Momentum is switching

We could be in for further upside. If my stop doesn't get hit straight away, I'll watch out if the opportunity to either minimise losses or flip sides arises.

Update: nope! stopped out of my short at 4305 for a 18 point loss.

Flipped sides at 4288

I took profit on my long from 4243 for 45 points and concurrently went short, 20% fill, stop at 4305.

I might flip sides again if strength develops: an area to watch as mentioned this morning is the 4250s.

Play for Tuesday, June 30th

I am going to keep it brief. We had a potential cup and handle in the works and we broke above the handle (the descending channel) yesterday.

However, we have also failed just above the 4300 line, as we did on Friday as well. Given the support that the 4310s to 4330s represented, we could now be seeing strong resistance at those same levels.

Intraday momentum is looking north at the moment and given the rangebound market we are experiencing I'll be looking to play both sides. So, two possible plays at the moment: sell the 4310s to 4330s resistance on weakness with a rather tight stop or else look for strength on a dip to 4250s.

Took profit on 1/3 of my long at 4263

From 4243 for 20 points. Moving stop on remainder to 4233 for a risk free trade on what I have left.

Update: moved stop to 4240.

Flipped sides at 4243

Took profit on my short from 4298 (for 55 points) and concurrently flipped sides and went long at 4243, 30% fill, stop at 4230.

I have changed my plan to the upside, but let's see if I am called to flip sides again.

Play for Monday, June 29th

We slightly broke above the descending channel on Friday, but quickly drove back inside. There is still a potential cup and handle formation to consider if we don't break towards the bottom of this channel and touch the 4200 line again soon.

I'll be looking for weakness below the 4270s to add. Intraday as well as daily momentum are looking south. However, I'll be watching the ES closely as well as there is an area where we could find strength nearby and take the European indices up as well.

Partial cover

I covered half of my long at 4265 from 4298 for 33 points. Moving stop on remainder at breakeven, however, I am ready to flip side if appropriate.

Holy cannoli

My stop did not get hit...but I have witnessed a trading miracle.

Actually, may I say that this is really interesting. My broker began to have technical problems at around 9:45am this morning or so. While my broker was out, the official FTSE index went up to touch 4298 between 10am and 11am.

Because no one was trading on this particular broker and they probably had real issues for over a hour, the price they are "quoting" for that period of time flatlined, hence my stop wasn't hit, see the chart below.

I am not a spiritual man by the way.

Downtime...

Just got back at the desk: I have no idea where my FTSE short is at since the broker I used is having technical probles (I can't log on...). Apparently we reached as high as 4298 on the LSE quote, so probably my short got stopped out.

Shorted again at 4298

50% fill, stop at 4310 for a scalp.

Update: I took 3/5 off at 4287, taking back the earlier loss, left with a 20% fill, moved stop to 4300.

I have to jet out now, will leave the above trade on, worst case scenario I'll lose 2 points.

Well that was fast....

Stopped out my small short at 4310...perhaps the market is telling us what side we should be on?

Anyways, going to take a break at this point and look back in a couple of hours.

Play for Friday, June 26th

Notice how we have a potential cup and handle formation in the works, and in conjunction daily momentum is beginning to settle and perhaps point back north again.



However, we are right outside the boundary for the downward channel: one idea is to look for weakness at the open and then look for strength anywhere between the 4250s and 4270s. I am taking on a small short now at 4283, 10% fill, stop at 4310.


We need a strong move above the 4300-4330s to confirm the cup and handle and thus a continuation of the bullish trend.

Took profit on all shorts at 4262

From 4356 and 4274 for 94 and 12 points respectively.

I am now flat.

Added short at 4274

For a further 20% fill, also moved my stop to 4310 to transform my over-all positions into a risk-free trade.

Update: moved stops to 4274, at breakeven with my second entry.

Beware that....

I am seeing momentum creep north...

If we don't sell off at open, this is a worrying scenario for the shorts (alas me as well right now).

