Asia shares rise | 5910 support 6005 resistance | Bit of a bounce today?

Support 5929 5920 5907 5879 5868 5819 5790
Resistance 5955 5956 5982 6005 6028 6066
Good morning. The thought of leaving the Eu has certainly put the jitters into the markets with another sustained sell off yesterday, and a move below the 6000 level. Support levels just haven’t been holding, however, the 5920 area last night has put up a bit of a fight, with a rise to 5940 currently. We are certainly very sentiment/emotionally driven at the moment rather than technical though the bulls need to break 5955 this morning to build on this bounce. Markets stabilised overnight ahead of the Fed’s policy decision today on rates. We have a small dividend today of 1.1 as well.

US & Asia Overnight from Bloomberg
Asian shares rose, rebounding from the steepest selloff in global stocks since January, as currency markets stabilized ahead of the Federal Reserve’s policy review. The yuan traded near a five-year low after MSCI Inc. decided to keep Chinese equities out of its benchmark indexes.

The MSCI Asia Pacific Index gained for the first time in a week as Japan’s Topix rebounded from a two-month low. Shares in Shanghai reversed earlier losses, spurring speculation state-backed funds were supporting share prices. The British pound advanced, after sliding more than 1 percent in two of the last three trading sessions, and the yen held near its strongest level since 2014. Crude broke below $48 a barrel after a report showed U.S. stockpiles increased, while copper rose. Japanese bond yields plumbed new lows.

About $2.5 trillion was wiped off the value of global equities in the past week and the pound tumbled as a slew of polls showed growing support for Britain to leave the European Union ahead of a June 23 referendum. The vote is making investors wary before central banks in the U.S., Japan and the U.K. review monetary policy this week. MSCI, whose emerging-markets index is tracked by some $1.5 trillion of funds, said more improvement in access to China’s stock market was needed before the nation’s equities can be added to its benchmarks.

“While we get a bounce following the huge knockdown across markets, investors should probably sell into the strength ahead of the Brexit vote,” said Nicholas Teo, a trading strategist at KGI Fraser Securities Pte in Singapore. “There’s a lot of uncertainties out there. A statement from the Fed tonight may help calm the market, but concerns remain on the timing of the rate hike.”

The Fed is expected to keep the benchmark lending rate unchanged when its two-day policy meeting concludes in Washington, though the central bank’s statement and Chair Janet Yellen’s comments at a press briefing will be scrutinized for clues on the likely timing of the next increase. Futures indicate the odds of a move by July tumbled to 16 percent from 53 percent since the start of this month, damped by weak U.S. payrolls data and turbulence in global financial markets.

Stocks
The MSCI Asia Pacific Index rose 0.2 percent as of 1:49 p.m. Tokyo time, after sliding 4.4 percent over the last four sessions. Japan’s Topix climbed 0.4 percent as the yen snapped a three-day advance and Hong Kong’s Hang Seng Index gained 0.5 percent. Toshiba Corp. jumped as much as 8.7 percent in Tokyo as brokerages including CLSA Ltd. turned more positive on the stock.

The Shanghai Composite gained 1.5 percent, after earlier sliding as much as 1.1 percent following the MSCI decision. China’s benchmark is still down 18 percent for the year.

“It’s a sharp reversal so there has to be some government intervention,” saidFrancis Lun, chief executive officer at Geo Securities Ltd. in Hong Kong. “The Chinese government never wants to see the market falling too much.”

Futures on the S&P 500 Index declined 0.1 percent, after the benchmark ended the last session at a three-week low. Contracts on the U.K.’s FTSE 100 Index advanced 0.2 percent, after the gauge closed below 6,000 for the first time since February.

Currencies
The yuan fell as much as 0.1 percent to a five-year low of 6.6047 a dollar in Shanghai, before trading little changed at 6.5945.
The pound strengthened 0.2 percent to $1.4135. It slid 1.1 percent on Tuesday after five opinion polls in two days put the ‘Leave’ campaign ahead of ‘Remain’ in the run-up to the EU vote and as Britain’s best-selling newspaper, The Sun, backed a withdrawal.
The yen was little changed, after rallying almost 1 percent over the past three sessions.

