Indices News

by, James A. Hyerczyk Traders continued their rout of the FTSE 100 on Wednesday, driving the market through psychological support near 5200.00, setting up the possibility of a complete washout to the downside. Volume picked up considerably, reaching over 1 billion shares as liquidation of long positions continued without any signs of bottoming. Volatility was present during intraday pockets of time, but for the most part, the sell-off was orderly as the market demonstrated a clearly defined lower-top, lower-bottom swing pattern. Chart analysis suggests that there is no specific support level identified at this time. This typically means that a chart pattern rather than a price level is likely to turn the market higher. Now that the former support level at 5156.31 has been breached by the trade to 5139.78, it should become new resistance. Additionally, a close above this level may be a sign that oversold conditions have prevailed and that short-traders are beginning to lighten up their positions. Downside momentum is...

by, James A. Hyerczyk The liquidation continued in the FTSE on Tuesday, but volume was limited as traders seem to have entered a pre-holiday mode. At times it looked as if the short traders were getting ready to lift their positions and call it a week. There also seemed to be a constant bid in the market which prevented a sell-off from occurring like it did on Monday. This type of trading action allowed the short-traders to exit in an orderly fashion, setting up a possible short-term bottom. Besides the volume, Tuesday’s price action seemed to be indicating a slight shift in sentiment. This may have been because the FTSE was trading inside of one key retracement zone and rapidly approaching another. Based on the August low at 4791.00 to the October high at 5747.30, the first key retracement zone is defined as 5269.15 to 5156.31. Additionally, the October range is 4868.60 to 5747.30 with a retracement zone at 5307.95 to 5204.26....

by, James A. Hyerczyk After forming a descending triangle featuring a series of lower tops and a flat bottom, the FTSE 100 index finally broke through support at 5338.40, triggering a substantial break. Although short-term the index appears to be oversold, traders are likely to sell any short-covering rally as market sentiment has definitely shifted to the downside. Now that a top has been clearly defined, traders will be looking for retracement zones which may be attractive to bottom-pickers or appealing to those looking to lighten up successful short-positions. With the fundamentals and the trend setting a negative tone in the marketplace, the odds will be against new longs who believe they are buying value. Even though a short-covering rally could be triggered if bearish traders lighten up. The market appears to be in the strong hands of short-sellers who are likely to put up stiff resistance. Technically, based on the August low at 4791.00 to the October high at 5747.30, the key...

by, James A. Hyerczyk With over half of November completed it is surprising that the FTSE 100 is still locked inside of October’s range of 4868.60 to 5747.30. Given the heavy volatility in recent months, one would have expected it to continue, but that is not how volatility works. It gives a trader the feeling of complacency when it is low, and it invokes fear when it is high. The recent sideways action in the FTSE has done a lot to cool down a volatile market. Sure there have been violent swings, but nonetheless, the market has remained rangebound. Since volatility tends to move from low activity to high activity and vice versa, this current period of low activity is likely sending a signal that a huge move is looming. The charts are indicating a noticeable bias to the downside. Since topping at 5747.30 in late October, the FTSE has embarked on three consecutive weeks of lower highs. This may be a sign...

by, James A. Hyerczyk The US500 index CFD formed a 3-Point Extension Fibonacci pattern on the 240-minute chart, setting up a possible retracement of the swing from Point B to the recent bottom. This particular pattern offers opportunities for both the trend trader and the counter-trend trader. The 3-Point Extension Fibonacci pattern is made up of three-fourths of the ABCD pattern sometimes called a “lightening bolt” pattern. Its counterpart is the 3-Point Retracement Fibonacci pattern. The difference between the two is the swing from Point B to Point C. With the 3-Point Retracement Fibonacci pattern the break from Point B to Point C is only a partial correction of Swing A to Swing B. The 3-Point Extension Fibonacci pattern actually “extends” the break from Point B to Point C through the previous bottom at Point A. With the US500 the top at Point B or 1273.90 completed its downswing at Point C or 1208.90. This move took out the previous bottom at Point...