Play for Thursday, June 25th

Yesterday I mentioned how the 4270s-4290s would have been an area to watch for weakness: the the high was 4291...

We are currently in the 50% to 61.8% retrace from that level to the after hours lows in the 4230s, as we are currently quoted int he 4260s.

I suspect we could find weakness at the current levels at open, however be mindful that most intraday charts show positive momentum. If we continue higher, a move above the 4330s violates the current downtrend scenario.

If we don't sell off between today and Friday, the scenario for the permabears begins to change. In any case, I am strongly inclined to maintain my idea that this bear market will not break the March lows, unless unforeseen events occur.

I'll be looking for weakness anywhere below the 4310s-4330s to add, or else maintain my current position.

Play for Wednesday, June 24th

Intraday momentum is beginning to look north, and yesterday we found strength in the 4220s.

My plan is still to look for weakness anywhere between the 4270s and 4290s, while we could touch the 4300 resistance as well. The 4230s could be the area off which we bounce.

However, the current quote of 4240s is a the 50% to 61.8% retrace from yesterday's highs to the lows as well: be on the lookout for weakness at this area as well.

Play for Tuesday, June 23rd

Yesterday we broke out of the 4300-4500 area completely, and after-hours we reached as low as the 4190s.

I suggest looking only for short entries on rallies: a full retrace from yesterday could take us up to the 4290s. However, I would expect the FTSE to go down further before making a strong retrace up: eventually we could see it test the 4300 area as a resistance, but this seems very unlikely for today. The first area of significant support should be met between the 4150s and the 4180s.

In any case, I would look to add on weakness below the 4300 line. I am still short as per the details on the left.

Play for Monday, June 22nd

Another quick and easy post.

On Friday we failed at the 50% to 61.8% retrace from Monday's highs and determined a descending trendline: so watch out for it.

However, also be on the look out between the 4280s-4290s for strength to the upside, and that a full retrace from last week's highs could take us as high as 4400.

Please also note that intraday momentum is mixed, and while daily momentum is still looking south, more and more indices are displaying a cross between the 50MA and 200MA.

I am still short at 4356, but have now moved my stop to 4370.

Short at 4356

20% fill. Stop at 4415.

Play for Friday, June 19th

I am off the desk this morning and not at my workstation, hence no access to my charting software...hence no charts this morning.

I perused the charts last night and would advise the following:

• Intraday momentum is looking north from 1 hour to 4 hour time frames.
• Hints of positive divergence on RSI on the 8 hour timeframe.
  
• Daily momentum still negative.
• Look out for weakness at the levels posted yesterday...however also be on the lookout for strength between the 4260s-4270s which might take us to the higher retrace levels mentioned.

I'll be back to regular trading next week: I have had a really busy personal schedule these past few days.

Play for Thursday, June 18th

I am still to find an opportunity to short this market. The downside momentum has been quite powerful since Monday and we have only had minimal retraces. The trendline we have formed this week is extremely steep, see charts below.

Intraday momentum has somewhat turned around: so we might get a chance for a short entry. Watch out for these levels where to find weakness:

• 4290s to 4300s: retrace from yesterday's highs.
• 4310s to 4320s: retrace from Tuesday's highs. The 4320s had also acted as support on Tuesday.
  
• 4350s to 4380s: retrace from Friday.
• 4370s to 4400s: retrace from last week's highs.

I doubt we'll have a full retrace from last week or Friday's highs though, but Monday's move left a lot of traders flat.

I am going to be out again for the most part, both today and tomorrow, so I don't know how much trading I'll be able to do.

Still flat...

I have not been on the desk this morning, and will need to head out now, so it is likely that I will not be able to trade today.

Market seems very weak at the moment: the only ambush we hit was the 4320s, which was a 50% retrace from yesterday's highs to the lows.

Play for Wednesday, June 17th

At pre-open we are quoted in the 4300s, and we reached as low as the 4280s at US close last night.

