FTSE 100 significantly lower as Greece rocks the European markets

Alpesh 75Stock markets this morning are rocking in the aftermath of the developments in Greece over the weekend and the decision of the Greek government to keep its banks closed for the week ahead. The situation in Greece looks grim and with the country staring into the abyss after months of negotiations the money markets are responding to the now very real threat that a Eurozone member might have to leave the union for the first time.

The FTSE 100 has opened significantly lower this morning and has dropped as low as the 6,560 points as the possibility that Greece will exit the Eurozone seems very real. The Greek Prime Minister has announced that the country will hold a referendum this Sunday with the question being whether the country will accept or reject the latest agreement terms proposed by the ECB, the IMF and the European Union.

It goes without saying that the European markets will be focused on any developments from Greece and there are rumors that efforts are being made for the situation to be resolved much sooner than Sunday’s referendum. The next part of the drama however might be played on Wednesday as Greece’s current program ends and the IMF and ECB could ask from the country to repay the loans that they have undertaken all this time.

From my point of view, as long as this situation continues without a glimpse of hope the stock markets will remain under pressure. The FTSE is trading higher at this time having recovered from this morning’s lows and seems to have found some support around the 6,660 points. Nevertheless as soon as the US markets come online we could see another round of bearish pressures and I believe that the important support level lies around the 6,600 points.

If this level holds then we should see a consolidation effort between the 6,600 and 6,700 points waiting for fresh news out of Greece and the efforts undertaken behind the scenes to find some common ground. Otherwise the FTSE could again dive lower and the 6,550 points lows will be revisited with the view to go even lower. My advice is to be very careful and quick in your trades as we’re now treading uncharted waters.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.

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The FTSE 100 is mounting a reversal attempt but the 6,800 points’ barrier might be hard to overcome.

Alpesh 75By Alpesh Patel

Last week the FTSE 100 has been on a transitional phase as it was trying to find enough support around the 6,700 points’ area to attempt a reversal. We at InvestingBetter.com have been calling for a reversal scenario that could trigger at any time and could drive the FTSE higher given the proper incentive.

It seems that the FTSE has actually found enough support around that area and today it has mounted an attempt to climb higher. At this time the London index is trying to break above 6,800 points and I personally believe that this is the important pivot point for the days ahead.

If the FTSE manages to build a foothold around this area and investors realize that the UK still has a lot to do for interest rates to rise in 2016 then we could be in for a rally towards the 6,900 points. On the opposite case if the FTSE finds it hard to overcome this short-term resistance then I believe that a pullback towards the 6,700 points’ area is equally possible.

Given that there is a lack of any important reports scheduled for this week both scenarios are equally likely to play so we’d be better off approaching this from a technical standpoint. My analysis at this time points towards more gains so I am relatively bullish for the short-term.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.
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The S&P 500 hiccups in response to news from the Federal Reserve

The S&P 500 (ETF Proxy – AMEX:SPY) put another wild hiccup on the daily charts in response to news from the Federal Reserve this week.

You can see the turmoil and the rapid attacks from both bullish and bearish camps on the chart, but neither side seems to be able to put together any sustained campaign.  I keep an eye on this market for the day that order returns, but am focused on other opportunities…SPY 6-21

 

Opportunities such as Pfizer Inc. (NYSE:PFE) PFE has maintained relative weakness in spite of the short term spike in the market index.  Now, another lower high has formed.

I would expect to see price break down below the $33.75 level next week and would expect to see an acceleration to the downside by week’s endPFE 6-21

 

 

 

 

 

 

Apple Inc. (NASDAQ:AAPL) is a stock who’s bullish interests seem to have lost control of the trend.  It started with a double top at the end of April, but our proprietary indicators forecast one more bullish thrust.  That exhausted itself as a lower high, and I have been stalking this for a daily price pattern ever since.

It seems that the balance has shifted, and the bearish “coil” that has formed between the 50 SMA (Orange line) and the 100 SMA (Pink dotted line) is ready to release.  With protective stop losses set above the $130 area, I would expect this stock to break down with conviction this week.

AAPL 6-21

 

 

 

 

 

 

Morgan Stanley (NYSE:MS) Is pausing near highs as it digests its recent gains.  I would let it breath and expect to see it retest the highs by the end of the week.

The odds according to our proprietary measurements indicates only a 60% chance that we break out to a new high, so I will be on the lookout for any signs of a double top or false breakout.

