Good morning. Well we got the dip from the 6960 area (6958 on the spike up) and dropped all morning to the bottom of the 10 day Bianca at 6887, however, the bulls were battle wary and the rise didn’t really materialise from there, though it is hovering above 6900. Bottom of the 10 day Bianca is 6902 so will be interesting to see if this level holds during todays session, if not then a test of 6851 is likely. Few want to commit to longs (not surprisingly) when we are at record highs, and waiting to see how Greece plays out.
US & Asia Overnight from Bloomberg
(Bloomberg) — Japanese equity-index futures signaled the Nikkei 225 Stock Average may extend its longest rising streak this year, with Greece’s creditors reviewing a list of debt-reduction policies and Federal Reserve Chair Janet Yellen to address lawmakers. U.S. oil traded below $50 a barrel.
Contracts on the Nikkei 225 were bid 0.2 percent higher by 8:08 a.m. in Tokyo, while Australia’s S&P/ASX 200 Index rose 0.1 percent. Futures on the Standard & Poor’s 500 Index were little changed after the U.S. gauge finished less than 0.1 percent from a record. The euro was steady after slipping 0.4 percent yesterday. West Texas Intermediate crude was at $49.58 a barrel.
Greece presented creditors with a list of policies to implement a Feb. 20 deal for continued funding. An official said the list would be presented to euro-area members for discussion Tuesday. Federal Reserve Chair Janet Yellen addresses Congress in two days of testimony starting Tuesday, with investors watching for clues on the timing of an interest-rate increase.
“Fed Chair Yellen’s Congressional testimony is likely to reveal little new information about monetary policy as the political theater focuses on political agendas,” BNP Paribas analysts led by Paul Mortimer-Lee wrote in a note today. Regarding Greece’s proposals “there is a marginal risk of some controversy over whether the list is ‘‘sufficiently comprehensive to be a valid starting point’’ — as the eurogroup would have it — for completing the current bailout.”
The euro was at $1.1339 today. Approval of the Greek plans would offer a four-month reprieve for the country. At the same time, Prime Minister Alexis Tsipras must try to avoid defections within his anti-austerity Syriza party after it won power on pledges to take back control of Greece’s finances.
Under Review
The measures are first subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions that were known as the troika and from which Tsipras told voters Greece would break free. A draft was under discussion Monday evening, an official from the institutions said. The person asked not to be named because the deliberations are private.
Italian and Spanish securities surged yesterday, and Portuguese 10-year yields touched a record low, as the accord avoided a cash crunch that threatened to push Greece out of the currency bloc.
The Stoxx Europe 600 Index advanced for a fifth day to extend the highest level since 2007. The U.K.’s FTSE 100 Index surpassed a record close in intraday trading before closing little changed as lower-than-projected profit at HSBC Holdings Plc pushed the stock lower. Greece’s ASE Index slipped 4.5 percent last week. The market was closed on Monday for a holiday.
S&P 500
Six of the 10 main S&P 500 groups retreated yesterday, with phone shares losing 0.6 percent to lead declines. U.S. stocks posted their longest streak of weekly gains since the beginning of December as Greece reached a deal on Feb. 20 to extend its bailout program and investors speculated the Fed will keep rates lower for longer even as the economy shows signs of picking up speed.
Sales of previously owned U.S. homes fell more than expected in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9 percent to a 4.82 million annualized rate, the least since April, according to figures from the National Association of Realtors.
West Texas Intermediate crude oil for April delivery settled at $49.45 a barrel, having slipped 2.7 percent on Monday. Brent was down 2.2 percent at $58.90 in London.
Oil fell as fields in eastern Libya resumed pumping to Hariga port after a pipeline was repaired, according to state-run National Oil Corp. Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, is boosting crude output to as much as possible with the global price rout over, said Salim Al Aufi, undersecretary of the oil and gas ministry. [Ref]
FTSE Outlook
Initial support today is 6902 where we have the bottom of the 10 day Bianca – the channel that held well yesterday at 6886. However, it didn’t really bounce much so the bulls will be hoping bull Tuesday plays out from the off with 6902 holding. 6916 is the daily pivot to initial resistance there, and the range between the supports and resistance is getting pretty narrow now – so I expect we will see a break one way or the other shortly. The top of the 10 day is only at 6955 after all, with the 20 day at 6960. All time highs are at this level so bulls will be slightly cautious to see how it plays out. If we dip below the 10 day then 6851 looks likely to be tested. Below this then 6805 area is the next support. There are a few known unknowns at the moment (to quote Donald Rumsfeld) namely Ukraine, Greece, Yellen testimony etc so it pays to be a bit cautious!
I think the 10 day Bianca channel at 6902, maybe a little lower, 6890, will hold initially, with a rise today to 6955. What happens there, at the top of the 2 Bianca channels will be key – either a fall to 6855, or a rise to 6712, top of the 10 day Raff (20 day Raff is at 7032 so not far above). Sorry thats a bit vague and kind of covers 2 bases but at all time highs it will either break higher or the bears will come roaring in.