. If I see some comments posted and the development of a readership I may change again. As there is an obvious delay between my trades and my comments, and a further delay for when the comments get posted, I don't think it necessary to try to make comments as 'live' as possible. This also means I can concentrate on the dealing screen and write comments at idle moments. I will experiment with this format and see how it goes.

What is ultimately important is developing trading tools and strategies that work and make money. Once those are in place then my trading comments become superfluous. We can all see the same data and use the same indicators, so will concentrate on longer articles.

Anyway... back to our programming.

FTSE

Yesterday touched 5580, which was also the low on 31 March. The Dow overshot its crucial 11750 by ten points then rallied. Today sees the Fed announcement on interest rates but as always this is after London closes, at about 19:15 BST. Depending on where you are in the world, this is often worth being awake for, as otherwise you will see the movement reflected in the FTSE's open the following day. The Dow's 11750 level is its March lowest close. The FTSE is still some way away from its March low at about 5460. Now, for the Dow this is more than just a local support - it is about the high of the 2000 tech bubble. A drop lower means that anybody invested in the Dow has been wasting their money for nearly 10 years. In contrast, the FTSE has been moving sideways for 10 years.

Just look at, say, a 20-year chart of the two indices. The tech bubble took the Dow to just short of 12,000, folowed by a credit bubble taking it up to over 14,000. However, the FTSE's twin peaks are at the same level, just shy of 7,000. From a purely technical perspective, this looks ominously like a double-top and there is no good reason why we can't see the FTSE back into the subterranean 4,000's.

I am reminded of the often quoted statistic that in the long term stocks have outperformed bonds, but only if you reinvest dividends. In a sideways market this last little proviso makes a huge difference.

Anyway, coming close to such important levels will no doubt see another bout of increased volatility, so I wouldn't be surprised if the market rises again to meet the 30DMA at about 5840 before falling further. It could, of course, just sink to 5500. I think it too late to take any long-term short positions, using the daily chart, but the 1-hour chart continues to be profitable, with the 100EMA line showing good trends over a 4 to 5 day period.

Bottom? Who knows!


GOLD

Gold has been twisting around faster than a dog chasing its tail. With the dollar on a weak upward trend and oil trading sideways it is hard to gauge the short-term future. The 200DMA at $868 is holding but gold fell away very sharply from trying to reach $910. After a period of what looked like nicely tradeable signals it now looks unclear until it makes a move outside this narrow $30 range.

Trading Day

FTSE

Dow sits a slither above 12000. FTSE around 5760 in pre-market. Last support at 5700. Came sharply down from the 30DMA, now sitting at 5930.

GOLD

At the top of its current range, just shy of the 100DMA at $896, with the 200DMA at $867. Seems to be following oil but gold's peak was back in March, showing some demand weakness since then, although propped up by its hedge status.

Just as a reminder that what are considered traditional relationships between markets may break down some days as sentiment flips.

Trading Day

No time for a preamble...

TRADE
FTSE
SELL @ 5842.8
1-min chart premarket

TRADE
Gold
Buy @ 844.4
30-min chart

Trading Day

On Gold: in one session gold went from its 200DMA up to its 100DMA. This morning it sits more or less in the middle of this range. Yesterday was boosted by falling dollar and oil spiking to a new record just shy of $140. Still needs to break through $900 to call a new rally.

On FTSE: yesterday was a poor trading day. Was probably just my not reading the script, but was very choppy and ended just below 5800. After a relentless fall from 6400 to 5700 the FTSE is taking a breather. The daily chart is still giving mixed messages, with a possible upswing but also just as likely to be a pause before 5500. The same thing happened in April when the SAR signalled a sell but the MACD remained weakly positive. Under those conditions it is a wait-and-see signal! Indeed, in April was wise to do nothing as the market turned upwards again within a few days.

Trading Day

Back to another see-saw week on the markets. The FTSE daily chart has finally broken the SAR and so we are now looking for further upward movement. The only caution is that the MACD is still in the red. However, as we've seen over the past few weeks, the FTSE has tested and re-tested every support and resistance, so perhaps no surprise that it will now test its resistances. The first one coming up is the 30DMA at about 5965. It needs first to move up convincingly from its current pre-market 5820, which was the April support. This could now herald a period of holding on to upward movements rather than downward. I would still look to a positive MACD before committing myself.

Gold looks less healthy, just $3 away from hitting the SAR to indicate going short. Continues to sit just above its 200DMA. No great entry point to buy, although if it were to get to $875 then that could signal a lurch up to at least challenge $900.

Waiting for the right trading signals.

Trading Day

TRADE
FTSE Daily
BUY @ 5762

pre-open so spread wider than within market hours. Take quickly at any sign of a loss.

Game on!

Trading Day

Where are we going today? The FTSE daily chart shows absolutely no signs of recovery, with 5500 and below looking likely. The resistances are so far away that they are as likely to be touched as a cathedral vault. Oil, banks, housing and retail are our four horsemen of the apocalypse - all we need now is another dumb war as a parting shot from a lame US administration. Of course, the reason to manufacture a war is to manufacture arms and thereby help a large but selective part of the economy - the General Electrics and Westinghouses of this world.

Resistances

6000
5800

Supports

5680
5500
5415

Trading Day

TRADE
FTSE Daily
SELL @ 5837.5
3-min chart

Still have a Jun 5700 put which has been losing in time what it has been gaining as the FTSE has dropped.

As I said, 5800 was the obvious first support, and I still don't see much support other than 5500 after that. Possibly 5700, which was a support mid-Jan to mid-Feb.

oh yeah...
TRADE
BUY @ 5822
Profit = 15.5 pts
not a bad start!

Trading Day

The Bank of England announces its decision on interest rates at noon.
Brace yourself.
Could be a boring morning. Any sign of it just treading water and I'm taking a break and coming back later.

The mood seems to be of gloomy resignation of interest rates staying at 5%. The BoE obsession with inflation above and beyond anything else has painted it into a corner. Even more of joke is that real personal inflation is closer to 10% than 2%, but the authorities now love to take out of their official inflation figures anything that might actually be inflationary. Data Corrupted.

Is Gordon Brown likely to be the only prime minister never to win an election?

OK, time to watch the numbers...

Trading Day

Another of those mornings when the spread betters have pushed the FTSE down to ape the Dow. Expect it to rise to meet last night's close. There is probably a strategy lurking in these movements but the profit potential seems so slight compared to the risks. What it does mean is that even if it is a down day this isn't the right time to go short.

FTSE closed above its 90DMA, although as of writing sitting some 30 points lower. Long term daily trend still bearish but has been putting on a good fight for 6000. The next level up (if that's not too wildly optimistic) is 6095. On the down side it still looks to me like fresh air down to 5800.

Waiting for the bell...

Trading Day

Resistances

6105 (30DMA)
6095 (200DMA)
6043 (90DMA)

Supports

6000 (barely a support but did close a nose above this)
5800

In terms of day trading, the 1-hour chart needs to go above 6000 to confirm a positive trend, as does the 30-min chart. It would be worrying if the charts didn't tell us the blindingly obvious! A drop below 5970 to confirm bearish session.