FTSE 100 Support 7075 7054 7050 7043 7012
FTSE 100 Resistance 7088 7124 7140 7141 7154

Good morning. Well we got the dip and rise yesterday as expected, with the low just missing the bottom of the daily Bianca channel by a whisker. The bounce from 7020 lasted for most of the day and saw an overnight high just shy of the recent high at 7124, before Samsung woes dragged Asia down, and the futures with it. Sterling continues to weaken, 123 to the dollar as I write this. Its looking like traders are more certain of a December rate rise by the Fed as well. Gold continues to hold above the 1250 level for the moment, while yesterday saw a 3% rise in oil – also helming fuel the FTSE 100 rise. We will we get the usual pattern of Bull Monday, Bear Tuesday this week?

US & Asia Overnight from Bloomberg

The dollar climbed versus all its major peers as bonds dropped after investors boosted expectations for a Federal Reserve interest-rate increase this year. Asian stocks reversed gains as Samsung Electronics Co. and Chinese developers tumbled.

The MSCI Asia Pacific Index dropped by the most this month, led by technology shares after Samsung told retail partners to stop sales and exchanges of its Galaxy Note 7 smartphone. The greenback climbed at least 0.5 percent against currencies from New Zealand to South Korea and Taiwan as 10-year Treasury yields added four basis points following Monday¹s market holiday. U.S. crude was near its highest price in 15 months.

Stocks unwound initial gains as investor nervousness remains amid concern over the looming U.S. presidential election, the U.K.¹s planned departure from the European Union and the potential for a U.S. interest-rate increase. The Bloomberg Dollar Spot Index is climbing for the sixth time in seven trading sessions as expectations build that the Fed will tighten policy in December for the first time since the same period in 2015.

U.S. dollar gains are ³entirely linked to the fact that the market has been upwardly rerating expectations of a December rate hike,² said Sue Trinh, head of Asia foreign-exchange strategy for Royal Bank of Canada in Hong Kong. ³Three weeks ago, the implied probability of a December hike discounted by fed funds futures was under 50 percent, today it is close to 70 percent.²

Crude held most of its biggest one-day gain since Sept. 28 as ministers from some of the world¹s largest oil-producing nations gather in Turkey, after provisionally agreeing to freeze output last month. Russia indicated it¹s willing to join OPEC efforts to stabilize the market, while the Saudi energy minister said he¹s ³optimistic.²

³The fact that Russia has shown willingness to cooperate with OPEC is a tailwind for oil prices going forward,² said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. ³In the short term, it¹s positive for oil and mining shares, and it¹s also improved market sentiment.²

Stocks

The dollar-denominated MSCI Asia Pacific Index retreated 0.5 percent by 1:10 p.m. Tokyo time, as technology shares had the biggest declines as a group. The Kospi index slipped 1.1 percent in Seoul with Samsung tumbling as much as 7.3 percent.

³Within Asia, Samsung¹s problems are a major issue that¹s effecting electronic partsmaker shares,² said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co. ³The decline in Korean stocks is mostly a reflection of that.²

The industry¹s fortunes were split between suppliers of Samsung and Apple Inc.¹s iPhone. In Taiwan, shares of Radiant Opto-Electronics Corp., a Samsung supplier, plunged as much as 8.4 percent while HannsTouch Solution Inc. lost 9.9 percent. Among makers of iPhone components, Alps Electric Co. and TDK Corp. advanced in Tokyo, and Japan Display Inc. climbed 4.1 percent.
In Hong Kong, the Hang Seng Index and the Hang Seng China Enterprises Index each dropped more than 1 percent.

The Topix gained 0.5 percent from Friday levels, rising for the fifth time in six days, while Australia¹s S&P/ASX 200 Index increased 0.1 percent. The Shanghai Composite Index rose 0.4 percent, adding to the 1.5 percent surge it posted Monday when shares resumed trading in China after a week-long break.

