swingin' the ftse: 2009

[barjon]

hi joules,

FTSE tends to shadow DOW - thus if DOW puts on a strong (or weak) performance to its close after FTSE close then FTSE will play catch up the next day. Assuming dow futures have held near to where they were on DOW close. Not an exact science, of course, but that's re-balancing .

good trading

jon

 

[tomorton]

Hi Joules - As Jon says. Jon tracks this relationship more closely than I do but I aim to pay more attention.

I was also tempted to suggest we all move our bias to the short side in view of the North Korea crisis - but on reflection I think we should ignore such 'fundamental' knowledge and let the TA sort it out for us.

However, I think I should flag up that we are in sight of the FTSE posting a new 20-day high. This will be a bullish continuation signal for some players for a variety of reasons, one of these being that it breaches the last 3-day/Rivalland swing high and re-confirms the previous uptrend. These people, plus Turtle-inspired traders (whether consciously or not), would regard this as a long entry signal. But I don't like to go long on a high, it feels like shinning up a pole that a lot of other people are holding upright. This will be a more interesting pattern if we make a Turtle Soup or Turtle Soup + 1 pattern, and price falls back below the previous 20-day high, 07/05. I will keep an eye on this in case there is need to identify such a pattern in the next week or so.

 

[dr.blix]

thanks again tom for sharing your analysis.

now to go and google the 'turtle soup' pattern (mentioning the turtles i'm assuming it refers to some kind false breakout pattern?!).

 

[tomorton]

Yes. The Turtles; strategy would demand going long on a 20d high, Turtle Soup allows catching the breakout failures in the opposite direction. Plus 1 means the signal is taken a day later. These come from Street Smarts by Raschke & Connors. They're not common signals. More detail if we get near forming this pattern.

 

[Joules MM1]

hi joules,

FTSE tends to shadow DOW - thus if DOW puts on a strong (or weak) performance to its close after FTSE close then FTSE will play catch up the next day. Assuming dow futures have held near to where they were on DOW close. Not an exact science, of course, but that's re-balancing .

good trading

jon

....yes, a small furffy.....I was actually asking what the approach would be when the ftse is consistantly divergent to the major us indecies.....by that I mean there comes a specific moment when the ftse no longer 'tracks' the dow (although there is clear evidence that the reverse is true if only on a futures basis as that suits those who are at play at that time of the day or game ) for example in mid 07 the ftse made a double top whereas the spx made a new altime high.....whether a new altime high occurred or a double top or a "failed top" this would not necessarily have effected the m/as as they look backwards..... ...hmmmm.....interesting.....thanks for the reply.....

 

[barjon]

joules

Approach? Look for FTSE longs when it's trading strong against DOW and shorts when it's trading weak. (strong = more than 1 ftse point for 2 dow points on rises and/or less than 1 point for 2 on falls - weak = vice versa).

good trading

jon

 

[SuddenDeath]

good morning everyone, some markets closed today

 

[tomorton]

Nice rise ths morning as anticipated. Closed my long for small profit, don't want to remain long at the top of a range. No looking to either short a suitable retracement pattern or go long after a break-out from this range, a close above 4521 would be good.

Best wishes,

Tom

 

[dr.blix]

do you think this could be a possibility tom/barjon?

 

[barjon]

anything possible blixy

i'm seeing it as a consolidation rectangle sitting on the same support as you have and the odds favour a break out north to at least test the more substantive resistance around 4675.

On a more cautionary note ftse has not been too keen to follow dow's lead lately and
futures have ignored continued dow strength after ftse close atm. Nonetheless, I'm favouring longs.

good trading

jon

 

[dr.blix]

Rectangles

thanks barjon, was just looking at the possibility of rectangles.

aesthetically pleasing chart! muted, organic colours...bit of a cubist/picasso vibe going on there

 

[tomorton]

Hi dr.blix - I see a rectangle or bull flag as we range eastwards for last 3 weeks. I do recognise the support level and I think you have neatly tied that back to the Jan/Feb resistance level, which I had not associated. But I would discount it as a double bottom pattern, it seems to me to be halfway up an uptrend, whereas a move from a double bottom (though it can be powerful) has to start from reversal of a downtrend. I still think the falling indicator pattern does look bearish. To be honest, I have not got a clue which way we are going from here.

 

[tomorton]

FTSE100 Candlestick TA 01/06 – Higher range day, closing above previous close and up on the day’s open. Tiny gap up 4470-4471 unfilled and may provide support. Opened above gap 4410-4445, and traded well clear of upper boundary throughout day.

FTSE100 3d Swing TA 01/06 – Putative swing high but not breaching previous 07/05. Breach of 4521 would re-confirm uptrend.

FTSE100 2d Swing TA 01/06 – Putative 2d swing high, breaching previous 4513. Breach of 4521 would re-confirm uptrend.

