6575, 6533, 6516, 6470, 6446 Support, 6585, 6605, 6645, 6671 Resistance

Good morning. An interesting Friday last week that just missed the long off the pivot order by a measly 4 points, which was a shame as that false rise first thing overshot the resistance a little bit before dropping back down. Ukraine is heating up again, which has generated an associated rise in Gold – shot up on Friday by 40 points. For the moment the FTSE bulls need to break Fridays high at 6605 to enable any higher, but the past few months have seen Monday being quite weak. If they were to push over 6605 then 6645, the top of the 10 day Bianca, is the next noteworthy resistance level. The bulls will be pushing for a close at these upper resistance level to enable a push higher (maybe 6750?), though how much longer the US markets will keep on making record highs before we get a pull back remains to be seen. Support is at the bottom of the 10 day Bianca at 6516 – with the 20 day at 6445 below this. A move to these levels puts the FTSE back into bear mode.

Asia Overnight from Bloomberg
Chinese shares surged with the yuan as regulators said a stock-trading link between Hong Kong and Shanghai will start next week. The dollar extended losses and gold fell after its biggest daily gain since June.

Hong Kong’s Hang Seng Index jumped 1.6 percent by 2:30 p.m. in Tokyo, and the Shanghai Composite Index rose to its highest level since 2012. The People’s Bank of China raised the yuan reference rate by 0.37 percent, the most since June 2010, while the currency advanced 0.3 percent in offshore trading after stronger-than-estimated export data. The Bloomberg Dollar Spot Index slipped 0.3 percent. Standard & Poor’s 500 Index futures added 0.1 percent. Gold fell 0.4 percent, and crude oil extended gains with natural gas.

The Hong Kong and Shanghai bourses will allow trading on each other’s venues from Nov. 17, regulators said today, giving foreign investors unprecedented access to China’s $4.2 trillion equity market. China’s producer prices fell for a record 32nd straight month in October, data showed today, after reports showed exports beating projections even as import growth fell short. U.S. employers added 214,000 workers to payrolls in October, trailing the 235,000 increase forecast by economists as the jobless rate fell to a six-year low.

The China stock linkage is “a great innovation, we understand it’s only the first step,” Mark Konyn, who helps oversee about $92 billion as chief executive officer of Cathay Conning Asset Management in Hong Kong. The fund holds about 10 percent of value for Asian clients. “It positions Hong Kong extremely well both from an investment management perspective allowing Hong Kong to deepen its resources around investing in China, which ultimately will be a very significant class globally.”

HKEx Climbs
Hong Kong Exchanges & Clearing Ltd., the world’s second-biggest exchange company by market value, surged 4.7 percent, heading for the highest close since Aug. 22. The Shanghai-Hong Kong Stock Connect permits international money managers to purchase a net 13 billion yuan ($2.1 billion) a day of Chinese shares, while also providing a route for mainland investors to buy Hong Kong equities.

The Hang Seng China Enterprises Index added 1.6 percent, while the Shanghai gauge added 1.3 percent, set for its highest close since March 13, 2012.

The PBOC raised its daily reference rate for the yuan to 6.1377 per dollar, the strongest since March 19. China’s exports rose 11.6 percent from a year earlier in October, more than the 10.6 percent growth forecast in a Bloomberg survey of economists, data on Nov. 8 showed. Imports climbed 4.6 percent, leaving a trade surplus of $45.4 billion, close to August’s record $49.85 billion.

“The connect will mean larger demand for offshore yuan liquidity,” said Dariusz Kowalczyk, Credit Agricole CIB strategist in Hong Kong. “The strong fixing reflects October trade data showing buoyant exports and a surge in the surplus.”

Yen Strengthens
The yuan advanced 0.14 percent to 6.1143 per dollar, China Foreign Exchange Trade System prices show. The offshore yuan jumped 0.3 percent, the most in a month, to 6.1203 in Hong Kong, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards also climbed 0.2 percent.

The U.S. dollar was weaker against all major peers, with Japan’s yen jumping 0.5 percent to 114.06 to the greenback. The euro strengthened 0.2 percent to $1.2481.

South Korea’s won appreciated 0.8 percent to 1,084.75 per dollar after sinking 2.3 percent in the five days to Nov. 7, its worst week since June last year. The Malaysian ringgit jumped 0.6 percent to 3.327 per dollar, while the Thai baht gained 0.1 percent to 32.747 a dollar.

Oil, Bonds
Gold fell to $1,173.48 an ounce in the spot market today, after surging 3.2 percent Nov. 7 for its steepest one-day advance since June. Assets in the SPDR Gold Trust shrank for a fourth day Nov. 7, to the least since 2008. Silver climbed 0.4 percent to $15.8465 an ounce following a 2.4 percent jump Nov. 7. Platinum was little changed and palladium added 0.3 percent.

West Texas Intermediate crude oil rose 0.5 percent to $79.04 a barrel after climbing 0.9 percent Nov. 7. Brent crude added 0.6 percent to $83.85 a barrel, following a 0.6 percent increase in London Nov. 7. Both varieties were down at least 2.3 percent last week, with Brent declining a seventh straight week, its longest run of losses since November 2001.

U.S. natural gas futures extended gains after capping the biggest weekly increase since February on forecasts for a polar blast extending across the central and eastern U.S., spurring demand for the heating fuel. Natural gas for December delivery rose 2 percent to $4.498 per million British thermal units on the New York Mercantile Exchange. Prices climbed 14 percent last week, the most since the seven days ended Feb. 21.

Asia-Pacific government bonds followed Treasuries higher, with the yield on Japan’s 0.5 percent note maturing in September 2024 declining 3 basis points to 0.45 percent, poised for the biggest drop since at least Aug. 8.

Australia’s 10-year note paid 3.28 percent, seven basis points less than on Nov. 7. Similar maturity U.S. notes were little changed today after the yield plunged nine basis points to 2.30 percent at the end of last week after the payrolls data stoked speculation the Federal Reserve will leave rates lower for longer. [from here]

FTSE Outlook

Todays pivot is 6575 so we have initial support there, though we also have key resistance initially at 6585 – not much of a range! – before Friday’s high at 6605. Monday’s have typically been quite weak recently, so I think he bulls might struggle to break that 6605, and I don’t think think they will reach the top of the 10 day Bianca at 6645 today. We also have the 200EMA on the daily at 6644 to act as resistance. If that level was reached then it looks a good shorting area. I am going to go for some initial shorts around the 6585, 6591 area with a stop just above Friday’s high, with a target of 6535. Below 6535, then I expect we will get the bottom of the daily channels (Bianca ones) at 6516 and 6446, as wells a bit of support at 6500 being a round number. 6445 is also the bottom of the 20 day Raff channel, and the daily coral, so pretty good support there.

Support so entry levels for a possible long

• 6575 daily pivot
• 6533
• 6516
• 6470
• 6446

Resistance so entry levels for a possible short

• 6585
• 6591
• 6605
• 6645
• 6671