Global trading got off to a rocky start in October amid speculation that the European Central Bank will start tapering stimulus and as hawkish comments from Fed officials boosted bets on a rate increase in 2016. Minutes from the U.S. central bank¹s September meeting will be released on Wednesday, and data on retail sales, producer prices and consumer sentiment are due Friday. Investors are also seeking clues as to the health of corporate America, with Alcoa Inc. kicking off the next earnings season on Tuesday.Futures on the S&P 500 retreated 0.2 percent after the underlying benchmark climbed 0.5 percent on Monday.

Currencies

The yen, which typically moves at odds with Japanese stocks, dropped 0.3 percent to 103.86 per dollar, weakening for the 10th time in 11 sessions.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.2 percent. The kiwi tumbled 1 percent while the Aussie dollar and the South Korean won each weakened more than 0.7 percent. The Philippine peso slid 0.3 percent and touched a seven-year low of 48.51 per U.S. dollar.

The offshore yuan also weakened, slipping for an eighth straight day in its longest retreat since 2014. The currency was down 0.1 percent to 6.7208 a dollar in Hong Kong, touching its weakest level since Jan. 7. The onshore-traded yuan declined 0.1 percent and hit 6.7154 per dollar, its lowest since September 2010.

Mexico’s peso held gains near its strongest level in a month after surging almost 2 percent last session on speculation Republican Party candidate Donald Trump’s performance in the second U.S. presidential debate wasn¹t strong enough to boost his chances against Democratic nominee Hillary Clinton.

“With Secretary Clinton taking the upper hand at the debate, negative factors have been scaled back a little for the markets,” Matsuno at SMBC Friend Securities said.

Bonds

Treasury notes due in a decade yielded 1.76 percent as trading resumed following the Columbus Day bond-market holiday.
The decline in Treasuries is being driven by the willingness of Saudi Arabia and Russia to cooperate on an oil output deal, said John Gorman, head of non-yen rates trading for Asia and the Pacific at Nomura Holdings Inc. in Tokyo.

Asian government debt followed suit, with yields on 10-year Australian bonds up six basis points, or 0.06 percentage point, to 2.24 percent. Yields on similar maturity notes in Japan climbed by more than one basis point and those in South Korea climbed five basis points.

Commodities

West Texas Intermediate crude slipped 0.2 percent to $51.26 a barrel after jumping 3.1 percent last session to its highest closing price since July 2015. Brent traded at $53.05 per barrel.

Oil has gained almost 15 percent since the Organization of Petroleum Exporting Countries provisionally agreed last month to cut production for the first time in eight years. The group¹s members meet this week in Istanbul for talks on implementing the deal and Saudi Arabian Energy Minister Khalid Al-Falih said it¹s not unthinkable prices will rise to $60 a barrel by the end of this year.

Gold for immediate delivery was down 0.1 percent to $1,258.69 an ounce, heading for its ninth decline in 11 trading sessions. [Bloomberg]

FTSE 100 Outlook and Prediction

For today I am going to go with my gut feel and follow the bull Monday, bear Tuesday pattern, with a short from the daily pivot area at 7088. We also have the 25ema on the 30min here, after an overnight cross to bearishness on the moving averages. Its also the 100 Hull MA on the 2 hour which normally would be support, but has been broken through by the bears after that fall overnight off the back of the weaker Asian session. There is still concern over the looming U.S. presidential election, the U.K.’s planned departure from the European Union and the potential for a U.S. interest-rate increase, all weighing on traders minds. Yet some forecasters are still talking about 7400 coming soon?

Anyway, for today I think a decline down towards the bottom of the 10 day Bianca channel at 7043, and possibly the 20 day at 6993 is likely. If 6993 breaks then 6970 and 6900 are the next supports of note, but the bears will probably need a bit of fear in the markets to break the 7000 level with conviction. Which may come from somewhere unexpected. If oil rises again today then of course that will help the FTSE again, and we may see the bulls manage to break through that 7088 level and push towards the 7130 and 7150 levels. For now, I am watching 7088 as a decent short entry for a bit of FTSE 100 weakness today.