Good morning. A good day for the trades yesterday apart from the long at 6457 – went in just a bit too early as it dipped to the bottom of the 10 day Bianca at 6443 before bouncing overnight. Not such a good day for Obama who has lost control of the Senate, with the Republicans sweeping the Democrats aside in voting across the US, leaving Obama to contend with a Republican-dominated Congress in his last two years in office. Overnight FTSE action doesn’t seem too worried, now testing 6500 as I write this, though the bulls will need to break 6510 first thing to push any higher. A second test of the Bianca 10 day might hold, whilst a 3rd test will most likely break and put the bears in the driving seat again.
Asia Overnight from Bloomberg
U.S. equity-index futures climbed after Republicans won control of the Senate, while gold and Brent crude oil retreated to four-year lows. The yen weakened and Asian stocksslipped from a six-week high.
Standard & Poor’s 500 Index futures advanced 0.3 percent as of 2:39 p.m. in Tokyo, with the U.S. gauge trading within 0.3 percent of a record high. Brent slid 0.4 percent in London after closing yesterday at a four-year low, dragging energy shares to the biggest loss among the MSCI Asia Pacific Index’s industries. The yen lost 0.4 percent against the dollar and gold fell to a new four-year low.
Republicans were on track to claim at least the six seats needed to take control of the Senate in January, positioning Mitch McConnell, the chamber’s Republican leader since 2007, to set the legislative agenda for the final two years of Barack Obama’s presidency. Some investors consider Republican policies as more favorable toward businesses, said Desmond Chua, a strategist at CMC Markets in Singapore.
“This should help sustain the rally,” Chua said. “U.S. equities are in an upward trajectory, supported by strong corporate earnings and improving economic fundamentals.”
The S&P 500 has rallied 8.9 percent this year, compared with the Asian stock measure’s 0.1 percent gain. Hong Kong’s Hang Seng Index slid 0.5 percent and a gauge of Chinese equities listed in the city retreated 0.8 percent today as the HSBC China Services Purchasing Managers Index fell to 52.9 from 53.5 in September. The Shanghai Composite Index dropped 0.2 percent.
Oil Slumps
Brent futures traded at $82.49 a barrel, while West Texas Intermediate contracts were little changed after closing at $77.19 a barrel yesterday, the lowest level since October 2011.
Oil futures have slumped deeper into a bear market as the largest producers in the Organization of Petroleum Exporting Countries resisted calls to cut output. Global supplies are climbing, with the U.S. pumping at the fastest pace in more than 30 years even amid signs that consumption will weaken.
The yen weakened to 114 per dollar after gaining 0.4 percent yesterday. The currency slumped to an almost seven-year low Nov. 3, in the wake of the Bank of Japan’s unexpected increase to Japan’s monetary-base target. BOJ Governor Haruhiko Kuroda said today there is no limit to measures the central bank will take in its quest to rekindle inflation.
Japan’s Topix index, which jumped 7 percent after the BOJ announcement through yesterday, pared its loss today to 0.1 percent. SoftBank Corp. plunged 3 percent as the company projected its first profit decline in nine years amid losses at U.S. unit Sprint Corp.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed after sinking 0.2 percent from a more-than five-year high yesterday.
Gold tumbled as much as 1.4 percent and touched $1,153.13, the lowest intraday level since April 2010. Silver dropped 1.4 percent to $15.8053. [From here]
FTSE Outlook
Well, we have had a test of the bottom of the 10 day Bianca which has held on the first touch, and the daily EMAs were slightly breached but we are back above them now. The bulls will need to break 6510 this morning to push higher now, but with the political landscape shifting in the US, the bulls might be a little bit wary. Yesterday morning played out very well with the initial long and then the short off the pivot, so with todays pivot at 6470 we have initial support there. I do think we might see a bit of a dip today, probably to test 6450 and maybe yesterday’s low. If we break 6442, then 6390 looks likely, with a brief bounce off the 10 day Bianca at 6430.
Support so entry levels for a possible long
- 6470 daily pivot
- 6442
- 6430
- 6392
Resistance so entry levels for a possible short
- 6510
- 6574
- 6613