6400, 6393, 6363, 6337, 6325 Support, 6440, 6461, 6471, 6495, 6531 Resistance

Good morning. Well that was a pretty flat day and the 6383 long spent a long time doing nothing much, till the end of the US session when it eventually decided to run to the 6435 target. Prices stalled around there, awaiting the Fed later today regarding QE3 and its most likely demise. How long till QE4 then….?

All fairly quiet yesterday (everyone on half term?), though initially today the FTSE needs to break 6440 (yesterdays high) to invalidate the chance of a drop to 6325, though there is initial support from the pivot at 6393. If it breaks 6440 then the top of the 20 day Bianca at 6471 is in play.

Asia Overnight from Bloomberg
Asian stocks rose for a fourth day, after the Standard & Poor’s 500 Index closed near a record, amid optimism about U.S. earnings and economic data before a Federal Reservepolicy announcement.

The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 139.32 as of 9:01 a.m. in Tokyo, before markets opened in China and Hong Kong. The S&P 500 jumped 1.2 percent yesterday as investors dissected corporate results and confidence among U.S. consumers rose in October to a seven-month high. The Fed is on pace to end its monthly bond-buying and leave its key interest rate unchanged near zero when its end a two-day policy meeting today, according to Bloomberg News surveys of analysts.

“We saw strong consumer confidence and the expectation of a dovish Federal Reserve,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc, which provides trading services on equities, currencies and commodities. “As long as the Fed holds up its end of the bargain and implicitly pledges to keep rates low, then markets should have what they need.”

Japan’s Topix index gained 0.7 percent as Nomura Holdings Inc. posted profit that beat estimates and data showed industrial production rose in September. South Korea’s Kospi index rose 0.7 percent. Australia’s S&P/ASX 200 Index advanced 0.2 percent and New Zealand’s NZX 50 Index added 0.3 percent.

Futures on the S&P 500 slipped 0.3 percent today after the underlying gauge’s rally yesterday. Earnings from Amgen Inc. to T-Mobile US Inc. helped drive shares before the Fed’s policy announcement. The S&P 500 has rebounded 6.6 percent from a six-month low on Oct. 15 amid better-than-expected profits.

Beating Estimates
Almost 79 percent of S&P 500 companies that have reported so far have beaten earnings estimates, while 62 percent have surpassed revenue projections, according to data compiled by Bloomberg. Profit for S&P 500 companies rose 6.3 percent in the third quarter and sales increased 4.1 percent, analysts predicted.

Fed Chair Janet Yellen and her colleagues will focus on the U.S. economic outlook and end their bond-buying program as planned, according to 62 of 64 economists surveyed by Bloomberg News. Minutes from the last meeting, when policy makers pledged to keep U.S. borrowing costs low for a considerable time, showed officials expressed concern that U.S. growth may be at risk from a global slowdown.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

We have had a decent bounce from the lows last week but I am not sure how much longer it is going to run. The S&P has resistance at 1986, Dax at 9120 (then 9229), and the FTSE at 6461 initially, if it breaks through yesterday high at 6440. On the downside the bears will need to break 6400 to visit the 6326 area, which all may get helped by the Fed announcing the end of QE3 later. I do wonder if we are going to need a QE4 at some point in the future though, given that QE1 and 2 didn’t really get the job done. If the bulls manage to break the 6460/70 area where we have daily resistance then 6495 is the next level to watch.

For today I am expecting an initial dip from yesterdays resistance level of 6435 down to 6400, possibly the pivot at 6393, before a bounce to the 6460 area. At that point its fairly crucial – break through to test 6495, or drop and keep going. I favour the latter.

Support so entry levels for a possible long

  • 6400
  • 6393 daily pivot
  • 6363
  • 6337
  • 6325

Resistance so entry levels for a possible short

  • 6440
  • 6461
  • 6471
  • 6495
  • 6531

35 Comments

      1. Maybe, just hit the first resistance area at 6453… Didn’t quite dip down as low as i wanted with the first arrow

        1. Short at 6453. Where do you envision it going? Do you think we’ll see a drop to 6400 or lower now that it’s reached 6460?

  4. Javed, too early to say FTSE might be on its way (Other indices and Yellen will drag it up) to 6500+ 🙂

  5. Is Fed telling market which people dont know already? Dont think this rally is going to continue — on that basis i am going short 🙂

  8. Technical move up continuing. This is because end of QE is so well forecast that the sellers have done their selling and bears are squeezed.

    But Sandp’s nearing 2000 again and nothing’s changed. Little to look forward to, low growth at best and more stimulus will only come if things worsen. Hardly bullish.

  9. Yes Sam it’s encouraging. Needs to break 6460 and finish close to 6480 today.

    To finish October in the mid 6500s won’t be too bad considering where we have come from.

    Let’s see. 2 and a half days is a long time in this market.

  13. On the 4 hr. front, I think FTSE progress ≫ 6500-6600 is likely. But, in the daily timeframe, we already have descending local minima [Aug 07;Oct 16], so one can hardly rule out the possibility of descending local maxima [Sep 04; ?]. That would raise the spectre of bearishness over the next couple of months. Currently, FTSE is below last high by ≈ 415 points — which will take some recouping.

  16. Guess we at the break or make point for the markets and they will probably halt here till 6pm or so. My prediction is that we will move a bit higher if the FED says nothing too unexpected. However tomorrow once the FED is done reality will set in and investors will realise there are more worries than there is reason for optimism looking at 2015 and beyond. I will short a bit now in case they signal they start raising interest rates sooner (which would not be such a bad move because at least then they can tone it down if they need to H1 2015 and markets are ok again now so not bad timing to dampen things a litle). I will the add to this if we go a bit higher tonight 6500 for FTSE and 9225 for DAX as short entries if we get more bull

      1. looking at daily chart. The last high 6431 when it came down.
        And if you look further, you see that 6446+- was a support acting as resistance until today.
        Now the next stop to the upside is 6544-6560

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