FTSE 100: vertical drop at the close

A shortened trading session today with the market closing at 1230 GMT. All morning it drifted lower, then around midday started to recover and when i looked at 1210 it was down about 36 points. It then cratered in to the close, doubling the day's loss and closing down 71 points. Still not sure why, there was no 'news' to spark this late morning drop. HNY all!

FTSE 250

6 month daily chart

3 year weekly

weekly from 2000 to date

SPX 10x3 (big picture)

This 10x3 closing chart goes back to 2007. I have circled the 5 strongest columns of 'up' X's since the March 2009 low. Stripping out short term noise as a 10x3 chart would, this shows periods where the market rose uninterruptedly before experiencing a three box reversal.

We have had five columns where the index has risen by between 130 and 170 points before reversing to the downside, starting with that 15 box revesal from March 2009. What has been both notable (and impressive) about the most recent column is that at 17 boxes, it is the largest of the five - even stronger than the recovery off the 09 low. And impressive that it has taken place almost 2 years in to the market recovery.

The last two large columns of X's (15 boxes through to April 10) and 17 boxes (to Nov) have given activated targets to the upside of 1,500, bringing the possibility of an encounter with the 07 all time high. Remember, these targets are not always achieved but that is what the chart is currently saying! We may see a bit of resistance around the 1,270 level, a target given by a previous column of X's back in August 09! Useless for trading but quite handy for giving 'big picture' perspective.

FTSE 100 - all targets pointing higher

This is a 50x3 closing chart, based on yesterday's close and giving the 'big picture' from the 2007 peak. What previously looked like a forming double top pattern is now looking more bullish. The FTSE is currently at around 5,942 and if it can close above 5,950 or 6,000 and hold this level, that 7,250 target will become activated (the 6,500 target is already active).

For the bears, while the previous high in April has already been filled and there has clearly been resistance around this level, first in April and more recently in November. You can also have double top patterns without them being 'perfect' double tops but clearly to push the bearish case, we would need to see the FTSE consolidate at or below the current 5,850 box, them move lower in the New Year, which is still possible.

For now though the bulls have the ball and are advancing up the field. There are no obvious active downside targets. We therefore can't rule out a possible assault on the 2007 high. Maybe that is where we will see the 'true' double top.

Oil - heading higher

It may be a bit early to predict that oil will get back to those highs of 2008 but the short term picture is quite bullish. We now have a (blue) bullish support line, reversals to the upside taking out the previous highs and note too that the recent upward move has pushed oil above the previous resistance in April (circled in the chart).

Activated targets to the upside of $104 and $105.

US 10 year yield - onwards, upwards..

A nice looking chart this one, successive higher highs, reversals to the upside taking out the previous high, on four occasions. For now, activated targets of 3.55%-3.6% are in play although a bearish resistance line (red) needs to be overcome first.

Transocean (RIG)

Transocean, closing 1x3 P&F. All those red horizontal lines are previous areas of resistance where there has been a reversal and then a reversal to a higher high. At the very least, $80 looks achievable and is active.

FTSE 100 - update

A swift 200 point reversal in the last 2 days has wrecked the double bottom sell signal - bummer! The 5,050 price objective is no more. No obvious targets in either direction from here -will have to see how things pan out over the next few days, specifically the Irish Goverment's vote on its austerity budget on 7th Dec.