6614, 6590, 6521 Support, 6629, 6639, 6647, 6654, 6676 Resistance

Good morning. Looking at the Bianca channels there isn’t much to be too joyous about, as they are all heading down, with the top of the 10 day at 6639 not being that far away. we got the bounce yesterday as expected, from between the 6610 and 6620 levels, the bulls failing to quite reach the 6650 level. Having dropped back its been fairly static around the 6620 area, and with support today at 6614 we might get another bounce though the bulls certainly lack conviction. Below 6614 the next support is 6590. There is also the bottom of the 10 day Bianca at 6520. The news about the Russian aid convoy trying to go into Ukraine and being refused based on it being a suspected trojan horse gave the bears something to use to drop the price down to 6605. Germany is really struggling at the moment, Dax not far off breaking 9000 now, on crashing investor confidence (Germany’s ZEW index of investor confidence plunged from 27.1 to 8.6 in July, the sharpest fall since June 2012). On the plus side for motorists anyway, oil has hit a 9 month low!

Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as investors weighed earnings reports. Chinese shares fell after the nation’s broadest measure of new credit unexpectedly plunged.

The MSCI Asia Pacific Index (MXAP) gained 0.1 percent to 146.74 as of 12:21 p.m. in Tokyo after falling as much as 0.2 percent. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong dropped as much as 0.5 percent after China’s central bank said aggregate financing was 273.1 billion yuan ($44.3 billion) in July, missing the 1.5 trillion yuan median estimate of analysts surveyed by Bloomberg News.

“Credit is an issue and the government needs to reform the economy so that it will grow more by domestic consumption,” said Vasu Menon, vice president of wealth management at Oversea-Chinese Banking Corp. in Singapore. “Of course there will be a little bit of worry with this credit number, but I don’t think they will lose the sight of longer-term picture.”

China’s new local-currency loans of 385.2 billion yuan were half of projections, while M2 money supply grew a less-than-anticipated 13.5 percent from a year earlier.

The Shanghai Composite Index dropped 0.8 percent. Hong Kong’s benchmark Hang Seng Index fell 0.2 percent.

China Data
More data from the region’s biggest economy is due this afternoon, with economists predicting China will report a 12.5 percent increase in retail sales for July from a year earlier, up from 12.4 percent in June. Growth in factory output probably held at 9.2 percent.

Japan’s Topix (TPX) index fluctuated after a report the nation’s economy contracted an annualized 6.8 percent in the three months through June.

Australia’s S&P/ASX 200 Index fell 0.3 percent, while New Zealand’s NZX 50 Index rose less than 0.1 percent. South Korea’s Kospi index added 0.6 percent. Taiwan’s Taiex Index gained 0.4 percent. Singapore’s Straits Times Index declined 0.2 percent.

Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent today. The measure fell 0.2 percent yesterday as investors watched geopolitical developments and energy shares sank after Brent crude fell to a 13-month low.

Labor Market
A report yesterday showed U.S. job openings rose in June to the highest level in more than 13 years, firming up the labor-market picture for the second half of the year. The figures are among those on Federal Reserve Chair Janet Yellen’s labor-market “dashboard,” which she uses to help guide monetary policy.

A convoy Russia says is loaded with humanitarian assistance for rebel-held areas of Ukraine headed for the border, as the government in Kiev set conditions for letting the aid in and the Red Cross demanded more details.

Russia’s government said 280 trucks with 2,000 metric tons of donated food, medicine and water left Moscow yesterday and would proceed into Ukraine under the auspices of the Geneva-based International Committee of the Red Cross. Ukraine expressed fears the convoy is carrying military equipment to support pro-Russian separatists.

FTSE Outlook

Todays pivot is just above where we are at 6629, and despite the bounce from 6605 last night it still looks pretty weak really. The S&P isn’t far off the top of its 2 Raff channels, and the Dax is talking a hammering. On the positive side for things this morning the FTSE is at the bottom of a PRT 30min channel, so if this 6620 level holds we might get a rise through the pivot to test the first resistance level at 6647. Bulls have been pretty weak though this week so we may see a slightly more bearish start today. The top of the 10 day Bianca channel is only at 6639 as well so I expect we will get resistance there. I have plotted the arrows for a small rise to the daily pivot, a dip to the cluster of supports at 6610, then another slow climb. The lower support level I have is 6590 – but not sure we will get that low. Its actually a tricky one to call this morning! I think while the geopolitical situation is still a bit delicate the bulls are unwilling to commit large sums so we will just drift again today.

If the bulls were to break 6647 then there is a chance of a rise to 6676 but that might be a tall order based on the recent weak bull action. Below 6590, 6520 is the next level of note.