Let's see if the 4300 support holds this morning. Ideally, we should rally up towards the 4400 line and get a chance for a good short entry: however, given the current downside momentum a sell signal might occur earlier. The 4350-4360s could also provide an entry.

I will not try to scalp a long, as I did yesterday in a rush, and will look for a stable short entry instead (hoping to be at the desk when it appears...).

Long at 4333

Only 10% fill, stop at 4310.

Update: this scalp was in the money for a few minutes and then we broke onto new lows. It missed my stop by 1 point or so. Took this out 4317 for a 16 point loss, this trade was too emotional...

Play for Tuesday, June 16th

With yesterday's down move, daily and intraday momentum is looking down. We still have to break below the 4300 line though.

The short case scenario would entertain a retrace upward where we could seek a short entry fill:

• The 50% to 61.8% retrace from yesterday's pre-open levels would take us just below the 4400 line.
• A more extended retrace from Friday's highs could take us up to 4425.

Alternatively, we could take the route up towards these levels. But at this point, on the FTSE, I'd rather seek a short entry.

Speculative long

At 4351, 10% fill only, stop at 4325. Highly speculative, looking for a retrace up into US open.

If it happens, I'll be on the lookout for weakness to flip below the 4430s, especially between 4400 and 4410s.

Update: stopped out at 4325, I was out when we reached the 4370s briefly...oh well.

Play for Monday, June 15th

Again this week I will maintain a cautious stance to start with: small trades, humble profit taking and conservative stop losses. Let's see if we finally break out of this range.

Look out for the wedge below, and thus strength above the 4410s and weakness below the 4470s. Intraday momentum is looking down, and daily is looking down too at the moment. Look at the weekend wrap up for further analysis.

Weekend wrap up, June 14th

This is going to be a quick wrap up. As we all know, we have gripped on tightly to the 4300-4500 range: actually, the range has gotten even narrower, as the lowest point I have for the week on a 24 hour basis is 4366.


We now have a couple of ascending trendlines too look at (in brown and pinkish purple), both of which could be part of a larger wedge (in pinkish purple, I favoured the major ascending trendline).


As we keep on ranging, the daily RSI is stalling, and while the indicator is moving lower, we can't call it divergence as we have not recorded a new high in prices. Momentum on the daily is now looking to the upside: but just like last week, a 1% move up or down can currently change this.


Looking at the Accumulation Swing Index, as we did last week, please notice how we broke above previous highs for the year and how we have kept on climbing.


My bias is to look for longs, until the picture changes. Next week is option expiry too, so let's keep an open mind. However, as we continue ranging the feeling I have is that, while we will most certainly get a pullback, the lows touched in March will not be broken unless unforeseen events materialize. Please note how the Alligator's mouth is shut tight (below), and has been so for a prolonged period: the next major move, up or down, will likely be quite powerful and fast.

Closed short completely

At 4454, from 4450 for a 4 point loss. Net P&L for today was +54 points, both long and short, that's good enough for me. Upside momentum is building on US indices and in any case I don't want to keep a short over the weekend at this juncture.

Have a nice weekend!

Closed half of short at 4430

From 4450. Moving stop on remainder at 4470.

Flipped sides

I have taken profit on my small long and concurrently went short at 4450, 20% fill, stop at 4475.

Play for Friday, June 12th

I am going to keep this quick as I will be off the desk most of the day.

We broke out of the wedge that I had signalled this past weekend, but have still respected the lower trendline of that wedge even after breakout, as you can see in the chart below.


At US close last night we struck an long ambush area in the 4440s, from which we bounced off slightly as we reached as high as 4469 on the bid since then. Look out for pronounced weakness below the 4470s or else a buy signal again in the 4430s and the 4440s.


As mentioned, I'll be off the desk most of the day, I'll keep my small long for now and either let it ride if we move higher or get stopped out at a small profit. Regardless, I would still advise to be cautious on trade size, stop loss distance and profit objectives. Daily momentum is now positive, but intraday momentum is mixed.

