I am on Bloomberg Money show over the weekend discussing all major markets.
8th February 2008 - 08:58
Good morning,
Last night I went long the FTSE pretty much after the close. My thinking was " we just hit support at 5683 after losing 150 points on the day. How bad is it going to be tomorrow(today)". It was a combined gut call with a little support in the market at the 50% level.
As you can see from the chart we had rallied in a 5-wave sequence up. We hit 61.8% retracement, so I am now betting that we will have a retracement of the move down yesterday. (take a look at the DAX for a better feel for the state of the market).
Click to enlarge the chart
The FTSE map is also pointing to higher prices. However, once the US open kicks in, the FTSE is reversing according to this chart. I will at least remain long until then, unless I see a total deterioation of the market between now and the US open. The Map is a proprietary indicator you can subscribe to. It shows the proposed path for the day in 8 different markets.
Click on the chart to highlight the image.
The SP500 is the chart that is not playing along with the logic of a rally in Europe. The SP500 is in a downtrend. There is a gap behind us and despite the good reversal last night, we need to get above 1348 before we see a reversal of trend, at a minimum. If we get above 1348, then the gap starting at 1363 is a good target to begin with. I am not sure that will happen today.
Click on the chart to highlight the image.
Finally the DAX- we saw a great climax pattern yesterday with lots of volume, and then a subsequent rally. The Dax has a great propensity to lead the US and the FTSE. Any move above 6890 in the futures ( 6860 in the cash market) should be seen as bullish. I am slightly long the DAX, but not as much as I would like to be if the DAX can get above 6860.
CONCLUSION:
I am thinking that we will have a positive market up until the Dow opens. From then onwards the Map is pointing lower and the Dow is pointing to a trend-day, i.e. a one-way direction all day. I am sure the US futures will alert of to the direction as we approach 14:30. I will prefer to be long the market today, and I will use the first 15-20 of trading after 14:30 to gauge if the Dow will build on yesterday's gains. At least I will be aware that 1348 is resistance.
HARD RIGHT EDGE WORKSHOP:
I have set a couple of dates for the next workshop. If you want an invitation, please sign up here. I will email you the invitation over the weekend with course details, price, venue etc.
The FTSE 100 chart below points to more downside. I think there will be important support at 5750, which would be a 300 point downmove for the FTSE. Take a look at the chart and notice the symmetry in the current phase and compare it to the advance in December.
Click on the chart to highlight the image.
The SP500 had a gap down yesterday, which is not good news for the bulls. I think it means more downside coming, although I still think that the lows from last week are going to hold. The current retracement is 20 SP500 points, or around 200 Dow points. It is easy to forget in this volatility to adjust for the expanded ranges. Most people would say a 200 point rally in the Dow is a sign of strength, but in the current climate it is just another retracement.
I initiated my Gold short at $917, and my stop is at $912. I think I will be stopped out today.
I will send out the invitations to the Hard Right Edge Workshop later tonight. If you want to receive the invitation, please sign up here.
The Matrix Newsletter has re-launched and focuses solely on the FTSE, the DAX and the SP500 togher with Gold and Cable. It is completely revitalised and focuses in great details on explaining how the Matrix turns are calculated.
This month for example there are 5 charts alone for the SP500, with short-term views and longer-term views. The change came about because very few people were trading the stocks in the newsletter. As a result of it the content has changed and the stocks are gone. Now it is solely on direction of the main indices and on educating you on the use of Matrix time cycles.
You can subscribe to here. I think it is safe to say the improvement is significant. It looks very stylish and it exceptionally rich in content. There is however a whole lot of bad language, but that kind of makes it fun to read.
ANALYSIS
I am on Bloomberg Money show over the weekend discussing all major markets. 
