Time to Short the DJ30 and FTSE100

We have been waiting for this moment for quite some time. Our technical models are beginning to turn bearish on global indices, similar to our prior signal in the IBEX35.

The moderate recovery in global indices, aided by artificial liquidity (courtesy of the United Stats) violated many predictions of well-respected analysts, which we sincerely hope not to join.

Our entry is combined of multiple times with a desire to remain in the trade for several weeks.

DJ30 Technical Analysis

Firm resistance is noted at 17,150 with a notable bearish divergence in the MACD. A weekly entry is also possible (chart not displayed) but we do not wish to wait for the end of the week as the RR may be affected.

We are therefore taking this trade on a 4hr chart, targeting 16,750. We believe our technical models have found the bearish crack in the heel of global markets.

Click on chart to enlarge:

DJ30 technical analysis

DJ30 4hr Chart

A possible scenario that could trigger a mass risk-aversion are more firms defaulting in China or the fear of the upcoming European stress test. We would like to repeat that we have no indication this will be a moderate correction. We will realize partials in accordance to the trend of the DJ30.

DJ30 Trade Details

DJ30 short @ market price (17,127)
Take profit: 16,750
Protective stop: 17,216
Estimated duration: 35 days
Risk Ratio (RR): 1:3 (approx.)

FTSE100 Technical Analysis

The FTSE100 has affirmed a bearish engulfing on the monthly chart after re-testing 6,875. This is an indication we may be in front of a moderate trend reversal.

Click on chart to enlarge:

FTSE100 technical analysis

FTSE100 Monthly Chart

Our main concern is that the entry will be imperfect as the monthly candlestick is still open, which may result in a limited drawdown.

After a great deliberation we have decided to take this short trade due to its RR but we will not hesitate realizing partials with a loss and re-enter the market at a better price.

FTSE100 Trade Details

Short @ market price
Take profit:  6,417
Protective stop:  6,920
Estimate duration: 90 days
Risk Ratio (RR): 1:3 (approx.)

Updates regarding the trades will be posted here.

22/07/14 UPDATE: DJ30 is trading at 17,097 at the time of this writing. Please note you may exit the trade at any time. You may disagree with our analysis, which is totally acceptable. We are continuing to monitor the market and will update this page when we find relevant.

23/07/14 UPDATE: DJ30 is trading at 17,063 at the time of this writing, ensuring the trade is in +50 points profit (approx.). We are closing 10% of the short trade at market price. The FTSE100 is trading at our entry at the time of this writing.

25/07/14 UPDATE: DJ30 is trading at 16,974 at the time of this writing, ensuring our short trade is in approximately +150 points profit. We are closing 45% of the trade at market price and shifting our protective stop to the entry.

Click on the chart to enlarge:

DJ30 short trade update

DJ30 25/07/14

25/07/14 UPDATE II: As the selling continues, DJ30 is trading at 16,917 at the time of this writing. We are closing another 10% of the trade. The FTSE100 is trading at 6,781 at the time of this writing. We are closing 10% of the short trade.

28/07/14 UPDATE: DJ30 and FTSE100 are heavily sold at the time of this writing. We are lowering the protective stop order for DJ30short trade to 16,995 and closing another 10% of the trade at market price (16,895). The FTSE100 is trading at 6,761 at the time of this writing, We are closing 25% of the trade at market price and shifting the protective top to the entry.

29/07/14 UPDATE: Both trades were stopped out but due to profit liquidation and readjusting the protective stop loss order we were able to realize a decent profit out of the market bears.

We have also realized a fairly decent profit in our corn trading signal.

ddmarkets trading signals service