Commodities
West Texas Intermediate crude slipped 1.4 percent to $47.81 a barrel, falling for a fifth day to be set for its longest run of declines since February. Concern over a global glut in the commodity reemerged with the American Petroleum Institute reporting a 1.16 million-barrel increase in U.S. oil inventories for last week. Nigerian militants, whose attacks on oil infrastructure have sent the country’s output plunging to its lowest level in 27 years, also said for the first time they are considering peace talks.Copper rose 1.3 percent in London, while nickel advanced for the first time in a week. Gold declined 0.1 percent, after surging 3.4 percent over the last five days.

Bonds
Yields on Japan’s benchmark government bonds were at record lows across tenors from two to 40 years. The rate on notes due in a decade fell to an unprecedented minus 0.19 percent, while 20-year and 30-year yields touched historic lows of 0.14 percent and 0.215 percent, respectively.

Ten-year U.S. Treasuries yielded 1.62 percent, after ending the last two sessions at 1.61 percent, the lowest closing level since 2012. The rate on similar-maturity German debt fell below zero on Tuesday for the first time as the U.K.’s potential exit from the EU fueled demand for haven assets. [Bloomberg]

FTSE 100 Outlook and Prediction

FTSE 100 Prediction
FTSE 100 Prediction

The way the markets are at the moment certainly make this analysis harder as support levels don’t hold, whilst resistance levels for ideal short entries are not reached. However, just hopping on shorts seems to be the best play over the past week. Today however we have the Fed and the rate decision later (largely expected to remain unchanged), as well as a small divi – too small to bring many divi hunters out I would imagine. For support we have the overnight low at 5907, as well as a ‘major’ PRT line at 5898, which also tallies with the bottom of todays 20 day Raff channel – will we see a bounce here? Worth a go for another long but with a tight stop. Its worth smaller stakes too on the longs as they are counter trend, but if it does bounce higher it could bounce quite well. Resistance wise we have the daily pivot and the 100 Hull MA on the 2 hour chart at 5955, so the bulls will need to break this first thing. If we do get some early bullishness then we might actually get a long signal on the 30min chart, which has been firmly bearish since 6am on 9th June. So, watching 5955, and 5905 areas today, and thinking we might mimic the Australia movement with a rise and dip day – towards 6000 then more downside.

63 Comments

  1. lots of weakness in the Dax, can’t see to much happening this morning of too work gl everyone.

  2. Hiya all.
    In this sort of market it’s easy to say “chuck the charts in a bin” and as Nick says above, support levels are being creamed and it’s all a bit weird.
    Markets still get overbought and oversold though, no matter what the motivation for the trades and FTSE was clearly oversold around 5900.
    IF it holds around there with maybe a 100 pt tail to 800 then after the Brexit dust has settled we could be looking at a nice inverted H&S. Could.

    Anyway, short term we will be highly influenced by differing polls coming out and vulnerable to a spike up should Stay look like gaining traction, but technically I expect resistance around 75/80 from yesterday to continue and it is atm.
    If it does get through 90 then there’s not much i can see till 6020, unlikely as that sounds.
    Downside I’d look for 60 to hold this morning, with the last hour yesterday being an oversold cash tail. If it don’t then 40.

    1. I think it looks like a dead as a doornail sideways “we’ve rallied now wtf do we do?” Day….

      1. lol Tmfp yeh thought we were going to see a upwards trending day but still plenty of sellers selling the rallies got stopped out on dax short @ 9630 now its came back down

  4. off for a coffee now, ps by the way Nick the website will not open in any costa if I am on there Bt open zone say that this web address doe’s not exist

  5. Afternoon all, just thought I’d check in but trying to sit on my hands. Watching the brexit binary which got below 60 yesterday and is now 63odd, mid price, would suggest that yesterday might have been a blip?
    Thinking out loud, if we come out the thought is that sterling will take a bit of a tumble, that said wouldn’t the euro take more of a tumble so would it be a bit of a punt to buy £ over €?

    1. Hi chippy, I just bought my holiday euros for my July trip to be on the safe side but, yeah, I think the Doomsday scenario is not just us leaving, but the knock on effect and possible disintegration of the EU. (Ironically, if the Euro got a caning I don’t think Draghi & co would be too unhappy.)
      Personally I think that’s scaremongering, especially bearing in mind the way Greece was treated, so I think the conventional bet would be cable.
      Or a FTSE long with Leave binary hedge, but it’s getting the ratio right that I’m having trouble with.
      Say, sell a grand of binary @ 60, long £20 pp FTSE @ 5950.
      In it’s a £4k binary loss. Maybe 300 pt rally = +£6k = overall +£2k.
      Out it’s a £6k binary profit, maybe 450 pt drop = -£9k = overall -£3k.
      That don’t work lol….

