Support 6024 6000 5972 5950
Resistance 6053 6060 6078 6127 6206
Good morning.
Market Summary for Monday
The FT100 still showed high volatility by swinging more than 100 points during the day. It breached 6100 at the open then fell briefly below 6000 soon after Wall Street opened. The oil price again seemed to be the main driver as it has become a proxy for the state of the global economy. It fell most of the day from $34 to $31.5. As a result the oil (and commodity) sectors were some of the worse performers yesterday with oil consumers such as travel shares benefiting. All in all it was a pretty bearish day down to 6000, with just a small bounce for that 6040 long in the end, showing the importance of getting the stops to breakeven as soon as possible. However, it was a good fight back from the bulls from 6000, managing 6085 out of hours though its slipped back overnight. Still thinking 6050/6150 area is a short term top, especially as oil looks to have slipped (pun intended!) from the $35 area possibly en route to $16.
US & Asia Overnight from Bloomberg
Asian stocks dropped, with the regional benchmark index heading for its first decline in five days, as material and energy shares led losses after oil resumed its selloff amid signs China’s economy is deteriorating.
The MSCI Asia Pacific Index slid 0.3 percent to 122.29 as of 9:01 a.m. in Tokyo. The gauge on Monday capped its longest winning streak of the year, gaining 4.1 percent in four days, as optimism grew that central banks around the world will support financial markets. Crude tumbled Monday after China’s official factory gauge signaled a record sixth straight month of deterioration.
“We’re in for a period of continuing caution,” Angus Gluskie, a managing director who oversees $550 million at White Funds Management in Sydney, said by phone. “It’s a period of uncertainty. China remains the biggest concern for investors. If the Chinese situation develops more adversely, it could have greater ramifications.”
Federal Reserve Vice Chairman Stanley Fischer said on Monday that the impact of recent market turbulence on U.S. growth could factor into decision-making, helping U.S. stocks shrug off the oil slump to close little changed. Futures on the Standard & Poor’s 500 Index fell 0.4 percent on Tuesday.
Japan’s Topix index lost 0.8 percent, after rallying more than 5 percent over the previous two days on the Bank of Japan’s unexpected stimulus boost. South Korea’s Kospi index slid 0.6 percent. New Zealand’s benchmark gauge added 0.2 percent. Australia’s S&P/ASX 200 Index retreated 0.6 percent before the nation’s central bank reviews its monetary policy.
China Futures
Futures on the FTSE China A50 Index added 0.2 percent in most recent trading, while those for Hong Kong’s Hang Seng Index slipped 0.2 percent. The Shanghai Composite Index slumped 1.8 percent on Monday after official factory gauge signaled a record sixth straight month of deterioration, raising the stakes for policy makers struggling to prop up the economy amid a second bear market in stocks since June and a currency at a five-year low.
Crude futures fell as much as 0.9 percent on Tuesday after slumping 6 percent on Monday. U.S. inventories probably rose by 3.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. [Bloomberg]
FTSE Outlook and Prediction
Initially it looks like 6055 is a fairly key area as we have the daily pivot here and also a 30min coral trend change with resistance here too. As such I think this level will be worth an early short. With the drop off the 6120 area yesterday and the oil price dropping, I think the FTSE might be nearing the end of its run up from 5600. If 6000 breaks then there is S1 at 5980, and then 5950 below that were we have the 10 day Bianca channel, and the daily EMAs. Above 6055 then its likely to reach 6100 again (it could infact probably go to 6200 and then drop and still keep the bearish future intact) where we have a PRT resistance on the the 30min, with 6140 above that for the channel. Given recent volatility, if it breaks above 6055 then going long is worth a go to target those areas, even though I haven’t put that on the trade plan below, mainly as the 100 Hull MA on the 2 hour has resistance at 6078. Google results last night drove the US markets up, but the FTSE only managed 6080 (US markets have since fallen back as well). Generally I am not felling overly bullish at the moment, despite us holding above 6000 yesterday, and the main resistance levels I am watching today are 6055, 6078, 6105 and 6127.