Good morning. A bit unfortunate yesterday for my long order at 6520, as the low was 6521.3 and miss, before getting the rise to 6591 as expected, though it took all day to get there. Today it will be all eyes on the Fed and the prospect of rate rises, though a poor consumer confidence report out in the US yesterday might temper any enthusiasm to raise rates in September. I think he UK will follow the US lead and wait to see the effect of raising rates. Don’t want to do it too soon really….
US & Asia Overnight from Bloomberg
Asian stocks rose for the first time in six days, following U.S. and European shares higher, as investors awaited an update on monetary policy from the Federal Reserve.
The MSCI Asia Pacific Index gained 0.4 percent to 140.85 as of 9:02 a.m. in Tokyo. Better-than-estimated earnings from Pfizer Co. to Ford Motor Co. and mergers among European companies fueled Tuesday’s rally outside Asia, with a gauge of global stocks snapping a five-day slump. Traders will be combing the Fed’s post-meeting statement on Wednesday as policy makers assess the strength of economic growth amid plunging commodity prices and Chinese financial-market turmoil.
“Often when a lot of stocks get washed out, we get a rebound,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which oversees A$160.5 billion ($117 billion), said by phone. “The Fed will be focused on global conditions. What’s happening globally can’t be totally ignored.”
While economists see no chance the central bank will raise rates this week, they put the odds of a September boost at about 50 percent, a Bloomberg survey published July 22 showed.
Fed Chair Janet Yellen has signaled that the central bank is likely to lift rates this year, and emphasized that the pace of subsequent increases would be gradual. Data showed consumer confidence slumped in July by the most since August 2011 as Americans became less upbeat about prospects for the economy, employment and their finances.
Japan’s Topix index gained 0.5 percent. Fanuc Corp. slumped 0.8 percent in Tokyo after lowering its full-year profit forecast as demand from the information-technology industry declines.
Australia’s S&P/ASX 200 Index advanced 0.4 percent and South Korea’s Kospi index added 0.8 percent. New Zealand’s NZX 50 Index was little changed.
Futures on the FTSE China A50 Index, a gauge tracking the country’s biggest mainland stocks, added 1.1 percent in most recent trading, while contracts on the broader Shanghai Shenzhen CSI 300 Index were down 2 percent. The Shanghai Composite Index ended Tuesday 1.7 percent lower, paring a slump of as much as 5.1 percent following Monday’s 8.5 percent tumble.
Hang Seng China Enterprises Index futures and contracts on the Hang Seng Index both rose 0.3 percent. E-mini futures on the S&P 500 were little changed. [Ref]
So far yesterdays 6591 has held as resistance still so with the daily pivot and the bottom of the 30min channel at 6560 I am thinking that we have an initial drop to this level (maybe a slow drop). It might be a fairly flat day while we await direction from the Fed once again, with rates expected to stay the same for the moment but looking for clues as to when they may or may not rise. Below the pivot we have support at 6535, with the bottom of the 20 day Bianca below that at 6476. Not sure it will get that low today.
Above the 6591 resistance area we have the 200ema on the 30min, followed by the 10 day Bianca at 6612 which may be worth a small short, followed by the tops of those 10min and 30min PRT channels both at 6622. We then have 6657 with the 25ema on the daily as a possible stronger shorting area. Generally I think it will be fairly flat till later (7pm) when the Fed roll into town.