FTSE bears eye 6000

Updated 1321 GMT

• Noble Q3 profit crashes 83%
• Options traders bet on 6000
• Mid-session uptick

Noble fundraising

Energy and mining stocks drove the FTSE 100 index back to monthly lows on Friday, after Thursday’s sharp sell-off from a resurgent dollar.

Rolls-Royce shares extended losses, after a near-20% collapse the day before exacerbated a European market rout.

Another leg of the dollar’s recent advance against the euro on Thursday had hurt resources, particularly oil and copper, with persistently weak demand dogging related shares.

And whilst risk-seeking typically rises when ECB President Draghi affirms his ‘lower for longer’ view, the effect was offset on Thursday after he noted a lack of ‘healthy’ inflation.

On Friday, US crude oil bounced off lows on the $41 handle, last seen in August, whilst copper ticked up from 6-year lows.

But few had illusions about a sustainable comeback by energy and metals which are pivotal for the UK’s principal index.

A 10% slide by Singapore commodities trader Noble Group overnight underscored this pessimism.

It reported an 83% fall in Q3 profits and announced a $500m fundraising.

Christmas putting

These negative intraday cues kept the FTSE in the red past mid-session, with futures on the index the worst, with a 1.1% loss.

ICE Europe FTSE 100 broke below a descending line from late October in the four-hourly view, eyeing early October consolidation around 6100 for support.

Further down lay 61.8% of August/October’s bounce (6063.9) and late-September consolidation c. 6018.

The Slow Stochastic momentum gauge was oversold. Theoretically that suggested a correction was due, but not necessarily imminent.

Longer-term intervals gave similar readings.

Caution ahead of US Retail Sales, due at 1.30 GMT, also weighed against buying, whilst bears stalked ‘darker’ markets too.

Short-term options trading on the FTSE skewed negative.

Puts on 6000, expiring 18th December, showed the biggest open interest across the curve by far at 30,840.

FOUR-HOURLY CHART

Please click image to enlarge

Air test

The UK 100 Daily Funded Trade offered by City Index showed clients dialled bearish bets back a bit, later on Friday.

The half-hourly view revealed a trendline collapse that was similar to other FTSE 100 derivatives.

An uptick was eyeing Thursday’s lows, helped by short-term momentum swinging up from oversold.

The trade was set to meet the trend around mid-6130s, though momentum resistance could prevent a return to those levels anytime soon.

The next test of the strength of any rebound, would be resistance at 6168.

Failure would suggest a return to session lows around 6104, where a bunch of stops were probably nesting, at the time of this update.

There seemed little guarantee the market would not fall further.

HALF-HOURLY CHART

Please click image to enlarge