6460, 6434, 6395, 6334 Support, 6560, 6577, 6584, 6651, 6753 Resistance

Good morning I hope you had a good weekend. The bulls managed to hold onto the gains made on Friday after the BoJ stimulus announcement, though didn’t really build on them during the day, with it dropping off the 6560 level a few times. As such that will be initial resistance today. The bulls need to break above 6570 today as that will slightly reduce the changes of a large drop any time soon, and its worth noting that the Dow closed its highest October ever. It was fairly quiet on the financial news side over the weekend, most probably relieved that the drop managed to reverse!

Asia Overnight from Bloomberg
The dollar jumped to an almost seven-year high versus the yen and gold fell with oil as slowing Chinese manufacturing growth and the Bank of Japan’s unexpected stimulus highlighted the diverging growth outlook for the U.S. and Asian economies. Natural gas jumped.

The Bloomberg Dollar Spot Index advanced 0.2 percent by 2:33 p.m. in Hong Kong, heading for a level last seen in June 2010 as the greenback bought 112.66 yen, the most since December 2007. Gold fell 0.3 percent to $1,169.86 an ounce in the spot market. West Texas Intermediate crude dropped 0.5 percent and gas futures surged 3.8 percent on forecasts for cold U.S. weather. South Korea’s won slid 0.4 percent. Standard & Poor’s 500 Index futures slipped 0.1 percent and Chinese shares in Hong Kong fell.

Most major currencies were weaker against the dollar today after U.S. consumer-confidence and manufacturing reports Oct. 31 underscored the strength of the world’s biggest economy relative to the outlooks in Europe and Asia. An official gauge of Chinese factory output unexpectedly dropped in October, data at the weekend showed, while a private gauge today was unchanged from September. Japan’s markets are closed for a holiday after the country’s central bank surprised investors by increasing its unprecedented monetary easing program.

“The dollar’s strength will continue to persist given the widening interest-rate outlooks between the U.S., Japan and Eurozone,” Audrey Goh, a Singapore-based investment strategist at Standard Chartered Plc, said by phone. “Growth momentum in the U.S. has been quite robust. Europe, on the other hand, is continuing to see weakening economic data. That will pressure the ECB to do more easing, following the BOJ’s move last week.”

Precious Metals
Gold extended declines today after sliding 2.2 percent Oct. 31 and touching $1,161.35, its lowest intraday price since July 2010. The precious metal dropped 4.7 percent last week to cap a second straight monthly loss. Silver slipped 1.2 percent to $15.9595 an ounce today, after reaching $15.7908 Oct. 31, its lowest level since February 2010. Platinum fell 0.3 percent while palladium added 0.3 percent.

The yen tumbled 2.9 percent Oct. 31 after the unexpected BOJ announcement, which saw five of nine BOJ board members — including Governor Haruhiko Kuroda — vote in favor of raising the annual target for enlarging the monetary base to 80 trillion yen ($710 billion), from a range of 60 to 70 trillion yen previously. The currency dropped as much as 0.6 percent today to 112.99 per dollar after losing 3.9 percent last week, its worst five-day slump since December 2009.

Nikkei Futures
“The more you look at both the strengthening U.S. data and what the BOJ has done the more you think that the yen has further to go,” Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd., said by phone from Auckland.

Nikkei 225 Stock Average futures traded in Singapore are signaling Japanese equities may rally further when markets open tomorrow. The December contract traded as high as 17,070 today, 4 percent above the underlying gauge’s close on Oct. 31, when it surged 4.8 percent. The Nikkei 225 hasn’t traded above 17,000 since October 2007.

The won, which traded at 1,072.69 per dollar, capped its biggest three-day drop since June last year. The BOJ’s expansion of stimulus came earlier than market expectations and South Korea will closely monitor its impact on the economy, Bank of Korea Governor Lee Ju Yeol told reporters in Seoul today.

The Swiss franc retreated and the euro dropped 0.3 percent versus the dollar. The European Central Bank, which meets this week, is also expanding its stimulus efforts, cutting interest rates twice since June and starting asset purchases and a targeted loan plan for banks. Inflation in the 18-nation region accelerated from a five-year low in October, data Oct. 31 showed.

Aussie, China
U.S. data last week showed the world’s largest economy grew an annualized 3.5 percent in the third quarter, exceeding estimates and, with declining applications for unemployment benefits, helping to validate the Fed’s decision to end a third round of asset purchases.

The Hang Seng China Enterprises Index slid 1.1 percent in Hong Kong. A pullback in services and manufacturing will test the Chinese government’s determination to refrain from increased stimulus as the world’s second-largest economy heads toward the slowest full-year growth since 1990. The economy expanded 7.3 percent in the third quarter, the weakest pace in more than five years. Australia’s dollar retreated 0.6 percent to 87.44 U.S. cents.

Oil futures dropped to $80.11 in New York after sliding below $80 during trading on Oct. 31. Brent crude weakened 0.3 percent in London. Saudi Arabia is set to announce crude-export prices for next month after charging the least in almost six years for some November shipments to Asia.

FTSE Outlook

Interesting times ahead for the FTSE, with the bigger picture suggesting some serious downside, unless the bulls can push on with a rise above 6570, which would certainly lessen the chance of that. We have some pretty strong resistance levels around there, as you can see on the 30 minute chart, with the top of a rising channel as well as horizontal resistance. The top of the 10 and 20 day Bianca channels are both at 6585ish for today as well, hence my stops on the shorts in the trade plan below are just above there. If the bulls do manage to break through this area then it would suggest we are heading to 6750 and the top of the 20 day Raff in the not too distant future. On the downside, major support is 6434 where we have the bottom of the 10 day Bianca channel, and 10 day Raff, whilst looking at the EMAs on the daily chart gives 25ema support at 6460, might be worth a risky long there….

Support so entry levels for a possible long

• 6460
• 6434
• 6395
• 6334

Resistance so entry levels for a possible short

• 6560
• 6577
• 6584
• 6651
• 6750