6773 support, 6825 resistance

Good morning. Well it most definitely wasn’t bull Tuesday yesterday (the past few Tuesdays haven’t either so that ship has probably sailed now), and just trend down all day. Little bit of a reaction from the bulls at the 2 long points – 6835 and 6807 – but neither gained any traction and the bears drove down the price to 6770. Even the round number of 6800 didn’t hold! The bears are awake now, and the market is making lower lows on each dip, therefore I am still looking to short the rallies. The really frustrating thing is that all this week it has failed to reach my resistance levels to enter the shorts! Its never easy!

Initially this morning there is a glimmer of hope for the bulls as the charts look a little bit more favourable – though they will need to break above 6807 and the pivot at 6814 to really do anything. Reading about everything there is certainly more of a vibe to be short than long at the moment. The UK housing bubble looks like it might pop at some point…. again. Read an interesting stat yesterday and that was house prices in London are rising at £26 an hour!

Asia Overnight from Bloomberg
Asian stocks fell for a fourth day, with the regional benchmark index heading for its longest losing streak since January, as the yen strengthened and the Bank of Japan maintained its monetary stimulus.

The MSCI Asia Pacific Index slipped 0.1 percent to 138.89 as of 10:56 a.m. in Hong Kong. The gauge dropped the past three days amid concern about the pace of global growth after valuations on the measure last week touched a six-week high.

“Markets are experiencing a fresh bout of risk aversion,” said Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $29 billion. “There was scant new regional data on the economic and earnings front, which means justifying current valuations is the main concern for investors.”

Regional Gauges
Japan’s Topix index slid 0.3 percent as the yen traded at 101.32. The nation posted a trade deficit of 808.9 billion yen ($8 billion) for April, data showed today. Economists surveyed by Bloomberg had predicted a 646.3 billion yen shortfall. Exports gained 5.1 percent year on year, while imports increased 3.4 percent, both topping expectations.

The Bank of Japan refrained from boosting stimulus as the economy shows signs of weathering the impact of the first sales-tax increase since 1997. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen per year, it said in a statement today inTokyo, in line with forecasts of all 32 economists in a Bloomberg News survey.

The BOJ’s monetary stimulus and government spending by Prime Minister Shinzo Abe drove a world-beating 51 percent jump in the Topix last year. The measure fell 11 percent in 2014 through yesterday, the largest decline among 24 developed markets tracked by Bloomberg, amid concern the stimulus measures won’t be enough to revive the economy and generate inflation.

Confidence Slumps
Australia’s S&P/ASX 200 Index dropped 0.3 percent as consumer confidence fell to its lowest level since August 2011 following the government’s budget that flagged spending cuts and a new tax on high-income earners. South Korea’s Kospi index gained 0.2 percent and New Zealand’s NZX 50 Index fell 0.7 percent.

Hong Kong’s Hang Seng Index was little changed and the Hang Seng China Enterprises Index of mainland Chinese equities listed in Hong Kong surged 0.9 percent. Singapore’s Straits Times Index slid 0.3 percent, the Shanghai Composite Index climbed 0.2 percent and Taiwan’s Taiex Index added 0.1 percent.

S&P Futures
Futures on the Standard & Poor’s 500 Index were little changed today after the U.S. equities benchmark fell 0.7 percent yesterday.

The Asia-Pacific gauge yesterday traded at 12.7 times estimated earnings compared with 15.9 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

FTSE Outlook

Given the fact that bears hadn’t really done much till yesterday I was once again a bit too optimistic and instead we ended up with a trending down day, with the supports being broken. The best strategy recently at the moment has been on the 10 minute chart using the SMA settings of 5 and 34 – members will know what this is. Overnight we have had a little pop back to 6800 as I write this, but the resistance levels today are 6808, the daily pivot at 6814 and then 6825. Not really that much upside based on them! Support wise while we are below 6800 is yesterday low at 6773, and then 6745.

At these levels we are below the Bianca channel, whilst the daily Raff 10 day has now turned down for the first time in a while (on the FTSE anyway). The Raffs are showing support at 6770 and 6760 (10 and 20 day respectively). Technically speaking the EMAs not he daily chart are still bullish though definitely weakening with both turning down after yesterdays fall.

Despite the bearishness yesterday I would say that it does look like markets are being held up to project a feeling of normality, mainly as the FTSE is only 90 off its 14 year high seen last week, despite the DOW and S&P dropping a lot more. Is there an election coming up or something…….

After that fall yesterday and subsequent bounce from 6770 I wouldn’t be surprised to see a bit of a bounce first thing this morning to stop out some shorters. With 6800 breaking i think that over the next few weeks we will most likely head lower towards 6600, and the top is most likely in for the time being with that rise to 6894 (so damn close to the 6905 I had pencilled in as well).

I have been bearish with the arrows with bounces at those supports – 6780 and 6745 – though the 30 min EMAs are building up for a cross. I think i will go for the long at 6792 and then see what happens. Might even turn into a runner and it doesn’t dip down to those supports?