by, James A. Hyerczyk Downside pressure continued on the FTSE on Thursday, but this time it was accompanied by big volume, once again confirming that the index seems to be going through a major distributive cycle. Last week the market also had a billion plus share day as it moved violently to the downside, but this was followed by consecutive lower volume days. If the market doesn’t follow-through to the downside on Friday, or if it does on low volume, then consider it oversold and watch for a bear trap. According to the daily swing chart, 5360.20 is a minor bottom and 5338.40 is a main bottom. If the main trend is going to turn down then the market will take out the latter of the two. This may or may not trigger an acceleration to the downside, but it is a significant price level and is likely to control the direction of the market moving forward. Once the trend turns...

by, James A. Hyerczyk After days of compressed ranges, wild swings and low volume, the FTSE finally broke out to the downside with a vengeance as sellers pounded the market into the close. Since last week’s rapid rise to 5616.00, volume has been steadily dropping off, but the market has remained in a tight and narrow range. On Wednesday, short-traders finally reappeared and took control of the market. With two tops clearly defined at 5747.30 and 5616.00, traders are likely to go the way of least resistance. This means that they are likely to go after the pair of main bottoms at 5360.20 and 5338.40. A break through these levels will be a sign of weakness and turn the main trend to down. Based on the long-term range of 4868.60 to 5747.30, the first downside target is the retracement zone at 5307.95 to 5204.26. Even if the trend changes to down, traders should watch for a possible technical bounce to the upside, triggered...

by, James A. Hyerczyk The FTSE closed slightly lower on Tuesday following a slow almost lifeless trade. Volume was light for a fourth consecutive day as an air of uncertainty continued to dominate the trade. With the index trading at or near key 50% levels, traders opted to move the market in a sideways fashion. Without clarity and conviction behind a decision, the index is likely to remain in a range over the short-run until either the bulls or the bears begin to commit to a side. The best way to look at the FTSE at this time is to study its ranges and their retracement zones. The main range is the October range of 4868.60 to 5747.30. Its retracement zone is 5307.95 to 5411.64. The second important range is 5747.30 to 5338.40. This range has produced a retracement zone at 5542.85 to 5591.10. Finally, 5338.40 to 5616.00 is another range with a retracement zone at 5444.44 to 5477.20. The sideways nature of...

by, James A. Hyerczyk The rangebound trade continued in the FTSE on Monday. On top of the tight ranges, volume has been progressively dropping since reaching a peak at 1,074,608,400 on November 9. Monday’s volume was a paltry 687,675,200 shares. This is not good if you believe this market is set to launch another move to the upside. The main range is 5747.30 to 5338.40. The retracement zone created by this range is 5542.85 to 5591.10. Last Friday’s high at 5616.00 put the market on the bullish side of this range indicating strength, but the market could not hold on to its gains. Monday’s close at 5519.00 put the market on the bearish side of this range indicating weakness. This is the nature of the sideways beast. One day it looks good to the upside, the next day it looks like a collapse is imminent. A short-term range has been formed between 5338.40 and 5616.00. The retracement zone of this range is...

by, James A. Hyerczyk The FTSE index closed slightly higher for the week, but inside of the previous week’s range. This pattern typically indicates impending volatility. The strong comeback late in the week was impressive as it regained most of the huge loss from an extremely bearish session earlier in the week. The only problem is the volume was smaller on the up days than it was on the down day. This is an indication of short-covering rather than new buying. The main range is 4868.60 to 5747.30. This range was created in October. The fact that the index is still trading inside of last month’s range is the very definition of uncertainty. Short-term traders are dominating this index at this time, creating bullish scenarios that quickly evaporate and bearish formations that disappear just as fast. Based on the main range, the retracement zone at 5307.95 to 5204.26 once again held as support. In addition, the main bottom at 5338.40 also provided...