Moving stop

On the long I have left from 4412: moving stop to 4425.

Primer on CFDs

I would like to post this brief primer on Contracts for Difference (CFDs), aimed mostly at non-US traders who wish to trade leveraged products, or any trader who wishes to expand his/her product knowledge. From CFDs I will pass on to Spread Betting, which however would only interest residents in the UK and Ireland.

A contract for difference (or CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time or when the contract is closed. (If the difference is negative, then the buyer pays instead to the seller.) For example, when applied to equities, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares. So, CFDs are just another type of derivative contract.

Contracts for difference allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date, standardised contract or contract size. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 25-30% of the notional value, depending on the underlying product and the broker.

For example, today I decided to short the FTSE. I sell one (1) CFD on the FTSE at 4500. My margin requirement is 1%, so £45 (FTSE is denominated in pounds). I can hold positions overnight, and if I choose to do so, I pay or receive interest depending on my position. So, I am short the FTSE, hold the position overnight, and receive interest. My overnight margin requirement is the same: 1%. The next day, I buy the FTSE at 4450. I made 50 points, I had 1 contract open, hence I make 50 pounds.

Margins, commissions, P&L per point vary according to what you trade and your broker. But essentially, CFDs are products that allow you to take a leveraged position on an underlying financial product: for the FTSE example above, margin is set at 1%, thus leverage is 100x. Products available vary by platform, but usually include all main world indices in cash and future form, US, European and Australian equities, commodities (not all contracts though), bonds, and some even inflation and other products.

Now to Spread Betting...In the UK (and Ireland) there are no taxes on winnings from bets. That is because the UK tax man doesn't allow you to deduct gambling losses either: no deduction on losses hence no taxes on wins. To take advantage of this, UK finance houses repackaged CFDs as a bet, hence spreadbetting. Instead of buying a CFDs on the FTSE, you place a bet on the FTSE. Just like for CFDs, you can go long or short.

Let's look at the FTSE example above under a spreadbetting format. I believe the FTSE wil go down. I bet £1 per 1 point movement in the FTSE going short. My margin requirement is fixed to a set amount of pounds for every 1 pound I bet. So, for example it could be £30 margin for every £1 pound bet. I hold the position overnight on a short, and I receive interest. The next day I close the position for a 50 point gain: every point equals £1 pound, my profit is £50 pounds. This is just like the CFD trade above, only that it is wrapped as a bet: I could have bet £10 pounds per point and a similar CFD trade would have been to trade 10 contracts.

Spreadbetters to my knowledge don't charge commissions regardless of the product you are trading, in order for the trade to qualify as a bet. The make money by posting larger bid/offer spreads: so on the FTSE CFDs I have a 1 point difference between bid and offer, on the Spreadbet it might be 2 points. CFDs usually don't charge commissions on indices, fx and commodities, but do so on equities: again this depends on the broker.

CFDs are an alternative to trading futures for those traders seeking leverage. The advantage for say, the trader looking to take position on S&P 500 futures, is that when trading a CFD on the S&P 500 contract there is no commission.

These products are not available to US customers, as with most European products (and viceversa). However, there are obvious ways around this, but that's another discussion. That said, CFD brokers and Spreadbetters are some of the most regulated entities in London because of the risks involved with leveraged trading and their market being retail oriented, so they are closely monitored by the FSA.

I don't want to tout the goodness of the product, just explaning what it is: there are good brokers and bad brokers, good platforms and bad ones, great technical analysis and charting software and bad ones. However, CFDs (and spread betting) account for almost 25% of the volume on the London Stock Exchange. Prices reflect market movements, so the FTSE will reflect the movement on the underlying market, and the S&P contract will do so as well. However, as above...there are good brokers and bad ones.

Also, I have had a positive P&L example above...obviously if the trade goes the other way your losses would be of similar magnitude.

