6835 support, 6874 resistance

Good morning. It feels like the FTSE is on its half term break as well this week! Still, the short at 6857 worked well for a few points, though the S&P was the star yesterday, dropping off the 1915 resistance and bouncing off the pivot at 1908 as mentioned in the email. All fairly bullish across the board in term of equities, which is seeing gold take a pummelling, down to 1257 now (another support area, will this one hold?). The 10 day Bianca channel has moved up to 6863 and the 20 day at 6901 though it feels like there is a lid being kept on it at the moment to keep it below breakout levels- 6874 looking good for a short today. European indices are most likely waiting to see what the ECB does next week, hence the lack of volatility.

Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index extending its rally to a six-month high, as phone carriers and electronics manufacturers advanced.

The MSCI Asia Pacific Index (MXAP) rose 0.3 percent to 142.27 as of 11:53 a.m. in Hong Kong. The gauge is headed for its highest close since Nov. 19 and a 3.6 percent gain in May, its biggest monthly increase since September. The regional benchmark earlier fell 0.2 percent after Japan reported a worse-than-estimated drop in retail sales for April.

“Investors are more positive on equities as bond yields drop on expectations the European Central Bank will do something big next week,” Mark Matthews, Singapore-based head of Asia research for Julius Baer, which oversees about $377 billion, said by phone. “Valuations in Asia look attractive, with those for Chinese equities incredibly low. Japan has become pretty cheap, too.”

An unexpected increase in German joblessness and data on euro-region money supply released yesterday stoked bets that the ECB will act to boost inflation next week, fueling gains in European bonds.

Regional Gauges
China’s Shanghai Composite Index was little changed, while Hong Kong’s Hang Seng Index gained 0.4 percent and the Hang Seng Enterprises Index of mainland shares traded in the city increased 0.6 percent.

Singapore’s Straits Times Index climbed 0.9 percent, heading for its highest close in a year. Morgan Stanley raised its rating on Singapore shares to overweight from equal-weight, citing stabilizing economic growth and limited earnings risks, analysts led by Yang Bai wrote in a report to clients.

South Korea’s Kospi index slid 0.2 percent. The nation’s current account surplus narrowed to $7.12 billion in April from a revised $7.29 billion in March, data released by the Bank of Korea today showed.

New Zealand’s NZX 50 Index, Australia’s S&P/ASX 200 Index (AS51) and Taiwan’s Taiex index all slipped 0.1 percent. Markets in Indonesia are closed for a holiday.

The Philippine Stock Exchange Index declined 1 percent, heading for the lowest close since April 30. The country’s first-quarter gross domestic product increased 5.7 percent from a year earlier. Growth was expected to be 6.4 percent, according to the median estimate of 22 economists surveyed by Bloomberg.

China Outlook
The Asia-Pacific gauge rebounded 9 percent through yesterday from this year’s low in February amid optimism the U.S. economy can withstand a reduction in stimulus and that Chinese policy makers will step in to bolster slowing growth.

The value of global equities climbed to a record $63.8 trillion this week and the Standard & Poor’s 500 Index reached an all-time high.

Futures on the S&P 500 added 0.1 percent today. The U.S. equity benchmark index slipped 0.1 percent yesterday after a four-day rally drove the gauge to a record.

Economists are predicting that an initial reading of U.S. gross domestic product will be revised today to a contraction for the first quarter. A separate report today is expected to show weekly jobless claims declined.

“Investors will probably blame the weather or seasonality if we get a bad GDP print from the U.S.,” Scott Schuberg, chief executive officer of Rivkin Securities in Sydney, said by phone. “There’s still enough willingness from the Federal Reserve to intervene if a bad print comes out.”

FTSE Outlook

We have US jobs and GDP news out at 13:30 today so that might cause some movement but with todays pivot at 6646 and the breakout resistance level at 6874 we once again have a fairly tight range in play today. I am thinking the same again today – dip to the pivot area then slow climb. We also have a fairly decent rising 30 minute channel with support at 6830 and resistance at 6865.

There are still a few big picture resistance levels close by, including the 10 day Raff at 6780 and the 10 day Bianca at 6863. I ams till expecting the S&P to reach 1919 though!

With more resistance than support I am favouring the short today, from around the 6870 area which might tally with that 1919 on the S&P.