FTSE 100 Support 6935 6917 6915 6890 6880 6763
FTSE 100 Resistance 6932 6936 6942 6945 6994 7037

Good morning. Decent bounce from the pivot yesterday but only managed a high at 6955 before turning down – stopping just short of the top of the 20 day channel at 6960. Might be a similar pattern with bull Monday and bear Tuesday this week. Having closed at a record high last night the S&P has slipped back a bit, and my 2 hour FTSE 100 chart has turned bearish with resistance at 6945. Will the bulls manage to reach 7000?

US & Asia Overnight from Bloomberg

• Crude retreats before U.S. stockpiles data; nickel declines
• Dollar spot index sinks to lowest since June; won rises

Japanese stocks dropped as the yen surged to a one-month high, while gold advanced as a gauge of the greenback’s strength fell to its weakest since June.

The Topix index slid by the most in almost two weeks as the yen led gains among major currencies, eroding the competitiveness of Japanese exporters. U.S. equity index futures declined after the S&P 500 Index ended the last session at a record high. A gauge of the dollar’s strength slid to its weakest since June and gold climbed by the most in two weeks. Nickel retreated following its biggest jump this month.

Global equities are near a one-year year as lackluster data in the world’s biggest economies fuel speculation central banks will support growth with stimulus and loose monetary policy. The probability of the Federal Reserve diverging from its peers and boosting interest rates in 2016 is below 50 percent and that’s weighing on the dollar, which has lost ground versus 15 of 16 major peers in the past month.

Stocks

The MSCI Asia Pacific Index of shares was down 0.1 percent as of 12:38 p.m. Tokyo time, slipping from a one-year high. The Topix dropped 1 percent, while benchmarks in Hong Kong and Shanghai retreated from their highest closes in at least seven months.

Futures on the S&P 500 were 0.1 percent lower after the underlying measure rose 0.3 percent in the last session. Asset managers are favoring stocks over U.S. Treasuries, while active equity funds are the most bullish since 2008, according to Bank of America Corp.

Currencies

The yen strengthened 0.8 percent to 100.42 per dollar, while a gauge of the greenback’s strength sank 0.2 percent. The U.S. currency has weakened this month in the absence of signs that Fed policy is set to further diverge from that of the Bank of Japan and European Central Bank, which are boosting monetary stimulus as they seek to spur flagging growth.
Options show about 80 percent odds that the yen will touch 100 per dollar in the coming month, according to calculations by Bloomberg.

“The yen could test the 100 mark due to further softening of the dollar,” said Ray Attrill, co-head of foreign-exchange strategy at National Australia Bank Ltd. in Sydney. “A sustained break of that level would up the pressure on the BOJ to take steps at its September meet to support it.”

The MSCI Emerging Market Currency Index was near a 13-month high as the won strengthened 0.7 percent versus the greenback. The currencies of Malaysia, the Philippines and Taiwan added at least 0.3 percent.

The pound rose 0.2 percent to $1.2907, rebounding from a Monday close of $1.2880 that was the weakest since June 1985. The currency has lost more than 2 percent this month versus the dollar, the worst performance among major currencies.

Commodities

Oil fell 0.6 percent to $45.45 a barrel in New York as the market weighed expectations for U.S. stockpiles rising further from a record against speculation that informal OPEC talks next month may revive discussions to freeze output. It jumped 10 percent over the last three trading sessions as Saudi Arabia indicated it’s prepared to discuss stabilizing the market.

U.S. crude inventories probably increased by 900,000 barrels, rising for a fourth week and keeping supplies above the five-year average for this time of year.Most industrial metals slipped after an index of the main contracts traded on the London Metal Exchange posted the biggest gain in two weeks. Nickel dropped 0.6 percent in London, after climbing 2 percent on Monday, and aluminum was down 0.2 percent.

Gold added 0.5 percent, buoyed by speculation the Fed will be slow to raise U.S. interest rates. [Bloomberg]

FTSE 100 Outlook and Prediction

For today I am thinking that shorting the rallies is a good plan. There are a few resistance levels at the 6935 to 6945 level so this area is a good area to try shorting from. The 2 hour chart has gone bearish overnight, and we have dipped below the bottom of the 10 day Bianca channel at 6935 as well. So, we may well get a backtest of that before a bit more downside. I do think the market could do with a bit of a pullback rather than a straight-line assault on 7000, though with low volume summer trading, it could actually do anything. The 30min chart certainly looks favourable for a bit of bearishness at the moment, with the coral going red also, with resistance at 6942.

If the bulls were to break through 6950 today then I expect we will get a shot at 7000, and possibly the top of the 20 day Bianca at 7037, but just feels a bit of a big ask today. Maybe later in the week though. The S&P was trying for 2200 yesterday but fell short at 2194, and has dropped back to 2186 overnight.

So my plan is to short any early climb and hopefully run it for most of the day. Could do with a bit of momentum from the bears as it feels like they are on holiday at the moment!