I hope this was helpful. On the column on the left, down below, you can find some links to CFD brokers if you wish to check out demos and such: I am not affiliated with any of the names mentioned, but I use those platforms and find them extremely reliable and well thought out.

Long again at 4412

Stop at 4400, 50% fill.

Update: took profit on 3/5 of the trade oat 4426, moved stop on remainder at 4405.

Update 2: taking profit at 4446 on 1/2 of remainder and moving stop, left with a 10% fill long at 4412, stop at breakeven.

Closed long at 4433

From 4417 for a scalp, now flat.

Long at 4417

Stop at 4405, 20% fill.

Play for Thursday, June 11th

Yesterday evening the FTSE reached as low as the 4390s, and by US close had gone back up to the 4420s.

A hour from open we are quoted in the 4440s. Intraday momentum is tilting on negative for now and we could have two scenarios in play:

• Looking for weakness just below the 4450s to 4460s.
• Buying on strength in the 4410s to 4420s.

My bias would be to look for a shift in momentum and a long entry, but I'll be openminded.

That said, I will continue to be cautious in terms of risk: yesterday we failed to stay above 4500 for the 4th time, yet we are building higher lows.

Moving stop

To 4420.

Update: I haven't been stopped out (yet) by 1 point...

Update 2: stopped out at 4420 from 4371 for 49 points. Will we keep on ranging?

Play for Wednesday, June 10th

We have broken out of the wedge, and to the upside, as of this morning. Be aware that we have to take out the 4500 area and stay above it to disconfirm the triple top formation, or in any case the range we are in.

Intraday momentum is positive: unless the picture changes dramatically I would be looking to add longs anywhere above 4400. I am out most of the day, so that's unlikely to happen: I'll keep my small long for now.

Morning update

Let's see how the wedge has played out this morning: disregarding the "wicks" of the candles, we have respected the formation for now.

Play for Tuesday, June 9th

The wedge that I highlighted in the weekend wrap up was greatly respected yesterday, as we found support on the lower trendline and resistance on the top.


I am still long at 4371, and would either look to hold or get stopped out at breakeven (and outside the wedge). I would still recommend caution when boarding risk, in both size and stop loss, and regardless of direction.

Intraday momentum is mixed: from the levels reached at US close last night there is an ambush long around the 4400 area. However, the 4400 line has not provided much resistance/support over the past month: look for confirmations on intraday charts with longer time frames.

Long at 4371

10% fill, stop at 4350. I am going to test the lower trendine of the wedge: notice I am cautious on size and stop.

Update: see the chart below, please note that momentum is pointing down.

Update 2: moving stop to breakeven.

Play for Monday, June 8th

Please refer to the weekend wrap up posted yesterday.

There is an ambush long zone between the 4440s and 4410s. However, do watch out for that wedge pointed out in the weekend wrap up, and that intraday momentum is pointing down before the open.

Weekend wrap up, June 7th

Last week we finally broke out of the ascending channel we had been in since March. We are still holding the 4300 to 4500 range and have actually detailed a wedge formation over the past two trading days.


Although we have reached as high as the 4490s on Friday after non-farm payrolls, as we immediately shifted down we can safely say that the triple top play that was noted last week could still be in play. In fact, the bulk of the action occured below the 61.8% retrace from the 4510s top. Also, note below how the previous ascending trendline as now acted as resistance. It remains to be seen how we will play out of this wedge: still 4300 and 4500 are the key levels.



Intraday momentum, as of US close on Friday, is mixed but pointing down: however, as it has occured over the past 4 weeks this can change easily over the course of a few hours. I'll be watching the wedge above tonight as the markets light up and tomorrow morning.

Watching some longer term charts my current bias is to say that we could have some further upside. This in spite of the fact that the FTSE has been severely lagging all other indices, US, Asian and European, over the past week: the FTSE is the only index that has not made new highs. In any case, I would warn to continue to be cautious until we break out of the current 4300-4500 trading range and define a new trend.

