Good morning. Interesting day first thing with the drop as expected from the 6320 area down to 6260, before a second bite of the cherry at 6303 for a shorter run down. The bulls kept fighting back though and that 6330 level got hit – I thought it was going to blast through the 6345 stop level but it literally stopped dead there and dropped back down. Bit unlucky with that final short in the end. That said, I am not expecting us to push that much higher above the 6346 level as the 2 hour chart has resistance there and has gone bearish, so a possible dip to 6150ish looks viable for the next move.
US & Asia Overnight from Bloomberg
Asian stocks climbed, building on their biggest five-day advance in almost four years, as Samsung Electronics Co. jumped after quarterly profit topped estimates and investors awaited a Bank of Japan decision on monetary policy.
The MSCI Asia Pacific Index rose 0.2 percent to 129.23 as of 9:03 a.m. in Tokyo, as Samsung rallied 3.8 percent to provide the biggest boost to the regional gauge. The company posted third-quarter profit that beat analysts’ estimates as the weaker Korean currency boosted component revenue and blunted the impact of price cuts on Galaxy smartphones. Japan’s Topix index added 0.2 percent before BOJ board members and Governor Haruhiko Kuroda decide whether to expand already unprecedented monetary stimulus.
“As chances for additional stimulus are very low, even if stocks rise early on anticipation of easing, they will probably pull back in the afternoon,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “And with Kuroda’s press conference coming after the market close, today might be a day of simply waiting for further clues on direction.”
Thirty-four of 36 analysts forecast that the Japanese central bank will forgo further easing, with just two predicting a move, according to a Bloomberg survey. Fifteen are forecasting additional stimulus at the next meeting on Oct. 30.
Australia’s S&P/ASX 200 Index slid 0.4 percent and New Zealand’s S&P/NZX 50 Index was little changed. South Korea’s Kospi index rose 0.4 percent. Mainland Chinese markets remain closed for a holiday, while Hong Kong is yet to open.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent after concern over pharmaceutical pricing and company earnings spurred a slump for drugmakers on Tuesday. The underlying measure slipped 0.4 percent to end its longest winning streak this year.
“The recovery in U.S. markets began to show signs of fatigue,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, wrote in an e-mail to clients. “There was little macro data out of note last night, which provided investors with time to analyze what had changed during the recent five-day rally and the answer was not a lot.” [Bloomberg]
I have a possible swing short entry around the 6347 area off the 2 hour chart so this is worth a go with a slight wider stop than I usually use for day trades with a view to holding this for a drop to the 6150ish area where there is support from the 25ema on the daily chart. Initially we are within a pretty decent looking 10 min channel. with resistance at 6330 first thing, and then 6345 later on, if we get a bounce from the 6303/6297 area – there is the bottom of that channel, the daily pivot and the bottom of the 10min channel at that area. I am wary of this bounce getting aead of itself as its had a good run and there are only so many up days you have in a row till the worm turns, profit is taken and we drop back down again. Generally I am feeling cautiously bearish at the moment.