General TA Notes
Medium-term trend sideways, with price just below upper boundary of 3-week range. Gap 4470-4471 may offer support: also suggests 3-day unfilled gap reversal short possible. Gap 4410-4445 now filled, leaving 200EMA possibly too isolated as meaningful support. Resistance levels clustering at 4505, 4513, 4518 and 4521: breach of highest, 4521, especially with close above, would re-establish uptrend. P&F chart showing small-scale triple top but no signal yet. 20RSI not showing overbought since correction from high 19/05. Line chart study suggests bull flag formation with three successive higher highs and two higher lows. Breach of 4521 before Friday 05/06 would be bullish but would fail to signal 20d high.
US – Strongly higher range day closing at January levels likely to draw FTSE higher 02/06 and possibly beyond.

Closed my long today as we reached top of recent range. Though the US stayed bullish all day, I was happy to go flat as we bump on multiple resistance levels and fail to close above in a break-out. The US seems to have overcome these so maybe we will be dragged significantly upwards tomorrow. Breach of 4521 supported by a high close tomorrow might convince me to take the swing continuation signal and go long late in the day. But to be honest, I would not be surprised to see early rise, possibly with gap up, followed by collapse below today's low in whiplash or key reversal pattern signalling short.

 

[SuddenDeath]

good morning everyone

 

[tomorton]

Small short this morning before 0830 when we breached yesterday's low, confirming 01/06 as swing high. Added to position just now as the US looking suitably bearish: don't know what that pattern is called or what it will develop into but it certainly doesn't look like a bullish continuation signal.

 

[tomorton]

FTSE100 Candlestick TA 02/06 – Lower range day, closing below previous close but up on the day’s open.

FTSE100 3d Swing TA 02/06 – Confirmed 01/06 as swing high. Breach of 4521 would re-confirm uptrend.

FTSE100 2d Swing TA 02/06 – Confirmed 01/06 as 2d swing high. Breach of 4521 would re-confirm uptrend.

General TA Notes
Medium-term trend sideways, with price near upper boundary of 3-week range. Gap 4470-4471 may offer support. Though filling this gap today equally suggests shorting on 3d unfilled gap reversal pattern, closing above does not confirm bearishness. Traded down into gap 4410-4445, but recovered upwards to close well clear of upper boundary throughout day. This gap possibly acting as support, as is 200EMA, just under its upper boundary. Resistance levels remain at 4505, 4513, 4518 and 4521: breach of highest, 4521, especially with close above, would re-establish uptrend. P&F chart still shows small-scale triple top but no entry signal. 20RSI not showing overbought since correction from high 19/05. Line chart study suggests bull flag formation with three successive higher highs and two higher lows. Breach of 4521 before Friday 05/06, though bullish, would fail to signal 20d high.
US – Higher range day, but closing at barely above 50% of range, suggests consolidation or retracement to be expected.

Situation does not look as bearish as I would have liked (being short), especially with FTSE closing up on the open after a seriously bad start. If it had traded higher first, possibly above yesterday's range, and then closed at this same level, I would feel a lot happier. But I still prefer to be flat or long at the top of a range.

 

[dr.blix]

bearish pennant on the FTSE tom/jon?

 

[tomorton]

Hi dr.blix - Now you point it out I see this. Specifically it looks lie a pennant (I find converging upper and lower boundary line define this pattern pretty well. Typically it marks a retracement against the downtrend. It lasts long enough to be defined and gather power for the downstroke. As a rule of thumb, people say these things occur at half-mast, and the subsequent downleg to 09/03 matches the depth of the initial downleg from 05/01 quite well.
Nicely spotted.

 

[tomorton]

Closed short position, that's enough for me. Re-assessing tonight on US close.

 

[tomorton]

FTSE100 Candlestick TA 03/06 – Lower range day, closing significantly below previous close and down on the day’s open.

FTSE100 3d Swing TA 03/06 – Second lower range day of downleg from swing high 01/06. Breach of 4294 would affirm downtrend. Breach of 4521 would re-confirm uptrend.

FTSE100 2d Swing TA 03/06 – Putative swing low, higher than previous, 26/05. Breach of 4521 would re-confirm uptrend.

General TA Notes
Medium-term trend continues sideways, with price just below mid-point of range. Price has closed above low of the day but on no particular support level (but see reference to Dow below). Previous gaps above 4409 all decisively filled, and 200EMA well breached. P&F chart still shows small-scale triple top but no entry signal. 20RSI showing neutral. Line chart study still suggests bull flag formation with three successive higher highs and two higher lows. Breach of 4521 on or after Friday 05/06, would mark 20d high.

Dow – Lower range day, but finishing relatively strongly with recovery just above the 50% point of day’s range, suggesting buying pressure re-asserting. Support appears to be offered by high of last swing high, 08/05.

The strong US close confirms my exit from yesterday's short and offers an opportunity to reverse and get long on the FTSE as we re-balance. But I'm going to let this one go by - we're well above the base of the recent range / rectangle / bull pennant, and if we gap up at the open tomorrow that will likely take us to the mid-way point. Also, I have no other strong buy signal than this, and in the absence of confirmation it would feel like chasing a price upwards, just asking for a whipsaw - trying not to do these things. There is a possible 2d swing low setting up today, but I don't rate these very strongly. Will wait for a recognisable pattern to develop during action tomorrow.