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Wild Moves in the FTSE 100, Fear and Greed

The rally extended yesterday and the moves are wild. On Monday the index was down 288 points, on Tuesday it was up 182, on Wednesday down 102 and up 212 yesterday. How often do we these kind of moves? Rarely. In a panic driven market the moves will extend, so if you are going to go short you must do so as high as possible.

This of course has a disadvantage, if the limit order is too high you risk missing the move. That’s the dilemma we face in a panic driven market. I would rather miss a potential profit than lose money, so this time I am going short right at the top of the range. I have also sold calls as well, these should make money. In fact trading options in this market is the best strategy because there is no stop loss in the way. To follow my option trades click here.

The good news is that markets don’t stay volatile for ever, volatility will drop and trading conditions will return to normal. The rebound in stocks will relieve the oversold condition on the 13-day BTI and Top 20 Differential. This could happen today or early next week. Once the indicators are no longer oversold the FTSE will plunge again.

Today’s FTSE 100 Binary Tip

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Binary betting on the FTSE 100 is fun. We tell you if the FTSE 100 will close up or down at 16:30. Click here to learn more about binary betting.

FTSE100 set to remain largely unchanged this morning | 28 August 2015 | Stock Market Wire

The headline index is tipped to start the last session of the week broadly flat, according to financial websites, with a sense of investor caution, given the recent market volatility, likely to hamper any significant directional move heading into the Bank Holiday weekend...

Nevertheless, US and Asian markets continued to push higher overnight.

US & ASIA

In the US last night, the Dow gained 369 points to close at 16,655, the Nasdaq added 115 points at 4,813 and the S&P 500 climbed 47 points higher to reach 1,988.

In Asia today, the Nikkei was recently up 574 points at 19,148 and the Hang Seng had gained 127 points at 21,968.

WTI crude oil traded at $43.09 a barrel and Brent at $47.85.

Gold settled at $1,130 an ounce.

LONDON MARKETS

In the corporate diary today, a trading statement is due from Computacenter and interim results are expected from Novorossiysk Commercial Sea Port, 888 Holdings, Henry Boot, British Polythene Industries, bwin.party digital entertainment, Computacenter, Candover Investments, Chesnara, Cathay International Holdings, Charles Taylor, Exova Group, Huntsworth, Harworth Estates Group, John Laing Infrastructure Fund, Kenmare Resources, Lavendon Group, MHP S.A GDR, Marshalls, Matomy Media Group, No

via www.stockmarketwire.com

S&P 500 at key resistance

The rebound that follows a third of a third which is the most powerful wave down so far, tend to find resistance around the 38.2% retracement. This level is 1957 which is where the index is in pre-open. For this reason there is an increased probability that the rally will run out of steam.

Economic Calendar

Important announcements today (UK Time):

Today	13:30	US GDP
Today	13:30	US jobless claims
Today	15:00	US pending home sales

FTSE 100 rally will run out of steam

The roller coaster continues, the FTSE was trading near 5950 at the close yesterday, today it is back to 6080 in pre-open thanks to a surge on Wall Street. The US indexes finished up nearly 4%, but this is what you would expect when a market is split between fear and greed. These sharp moves up and down are typical in a fourth wave. When the market is near the lows the bulls will step in. When the market rallies those who are still long use this opportunity to unload shares, this creates a trading range or sideways move. This is why fourth waves are often sideways.

The FTSE is back near the top of the first bounce which is the high on 25 August [6115.7]. If this level marks the top of wave iv (circle) the index will decline. Going short here is fine but not ideal because the timing indicators are oversold. Both 13-day BTI and Top 20 Differential are oversold and when they are oversold the FTSE could rally further. The best short trades are when the timing indicators are overbought, this normally occurs after a strong rally.

For this reason there is a chance the rally will extend past 6115 and the move is counter trend and when the timing indicators move to overbought the FTSE will run out of steam and the next leg down will start.

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Today’s FTSE 100 Binary Tip

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Binary betting on the FTSE 100 is fun. We tell you if the FTSE 100 will close up or down at 16:30. Click here to learn more about binary betting.

Economic Calendar

Important announcements today (UK Time):

Today	13:30	US durable goods orders
Today	15:00	FOMC member Dudley speaks

China: First -- Freefall. Then -- Panic. Now What?

How does the Chinese market meltdown fit into Asia BIG Elliott wave picture?

By Elliott Wave International

Yes, China has crashed. But what about the big picture?

Learn more in this new interview with Chris Carolan, Elliott Wave International's Global Opportunities Expert and recipient of the 1998 Charles H. Dow award.

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Get More Analysis from Chris Carolan On Tuesday, August 11, China abruptly devalued the yuan. See how Chris Carolan helped subscribers anticipate the devaluation of the yuan. See his charts and read his analysis from recent issues of The Asian-Pacific Short Term Update. Read Chris' analysis and listen to his interview now >>

This article was syndicated by Elliott Wave International and was originally published under the headline China: First -- Freefall. Then -- Panic. Now What?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Economic Calendar

Important announcements today (UK Time):

Today	09:00	German Ifo survey
Today	14:45	US services PMI
Today	15:00	CB consumer confidence
Today	15:00	US new home sales