Good morning. Well that 6317 level proved pretty strong resistance – weird as the pivot was 6319 and the only thing about 6317 was it was the spot for my short order! I thought the third test later in the day when the US opened was going to break it but it didn’t and we fell away to an overnight low at 6255 – the bottom of the 10 day Bianca channel. Asia has been pretty optimistic and we are bouncing back to 6300 as I write this, mainly fuelled by further Chinese stimulus hopes. That said there is some decent resistance at 6307 not he 2 hour chart, and the 30minute at 6325.
US & Asia Overnight from Bloomberg
Asian stocks climbed, with the regional benchmark index heading for its first advance in three days, as technology and phone shares advanced.
The MSCI Asia Pacific Index rose 1.2 percent to 133.04 as of 9:47 a.m. in Hong Kong. The gauge slipped in the past two days, while the Shanghai Composite Index dropped for the first time in six days on Wednesday after data showed Chinese factory-gate prices matched their biggest slump since the global financial crisis, underscoring headwinds for the world’s second-largest economy.
“Stimulus hopes are putting a pause to the correction that we’ve seen this week,” said Audrey Goh, an investment strategist at Standard Chartered Plc in Singapore. “We’re expecting more stimulus from China since external demand is quite weak and domestic consumption has been decelerating. China could increase stimulus by increasing their fiscal spending.”
Japan’s Topix index rose 0.8 percent, reversing earlier losses of as much as 0.6 percent as the yen headed for its first decline against the dollar in four days. South Korea’s Kospi index climbed 1.1 percent after the nation’s central bank kept its key interest rateunchanged for a fourth month as it weighs a pickup in domestic activity against a continued slump in exports.
Regional Gauges
Hong Kong’s Hang Seng Index gained 0.8 percent. Taiwan’s Taiex index climbed 1.5 percent, while Singapore’s Straits Times Index rose 0.7 percent. Australia’s S&P/ASX 200 Index added 0.3 percent and New Zealand’s S&P/NZX 50 Index advanced 0.3 percent. China’s Shanghai Composite Index increased 0.3 percent.
E-mini futures on the Standard & Poor’s 500 Index rose 0.4 percent. The underlying gauge fell 0.5 percent on Wednesday as Wal-Mart Stores Inc. predicted earnings will decline next year and quarterly results from JPMorgan Chase & Co. disappointed.
Bets on the Federal Reserve boosting borrowing costs at its October meeting slid to just 4 percent and odds of an increase before the end of the year are now 27 percent.
Oil declined for a fourth day, heading for its longest losing streak since July, as U.S. industry data showed crude stockpiles increased in the world’s biggest consumer. [Bloomberg]
FTSE Outlook
Looking at the 2 hour chart there is resistance from the Hull moving average at 6307, so we may well get an initial dip from this area, down to the 25ema on the 30minute at 6385. If that hold initially and the bulls can build on the overnight strength then we might get another leg up towards 6325. However, from there we could well dip again as the Dow is just flirting with the 17000 level and trying to hold above it. If not then a dip down to 16500 still looks distinctly possible. Shorts off the 200ema on the 30min chart at around the 6320 area look like a decent play, and that would double top with yesterdays high as well. The bears will need to break 6255 or a leg lower, though the daily chart has support at 6240 with the 25ema and bottom of the 10 day Raff and then the 20 ay Raff at 6225. As such, while I am still feeling bearish for a dip from where we currently are, its important not to fall in love with the downside, as I think this will turn up again soon for a decent climb….. maybe all time highs before the year end? Thats a bold statement!