Support 6065 6056 6046 6045 6000 5993
Resistance 6089 6095 6163
Good morning. Another very volatile day trading around the 6100 level, however still only reaching 6075-6125 extremes yesterday. This is obviously becoming a key support/resistance level and a significant break either up or down must be very close by now. With six straight sessions of falls we may well start to see the start of move up into the Christmas period. However, with the Fed interest rate decision on the 16th, most bulls will be waiting till then. Sector wise there were no real strong trends with most sectors lower and a few special situations shares bucking this trend.
US & Asia Overnight from Bloomberg
Asia’s benchmark stock gauge headed for its biggest weekly drop since September as investors awaited data on Chinese retail sales and industrial production over the weekend.
The MSCI Asia Pacific Index was little changed at 129.75 as of 9:07 a.m. in Tokyo, on course for a 1.8 percent decline this week, a third weekly drop. The gauge is down 5.9 percent this year as a rout in commodities and slowing Chinese growth weighs on the earnings outlook for companies from Sydney to Tokyo, before a Federal Reserve decision next week on whether to raise U.S. interest rates.
“A cautious start to Friday is expected,” said Tony Farnham, Sydney-based strategist at Patersons Securities Ltd. “Traders are now looking ahead to the Chinese retail sales, industrial production and urban fixed investment data due Saturday and, a little further afield, to next week’s FOMC meeting.”
Traders now see a 76 percent chance the Fed will increase interest rates, with U.S. policymakers expected to confirm the world’s biggest economy is strong enough to cope with the first rise in borrowing costs since 2006.
Japan’s Topix index fluctuated, as did Australia’s S&P/ASX 200 Index. New Zealand’s S&P/NZX 50 Index advanced 0.5 percent and South Korea’s Kospi index added 0.3 percent.
Futures on the Hang Seng Index gained 0.3 percent in most recent trading, while contracts on the FTSE China A50 Index fell 0.2 percent. Chinese stocks retreated on Thursday amid concern the government’s efforts to make domestic consumption and services a bigger part of the economy won’t be fast enough to offset sluggish demand for industrial goods and commodities.
China Data
Chinese retail sales will probably rise 11.1 percent in November from the previous year, after an 11 percent gain the month before, according to the median estimate in a Bloomberg survey of economists. Industrial production is expected to advance 5.7 percent, up from 5.6 percent in October.
The billionaire chairman of Chinese conglomerate Fosun Group has become unreachable, Caixin magazine reported on its website, citing people it didn’t identify. Fosun’s stock tumbled more than 11 percent to $1.55 in over-the-counter trading in New York Thursday, the biggest decline since August.
Futures on the Standard & Poor’s 500 Index added 0.2 percent. The underlying equity gauge rose 0.2 percent on Thursday, halting a three-day slide, as energy shares climbed for a second session and airlines advanced. [Bloomberg]
FTSE Outlook and Prediction
We could have a fairly flat day today (famous last words!) and it looks fairly pivotal that the 6050 support area holds, otherwise we are looking at a dip to 5993 I feel. We have the bottom of the 10 day Bianca channel here, and also the 20 day Raff so its probably worth a long with a tight stop. The 6050 area is showing as support on the 10min channel (albeit declining), a 30min channel (also declining) and also the 100 Hull moving average on the 2 hour chart. Todays pivot is 6089 so we will probably have a bit of resistance here, though 6100 is stronger resistance, despite the fact that the bulls will be desperate to close the week above this level. After yesterdays bearishness, I don’t think we will be pushing too high today, though 6250 is the 25ema on the daily chart for swing short territory. It appears I was a bit too gung ho with my comment on Wednesday that we may see 6300 this week! It will be interesting to see if the 6050 level holds as support this morning, and if it does then we could spring up form here next week, as the daily RSI(10) is now at 27, the level last seen on 15th November when the FTSE tested 6000.