Looking at the daily charts, please note how, in the first chart below:

• Momentum is pointing south, but at the moment it is extremely sensitive given the tight trading range: so even a 1% move to the upside would turn it back pointing up. I would disregard this indicator at the moment, unless we break below 4300 and have a confirmation from the triple top formation as well.
  
• The RSI has been heading down while the market has flatlined: this could be interpreted as divergence but also as the indicator "recharging" before a push higher. Divergence is more secure if a higher high (or a lower low) in price does not determine a similar higher high (or lower low) in the RSI value.
• The Bollinger bands are tightening and replicating the well known trading range: we have a upper value on the daily of 4500 and a lower value of 4297 (surprise surprise).
• Very importantly, the 60 day weighted moving average and the 200 day weighted moving average have crossed: this is something to watch carefully and to be interpreted as a bullish signal, especially if momentum doesn't fail significantly causing the 60 day weighted MA to bend and go south again.
  

Below is another view of the daily chart which is coupled with the Accumulation Swing Index, which often gives good indications for confirming or disconfirming trendlines and breakouts. As you can see below, while the price range has remained the same, the Accumulation Swing Index has broken above previous resistance, which is a bullish sign. However, while we have reached for the resistance made during January's high, we need to break above it to have a clear bullish confirmation.


Now, looking at the weekly chart below three points of note:

• Momentum is still looking north.
• No divergence on RSI (this is a weekly chart too, so it takes a long time to develop).
• Upper Bollinger band is still untouched by this rally.
  

More importantly, let's look at some long term trendlines on the weekly chart below. I am not a fan of using technical analysis over long time spans: the behavioural rules behind trendlines and support/resistance can break down over long time frames, and the composition of an index is also to be considered. I would not go further than 5 to 7 years, with 7 somewhat pushing it, but that's my opinion and I know many traders might differ.

On the weekly chart below, the important things to note are:

• That the current 4300 to 4500 trading range was also found between 2003 and 2004 and lasted almost a year.
  
• That we could be detailing two distinct, but parallel, downward channels. Channel 1, which we broke below in September/October of last year, and Channel 2, where we have been in since then.
  
• Major resistance/support lines (such as 4550 and 5100) cross both these channels. If the triple top we have detailed is confirmed and we head down we would remain within Channel 2. If we break above 4500 and then 4550s area we could well be heading back into Channel 1.
  

That said, let's put thing into perspective. At the March lows, most markets had lost 50% or more of their value from the 2007 highs. As an approximation, from a valuation perspective that would equate to the underlying companies experiencing cash flow growth of around negative 5% to infinity. Now, how credible is/was that? Also, we rallied off from the 2003 lows: while it's true that things are gloomy, it is also true that the world keeps on spinning: families book holidays, friends go out to dinner, and so on. Maybe less than before, but regardless of that life goes on. The system is cleansing itself as bankruptcies and restructurings take place too. I would not be surprised if the March lows were the bottom of this bear market, and we are in for less volatility and a ranging market before the next bull begins.

Closed long at 4483

From 4446. All flat now and done for the week, beware of any reversals but also that a "quadruple top" formation would be something new...

I'll let the market decide its faith for the rest of today with its own money rather than mine.

Closed haf of long at 4461

From 4446. Keeping the rest with stop at 4435.

Long at 4446

20% fill, stop at 4435

Closed long at 4456

From 4445.

Long at 4445

20% fill, stop at 4430, for a scalp.

Play for Friday, June 5th

First things firsts: as sort of expected I got stopped out of my shorts yesterday in the overnight session, part at breakeven and part at loss, but nothing to cry about.

The FTSE is now quoted at 4416: intraday momentum is pointing north (on 1 and 2 hour time frames) at the moment and we can sort of detail a minor ascending trendline on the charts (in red).


There is an ambush long zone in the 4380s to the 4390s, and momentum is somewhat failing on the shortest intraday chart I use (15 minutes). Let's see if we get a pullback at the open and find strength somewhere.


