Good morning. Hope you all had a good long weekend (those in the UK at any rate). The big news of course was the election result with the UKIP surge – not totally unexpected but probably a thorn in the side of ConLabLib…. and the Bilderberg (was that result in their plans?!). Conspiracy theories aside, its all looking pretty bullish again after the wobble earlier last week, with the S&P looking like reaching that 1919 and the FTSE possibly nearing 6900. Monday saw the S&P hold above the 1900 which is a goos sign for the bulls and that they have control, and also generating a few more positive headlines. There is a bit or argy-bargy going on between China and Vietnam at the moment with China sinking a fishing boat in disputer waters.
Asia Overnight from Bloomberg
Most Asian stocks rose, while copper and the Australian dollar climbed, on prospects policy makers will act to support global economic growth. South Korean shares and wheat declined.
The MSCI Asia Pacific Index added 0.2 percent by 11:20 a.m. inHong Kong, set for the highest close since Nov. 29, as Japan’sTopix (TPX) gauge rose 0.7 percent. Standard & Poor’s 500 Indexfutures gained 0.3 percent from the May 23 close. Copper advanced 0.3 percent in London after futures touched an 11-week high. The Australian and New Zealand dollars both strengthened 0.2 percent. Wheat futures sank 1.5 percent.
Data on U.S. durable goods orders and house prices may fuel speculation the Federal Reserve will take time withdrawing its quantitative-easing program. European Central Bank President Mario Draghi signaled yesterday a readiness to act on low inflation, while China’s premier said he may fine-tune economic policy. Vietnam said a Chinese ship attacked and sank a local fishing boat yesterday.
“We still have a slowing China story out there and I think the government will have to try and provide a bit of support,” said Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, which has about $6.8 billion under management. “People are starting to feel good about the U.S. and the Fed’s approach to tapering.”
Vietnam Tension
The market “has discounted the news on the China-Vietnam tension and investors may not be as panicked as before,” said Hoang Viet Phuong, director of institutional research and investment advisory at Saigon Securities.
The Stoxx Europe 600 Index climbed 0.6 percent yesterday, helping the MSCI All-Country World Index gain 0.3 percent to the highest close since November 2007. Indonesian markets are closed today for a holiday. The S&P 500 closed at a record 1,900.53 when it last traded May 23.
The Aussie climbed to 92.55 U.S. cents, while the New Zealand dollar gained to 85.62 U.S. cents, rising for the first time in four days. The euro advanced 0.1 percent to $1.3658. The yen was little changed at 101.96 per dollar.
Orders for durable goods probably fell 0.7 percent in the U.S. in April, after rising 2.6 percent in March, according to a Bloomberg survey before today’s data. The S&P/Case-Shiller index of property values in 20 cities may show gains eased to 11.8 percent in the year through March, from 12.9 percent the previous period, a separate survey showed.
Copper Gains
Copper for three-month delivery on the London Metal Exchange, which was closed yesterday for a U.K. holiday, rose to $6,937.25 a metric ton, after futures in New York added as much as 0.8 percent to $3.1925 a pound, the highest intraday level since March 7. China is the world’s largest buyer of copper and industrial metals.
China’s one-year interest-rate swap declined 6.5 basis points to 3.56 percent. Premier Li Keqiangsaid China would fine tune policy to help the economy when needed, according to a statement posted on the central government’s website May 23. European policy makers are ready to take action in June should they see a slower rate of inflation becoming entrenched, Draghi said in a speech in Portugal yesterday.
FTSE Outlook
The FTSE has popped above the 10 day Bianca, probably a little distorted by being closed yesterday. However, if the price can hold above 6840 then then the top of the 10 day Raff at 6860 looks a likely resistance level. Todays pivot is 6811 so I expect any dips to find support around that level, possibly 6800. Above 6860, we have a more major ProTrend resistance line at 6877, but as I write this we are just nudging the top of the a rising 30 minute channel. Its always a little tricky to call after a bank holiday, but I think an initial rise off the back of the futures being fairly strong, dip, then further upside to 6860/6875.
I have plotted the arrows with the dip only going down to around the 200EMA on 30min at 6825, but as mentioned just now, the pivot at 6811 would likely act as support if it dipped lower. I think the S&P is going to go for that 1919 level I have mentioned a few times in recent weeks, so keep your eyes out for that.
Great analysis Nick thanks
Morning all, good morning so far. Anybody in any trades at the mo?
In a dangerous short on Dax and also S&P
X2 wlt I also have a short on Dax, but looking good, looks like they want too take the 10000 mark out this week.
That should have been not looking good
Im short FTSE at 6857, and long gold at 1283 currently
Gold stopped out at 1279
Nick, Have you closed your shorts ?
I was in a meeting and just missed the drop
Hi belly, are u into any trade ?
small Short @ 48
Hope everyone is doing good. As for me I’ve made a record trade three times in 6 weeks with a loss of 1.1k on S&P at £100pp from 1900. Not going short until we see a big sell off.
There is saying goes what goes up must come down, but if I keep believing I’ll go bankrupt!
Sad record. My record loss was 1800 pounds. Which lately recovered without me. Sad sad.
Ahwab you must be brave doing 100pp max for me is 25pp and sitting on a big loss at the moment with the Dax… Still have earned good money this year on Dax and don’t mind sitting on a trade for a while.
Glad I’m not the only one… caught short at ave 9725
Good call for long today, Nick.
Current rise in Dax is said too be because of rate cuts being announce by ECB… More cheap money in the system.
There will be talk of QE too at the forthcoming ECB meeting. We know I think that that’s an excellent way to oil the stock market, as opposed to channelling credit to the business sector. But perhaps eurozone banks are different. 🙂
Yes Jim QE oils the stock market worrying though all the measure they have already taken and still it’s not right…
FTSE is heading to where ? It’s been in a rangebound like DOW.
Like the past, history repeats itself.
After the SPX shining star, in a couple of days, we may see FTSE and DOW regain the pole position.
I give 1-2 days more for SPX starting a new leg down