MS 6-21

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Bo Yoder´s S&P 500 update

The S&P 500 (ETF Proxy – AMEX:SPY) has pulled back to support, which would normally be seen as a buy signal by those with a bullish bias. I predicted that this pullback would fail in last week’s column, and we see the failure starting with a lower high during last week’s session.
SPY 6-14

Pfizer Inc. (NYSE:PFE) is a stock with an interesting reversal pattern showing.   There is a head and shoulders reversal pattern on the weekly chart, and if you look at the daily chart shown here, you will see another head and shoulders pattern forming at the $34.40 level.

These stacked bearish patterns increase the odds for PFE to begin dropping in earnest, and I would be interested in short exposure here with protective stop losses set above the highs near $35.20.

PFE 6-14

Morgan Stanley (NYSE:MS) Is my star performer as it reaches up to test the $40 per share area.  I would expect to see a solid correction form now, but with the strong bullish reading I am getting, would be happy to let it wiggle and “breath”.

MS 6-14

JP Morgan Chase (NYSE:JPM) “setup”, than flushed out the stops the very next day as price shrugged off the lack of bullish power and pushed higher to close out for a loss.

JPM 6-14

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The FTSE’s outlook is strongly connected to this week’s FOMC meeting

This week finds the FTSE 100 trading just shy of the 6,700 points’ level, a support area that has limited the index’s price action over the past months. I believe that it is important to assess the FTSE outlook over the next few days coming from a technical and a fundamental standpoint so we can be prepared for the events to come.

On the one hand many analysts suggest that the FTSE will have a hard time breaking lower from this important floor of support and the reason is that the current decline has run an overextended rally lower over the past couple of weeks and one can suggest that the momentum has been diminishing recently.

At the same time though for the 6,700 points’ support to break we would need a substantial fundamental trigger. Looking into the next days’ calendar we find that the FOMC meeting on interest rates’ policy in the US is due for later this week. There is increased speculation that the Fed will move forward to prepare investors for a rate hike in the next couple of months and that could change things a lot.

Such a move from the US central bank would mean losses for the global stock markets as money supply in the US will not be as cheap as before. So would that development, if it takes place as expected, mean that the FTSE will lose the 6,700 points and if so where next? I have explained in my previous notes that I think that the UK and US stocks markets have different outlooks and a decline in the US on the back of an expected rate hike wouldn’t necessarily translate the same for the UK.

However given how interconnected markets are these days the initial reaction would be the same hence I am worried whether the FTSE will be able to remain afloat this week should the Fed move forward and announce plans to raise rates. If the break does take place then I would be looking to short the index and focus my targets around the 6,650 and 6,625 points’ areas.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.

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S&P update with Bo Yoder

The S&P 500 (ETF Proxy – AMEX:SPY) as predicted last week was unable to follow through after its most recent breakout.  I still see this market as mostly risk without all that much reward unless you are scalping intra-day (Don’t misunderstand…The daily is a mess, but there is still TONS of opportunity there in the smaller time frames if you are able to monitor the intra-day action.).

SPY 5-29

Proctor & Gamble (NYSE:PG) drifted lower out of its bearish flag formation without offering me an entry.  Now, it is testing the lows without any bearish power to act as confirmation.  I would expect to see this low produce a snapback, and if already involved would take this as a signal to take profits and move on to the next trade.

PG 5-29

 

Patience in Morgan Stanley (NYSE:MS) is being rewarded as my prediction comes true that this stock would continue to grind higher.  I am however worried about the lack of bullish power in this last push higher.  The odds for a double top to form are high, (60%-70%) and I would be very aggressive to take profits in full if the daily chart confirms a double topping pattern next week.

I would want to see a solid close above the $39 per share area before relaxing and trailing stops to let the trend continue.MS 5-29

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Increased volatility expected for the FTSE this week leading up to the US jobs report

Just another week of ups and downs for the FTSE 100 over the past few days with the London index trading between its recent 7,000 highs and 6,950 points area. I have mentioned on my previous note to you that the FTSE looks directionless over the past couple of weeks and its outlook haven’t changed since.

However I am expecting volatility to increase this week and the upcoming economic reports pretty much guarantee a more active week. That’s not to mean that the FTSE will finally decide on a direction since we could be looking at another week of sideways trading between the 6,900 and 7,050 points but nevertheless we’ll have something new to talk about.

Regarding the tactics I am looking to employ this week, I will focus on the very short-term intra-day price action of the index and try to capture as many points as I can before the FTSE turns around again. This is due to the number of reports scheduled for release during the next few days leading up to the Non-Farm Payrolls report from the US on Friday.

My primary scenario at least for the first couple of days of the week suggests shorting the FTSE if it breaks below Friday’s low around the 6,960 points. My first target would be last week’s lowest level at the 6,920 points so I need to be fast and decisive if I am to make any profit from such a small movement. Other than that if the FTSE fails to break lower than this level I will probably look for a reversal towards the 7,000 points once again.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.

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