I am on the sidelines for now. Right now I can't shake the bearish bias off given the formation we have and the momentum on daily and longer time frame intraday charts. If I trade I will continue to be extremely cautious in terms both of size and stop loss until we break out of this 200 point range we have been in for the past month.

I have addes DISQUS

To provide for a user friendly comment facility.

Evening update

The US markets are showing significant upside momentum which is bringing the FTSE quotes up.

My short position is so small that I am not going to bother with taking profit now and will go for a digital trade instead: stopped at breakeven or else wait for a significant down move on which I can add as well.

Update: I have added at 4400, keeping my stop at 4431.

Short at 4431

10% fill. Stop at 4460. No sell signal yet, hence the small position, but we are between the 50% and 61.8% retrace from yesterday's highs.

Update: I forgot to mention to remember that today we have several data points coming out such a BOE, ECB, US jobless claims as well as a speech by Bernanke.

Update 2: moving stop to breakeven.

Play for Thursday, June 4th

Apologies for the post-open post.

We experienced a significant break to the downside yesterday, finally abandoning the ascending channel we had been within since March.

Just before US close yesterday we bounced off the 4350s which had previously acted as support as well.

Several bearish arguments have appeared on the charts:

• Daily momentum, and momentum on longer intraday charts, is pointing south.
  
• We had a triple top formation develop.
• There is significant divergence on both daily and longer intraday charts.

We have been ranging between 4300 and 4500 for a month. A break is urgently need for our sanity. The arguments above support looking for a short entry anywhere below the 4440s if a sell signal develops. However, keep in mind that the FTSE is the only index that has not yet produced new highs when all other indices have, and momentum on the hourly is back to positive.

Looks like...

....the triple top mentioned this morning was confirmed, since we plunged from the pre-open 4480s to the 4410s in 45 minutes or less. But who knows?

I am flat and staying that way for now.

Stopped out of long

At 4435.

Play for Wednesday, May 3rd

Since Friday many indices have broken above the highs they had previously reached in this rally. The FTSE however has lagged behind, finding resistance yet again in the 4510s: this despite the fact that the index is strongly tied to the performance of energy and mining company and underlying commodity prices. The FTSE is usually a leading indicator to broader market indices such as the S&P.

As you can see from the charts below, the ascending channel is still intact, and we have a potential triple top to look at. Triple top formations usually form over a period of many months not just one: but we are in still in a quite unusual market.


Intraday momentum is mixed, momentum on daily and weekly charts is still positive. We would break below the ascending channel with a move towards 4400 and the neckline of the triple top is at 4300. A strong move above 4500 would disconfirm the triple top formation.

I am keeping this small long on for now.

Long again at 4455

10% fill only, stop at 4435.

Closed remaining long at 4472

From 4454.

Intraday momentum is turning around. In any case, this 4300 to 4500 range is starting to get boring.

Closed half of long at 4480

From 4454. Moved stop on remaining long at breakeven.

Long at 4454

20% fill, stop at 4420

Play for Tuesday, June 2nd

Momentum slowed down after US close last night on most indices. Also, to be noted is how the FTSE failed to break above the 4500 resistance while almost every other index did experience a break through (S&P above 930, DAX above 5000, and so on).

I'll be looking for an intraday buy signal today: we could see a 50% to 61.8% retrace from Friday's lows today which could take us as low as the 4430s though. Please see the updated trendline chart below.

Long at 4475

20% fill stop, stop at 4450.

Update: closed half at 4494, moving stop on remainder at breakeven.

Update 2: stopped out of remaining long at breakeven.

Play for Monday, June 1st

The FTSE is quoted in the 4490s just 25 minutes to the open. In spite of the fact that we are reaching the 4500s, which have acted as resistance on two occasions, I will not be seeking a short entry unless intraday momentum fails significantly: triple top formations are usually built over the course of months not days.

See the considerations in the weekend wrap up also.

I'll be looking to go long anywhere above the 4430s if a clean signal develops. Otherwise, I'll stay flat.