6781, 6766 support, 6821, 6848 resistance

Good morning. Shame it didn’t quite dip down to the pivot yesterday in the end, especially with the short at 6791 which took ages to go anywhere. FOMC helped the bulls though with the news that rates are likely to stay low for the foreseeable. The bulls reached the 6812 area in the end and overnight we are still at that level. 6821 is the first bigger resistance for me today being the top of the 10 day Bianca channel, then 6848.

The S&P went for it yesterday again closing at a new record high.

Asia Overnight from Bloomberg
Asian stocks rose toward a six-year high after the Federal Reserve said interest rates will remain low for some time as U.S. growth rebounds, and Premier Li Keqiang pledged to sustain China’s economic expansion forecast.

The MSCI Asia Pacific Index advanced 1.1 percent to 145.28 as of 11:22 a.m. in Hong Kong, heading for its biggest gain in a month as all 10 industry groups rose. A close at this level would be the highest since June 2008. Fed Chair Janet Yellen said accommodative monetary policy, rising home and equity prices plus an improving global economy should produce an above-trend U.S. expansion.

“The Fed sounded upbeat about the economy and it certainly managed to maintain a dovish tone,” said Stan Shamu, a Melbourne-based markets strategist at IG Ltd. “Adding to the positive sentiment were comments by Chinese Premier Li, who reinforced that his country would maintain a minimum growth rate of 7.5 percent and ruled out a China hard landing.”

Regional Gauges
The Topix jumped 1.5 percent today, climbing for a third day and poised for it highest close in almost five months. Australia’s S&P/ASX 200 Index advanced 1.5 percent and Hong Kong’s Hang Seng Index rose 0.2 percent. New Zealand’s NZX 50 Index and Singapore’s Straits Times Index added 0.1 percent, while Taiwan’s Taiex index gained 0.2 percent. The Shanghai Composite Index declined 0.4 percent and South Korea’s Kospi index (KOSPI)slid 0.1 percent.

The Federal Open Market Committee continued to trim bond purchases that have fueled a rally in equities around the world. The FOMC repeated that it’s likely to “reduce the pace of asset purchases in further measured steps” and keep interest rates low after the bond buying ends.

Yellen said while stock valuations are within historic norms, low volatility may become worrisome should it encourage excessive risk-taking. The Fed predicted that the target interest rate in the U.S. will be 1.13 percent at the end of 2015 and 2.5 percent a year later, higher than previously forecast. Policy makers lowered their long-run estimated rate, reflecting a slower growth rate for the U.S. economy.

China Growth
China will have “medium to high-level” growth in the long run, Premier Lisaid during a speech in London yesterday, adding that he could promise “honestly and solemnly there won’t be a hard landing.”

“The Chinese government is adjusting its economic operations to ensure the minimum growth rate is 7.5 percent, the level to ensure job creation,” Li said in the speech.
The MSCI Asia Pacific index (MXAP) traded at 13.2 times estimated earnings yesterday compared with 16.6 for the Standard & Poor’s 500 Index and 15.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 rose less than 0.1 percent today after the gauge climbed 0.8 percent yesterday to close at a record high.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

Bit of a stall at yesterdays resistance level of 6812 (now we are back above 6800 that dip was pretty short lived), but brings todays 10 day Bianca channel at 6821 into play this morning. The daily pivot is 6781 for today so support there, and 6766 below that. Overall I’d say the FTSE was bit lacklustre once again yesterday while the other indices rose quite well. The S&P is now at the top of the 10 day Raff as well, with the FTSE just breaking through the top of its one.

The fact that we are testing shorter term daily channels favours some shorts, particularly from 6820 and 6848. If the pivot breaks today then the bears will get some momentum, possibly 6704 on the cards, though the bulls are the ones in control at the moment.

63 Comments

  3. Belly, look at 4hr chart we are there or just about there on the 200ma ready in my opinion for a pull back to 6700. I have an order I set yesterday to go short at 6830 which has triggered but still thinking we could go to Nicks 6840/48 before drop so waiting to put another short in if we do.

  5. Nice one Belly, should see the top in the next 20 mins if it does intend to go higher

  8. I cannot figure out why shorting ? Is this a very short term trade ?
    FTSE is making a strong statement it wants to go higher and after a bounce at almost support level 6720 it is already 50 points from the highs.
    This could be a very hot summer with new highs… but who am I ?

    1. Just a short term trade. There is signs of a bounce off of 40ish today. Long term is still looking positive

  10. 3min looks very strong looks like it wants to go to the top 6848.
    Will short from here

    1. Still have my 37 short in place. Stop brought up to profit. Thinking of cancelling 47 order

  13. Hi – No trades for me for me this morning nor at the moment.
    (FTSE just bouncing off 6823 – seems to find Support here – so maybe worth watching)
    GBP firing off signals left and right .

  14. Jim, 10 min chart showing a very nice head and shoulders forming.
    To complete we need one more rise to 6832 on US open then the sell off. This would tie in nicely with the 4hr chart with FTSE bouncing off the 200 ma.

    1. You could be right Marco; FTSE 4/hrs. could eventually be running out of steam now, after which a run down to 6750 is likely.

  34. Patience, going to get stop to break even and let this one run through to the weekend.

  36. Still short from 16892 from last night might see some good downward movement tomorrow to 16750.

  38. Belly not moved to break even yet as want it to go through 6800 first. Going to hold this one down

    1. Senu, this has been so frustrating, since I exit my long at 1898, before the great break up.
      Did not catch this move again… FTSE and SPX have done a lot of cat and mouse game with me.

  43. Correct PMS it could go either way however I cannot see any reason to short here except because of all time highs. The fact is there is no other asset class for Fund Managers to invest in other than stocks.

    Yellen just gave the green light. It’s just about getting the right entry for the long. 6750 last week would have been a great entry and I think a few on here caught it. expectations of a drop due to light volume over summer just may not materialize. We have been on low volume for most of the year. A bit to go yet I believe.

  45. Closing my Long Here 6825

    Hugh says:
    June 19, 2014 at 4:30 pm

    FTSE
    5MIN CHART
    Long 6810

      1. Senu – I didn’t put one in – I got really bored yesterday – so did that trade and decided to walked away to do something useful !

          1. Trouble with these quiet days (or hours) is that it screws with the indicators as little bit !

  47. Back testing the 200ma on the 4hr at 6831 down from here in my opinion still holding short from yesterday.

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