      1. In my real life we buy a fair amount of euro denominated kit so I do keep an eye on it fairly closely and agree the £€ is not as important as cable. If we do come out I think £ will go to ratsh** against dollar for a bit.
        Your Binary vs FTSE arb – my plan if it is an out vote is to catch as many falling knives as possible and I have got the war chest ready. Equally a massive knee jerk relief rally would be step up shorts from 6350.
        Binary – 1. I should have held my 80 short and 2. I’m happy to be long at 62.5 at the moment, I think right price is 70-ish.
        Today – Bored at the moment and trying to keep my hands off the buttons, I had a bit of a noodle about on the open and have just resisted the temptation to buy some at 75. However, I do think we’ll probably get a push through the afternoon.

        1. Sure, but we’re looking at the same bet for different reasons, I want to try and find a reasonable odds hedge which works both ways on the actual day. You’re looking at trading the extremes that follow.
          I don’t see much to go for this afternoon, a bit of calm after the recent storm would be probable. If I was a holder, then 6000+ seems a good short to cover on dips before the vote: as I said before, this ain’t going away, the only upside relief will be a rogue poll.
          I think the yanks would be happy with a Brexit, they get their strong dollar with no interest rate increases needed, although they’re obviously conflicted politically, a weaker Europe would fuel their paranoia about Russian expansionism.

      1. Yeah I grabbed a bit too, we seem quite partial to a DOW opening run up despite the overall carnage recently. I got rid of all mine though.
        That DOW’s looking a bit vulnerable, really needs to hold 700.

          1. I just shorted 87 and closed at 81.
            Looking to short high 80s again, DOW is looking weak for some reason as normally yankies have a run for 70-80 pts on opening.

          2. Possibly because they’ve been opening down overnight recently Rick and just closing the gap.
            G’day by the way 🙂

          3. Afternoon tmfp, DOW is either going to fail soon or otherwise this afternoon is just going to be very quiet and boring. I guess Yankees would prefer for the one and only ”The Yellen Show” before executing their big trades!

          4. Technically the DOW could go to 17800 without a problem.
            Puts FTSE 6000+ shorts into play.

  9. Momentum failing all round, the DOW might charge on again but I don’t think Europe will follow very enthusiastically. 6000+ shorts looking ok atm

        3. Seems to have pulled things up a bit, will hang on before replacing for a little while.
          I said earlier that if we break 90 there’s not much resistance till 20, if the DOW carried on to its 17800 resistance we won’t be far away from that, would be a good short from teens up, but getting a bit late for me.
          Also looks unlikely.

          1. Yes 6020 seems bit of hard work now, I am just looking for a short above 6000 for some profit covering as I just missed this recent bounce.

  11. Now long at 94.5. Going to turn the telly off now and put a limit in at 6015. See if I’ve got the b*lls not to look until tomorrow

          1. Just in time, a bit of profit taking from todays patient longs into the close
            Let’s have a bit at 78

          5. Yeah, all of a sudden it looks weak again. That’s a couple of times the DOW’s done that at our close, no doubt some highly clever stuff going on.

            You should have left the telly on mate….

  13. Right, turning the telly off now. Bit like Zaphod Beeblebrox anti peril glasses. See you all tomorrow.

  14. Evening all,Dow in an interesting place above 700 down from the R1 area although like everyone is saying,levels are about as reliable as Inside Leg measurements from Army surplus dealers on Ebay at the moment.I’m long @ 77 stop at 690 fwiw and if anyone knows a Dwarf who wants a pair of swedish drill trousers…

  16. Good morning all well overnight blood bath for asia and not looking too good on any of the indexes this morning.

    1. Morning aces, yeah, looks like 100 pt dead cat yesterday and pressure back on today.
      Next support IG got is 5844.

      1. Morning Tmfp think support are out of the window atm all too do with brexit data if there is positive news market will spike no news or leave news then further drops.

        1. See my comment yesterday about the temptation to chuck all tech analysis out of the window.
          So what do you do then ? Guess? Or nothing?

          1. think nothing markets will be there after the vote, think its good for your style of trading using oversold/overbrought

          2. Hmm, that’s interesting, survived the opening, if it can weather the storm for half an hour then we might have a fight on here.
            I didn’t 🙁 Nice -12 to start the day.

  19. funny looking at the markets keep thinking of that saying its “its too big too fail” little of UK has put the cat among the pigeons lol

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