6840 support then 6821, 6860 resistance then 6893

Good morning. Bit more bearish than expected yesterday but the bottom support level of 6824 held alright and we managed to gain some points with that long having been stopped out on the long off the pivot. US news was better than expected yesterday, so just a bit of profit taking that could possibly gather some momentum and turn into the sell off. FTSE has regained ground and isn’t really that far off its most recent highs, so if the bulls can play today and push up then the top of the Bianca channels at 6893 look a good target. Iraq is still a cauldron of tension which flared up again yesterday, will have to see how that pans out, but can’t say its a surprise. The were always going to just wait till the troops pulled out and then resume attacks.

Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index retreating from its highest close in six years, after U.S. stocks dropped by the most in three weeks. New Zealand’s dollar jumped after its central bank raised interest rates, while platinum and nickel declined.

The MSCI Asia Pacific Index decreased 0.4 percent by 11:49 a.m. in Tokyo after the highest close since June 9, 2008. Japan’s Topix index slid 0.3 percent before the Bank of Japan starts a meeting today. Standard & Poor’s 500 Index futures were little changed. The kiwi climbed at least 1 percent against 31 major peers after the Reserve Bank signaled more tightening to come. Australia’s currency was lower after a surprise drop in employment. Platinum fell 0.3 percent and nickel slipped 0.4 percent.

The U.S. reports on initial jobless claims and retail sales, while a report is forecast to show a pick up in European industrial production after the World Bank cut its outlook for global growth yesterday. Australia shed 4,800 jobs in May, when economists had predicted a gain of 10,000. Stocks have retreated since the market value of global equities hit an all-time high of $64.96 trillion on June 10.

“We’re going to see a bit of a downside following a slide in U.S. equities,” Chris Weston, chief market strategist at IG Ltd. in Melbourne, said by phone. “A pullback in developed markets would be very positive as it will help bring fresh money in. Unless we see the fundamental picture dramatically changed, we are unlikely to see a huge correction.”

Shares Slide
The Dow Jones Industrial Average dropped 0.6 percent and the S&P 500 slipped as investors considered equity valuations. The S&P gauge trades at 16.4 times the projected earnings of its members, up from a multiple of 14.8 — its lowest valuation this year — at the beginning of February. The gauge has rallied 12 percent since then.

The MSCI Asia Pacific Index advanced 4.8 percent to 144.55 this quarter through yesterday. Samsung Electronics Co., Commonwealth Bank of Australia and SK Hynix Inc. have been the three biggest supports to the measure. The Asia-Pacific gauge trades at 13.2 times estimated earnings compared with a three-year average of 12 times.

The Topix is retreating from its highest close since Jan. 29 amid speculation the Bank of Japan will refrain from expanding stimulus at a meeting that starts today, diverging from the European Central Bank that unveiled record easing last week.

Hong Kong’s Hang Seng Index (HSI) fell 0.5 percent and a gauge of Chinese companies listed in the city tumbled 1 percent. Australia’s S&P/ASX 200 Index fell 0.5 percent and the so-called Aussie retreated 0.1 percent to 93.77 U.S. cents after the employment report. South Korea’s Kospi index retreated 0.2 percent as the central bank left rates unchanged.

Blankfein Concern
Investors are also considering the long-range market repercussions after U.S. House Majority LeaderEric Cantor lost to a Tea Party-backed candidate in yesterday’s primary in Virginia, fueling concern that gridlock will intensify in Washington. The seven-term House veteran was an ally for Wall Street on issues ranging from the 2008 Troubled Asset Relief Program to defending the Export-Import Bank.

“I hope it doesn’t mean that it will be impossible from this point forward to compromise on issues like the budget, immigration policy,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said in a television interview with CNBC today. “This is not necessarily a good signal, but we’ll have to see how this plays out.”

Since Republicans took control of the House in 2011, debates over the debt limit led to 11th-hour showdowns that raised concerns that the government could default on its obligations, roiling financial markets. Congress voted in February to suspend the limit until March 15, 2015.

Treasuries climbed for the first time in four days yesterday, driving down the 10-year yield by 1 basis point to 2.63 percent. U.S. government securities had been falling since the Labor Department reported June 6 that U.S. employers added more than 200,000 jobs for a fourth month in May.

FTSE Outlook

Todays pivot is 6845 which is pretty much were we are as I write this, the 10 min chart is also offering support at this area as well as the 10ema on the 30 min, so if it holds then we should get a push to 6865 initially, and as I mentioned above, the top of the Bianca channels at 6893. The S&P held the bottom of its Raff channels yesterday at 1940, though it was lacklustre – the dow was -130 at one point as well – so the fact that the FTSE is back at 6850 shows it is pretty resilient. If it does drop then the support is 6821 for today, followed by the bottom of pretty much all 3 Bianca channels at 6805ish.

Initial resistance is 6853, if the bulls can surpass that then 6865 and 6893 are next.

Drawing the arrows this morning seems tricky – its could go anywhere. I think an initial rise to 53, dip again to the coral area on the 30min, rise to 6860ish (top of that 30 min channel). there it will either break out to hit 6893, or drop again to 6821. Messy!