Good morning. Well we got the dip and rise yesterday as expected though we didn’t quite reach the lower target area at 6610/13. Still, after the dip the bulls fought back though we spent quite a while flatling around the 6635 area where we had the resistance, before a break higher. With prices closing above that level we could be on for a bullish path, though the press is getting a bit over excited with 8 up days in a row now, and that’s usually a warning sign. Looking at Bianca below we certainly have a lot of green daily candles in a row since the 6310 low the other week.
We have the delayed payrolls data due out today as well (delayed due to the government shut down) which is forecast to show employers added 180000 jobs.
We also have a 7.09 divi which will be applied – 16:30 for IG, other times by other providers so bear that in mind too.
Asia Overnight from Bloomberg
Emerging-market stocks fell for the first time in six days and Asian currencies weakened before U.S. jobs data. Crude oil declined to the lowest level since July, while nickel rose. The MSCI Emerging Markets Index dropped 0.3 percent at 12:51 p.m. in Tokyo. Standard & Poor’s 500 Index futures slipped 0.1 percent. Hong Kong’s Hang Seng Index slid 0.4 percent as China Mobile Ltd. slumped. China’s yuan fell for the first time in seven days versus the dollar, while Japan’s yen lost 0.2 percent. Crude oil was down 0.3 percent at $98.92.
U.S. employers probably added 180,000 workers in September, the most since April, according to a Bloomberg survey. The data was delayed by a 16-day government shutdown that spurred economists to push out expectations for tapering of Federal Reserve stimulus. China Mobile dropped 3.6 percent after posting the biggest profit decline since 1999.
“Although there’s a strong likelihood tapering will not start this year, investors remain mindful of key data to ascertain the state of U.S. economic recovery ,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. “The jobs data will give markets a good gauge.”
Fed Stimulus
The U.S. Labor Department will probably say the jobless rate held at 7.3 percent, according to median estimates in Bloomberg surveys. Economists expect the Fed to delay the first cut to its quantitative-easing program until March, according to a separate poll conducted Oct. 17-18. The Fed’s last two policy meetings this year are on Oct. 29-30 and Dec. 17-18. The Richmond Fed also releases its manufacturing survey for October.
U.S. Earnings
Companies including Texas Instruments Inc. and Netflix Inc. were among S&P 500 members that reported quarterly earnings after U.S. markets closed. Texas Instruments, the largest analog-chip maker, forecast revenue and profit that fell short of current analysts’ estimates, while Netflix’s third-quarter earnings per share exceeded projections.
FTSE Outlook
We have a triangle on the 30 minute chart which will break today I am sure, and with the pivot and ProTrend support line coinciding at 6645ish then a long from there could well be viable today. However (there is always a however isn’t there!) if the 6635 level breaks then I think we could see a sentiment shift and the bearishness will kick in for the next few sessions. We have the delayed US jobs news out later and that might provide a bit of a bell weather indication of the next few sessions. I am therefore cautiously bullish today but ready to change stance to bear fairly quickly. If 6594 breaks then I am full bear for the rest of this week! Looking at the Bianca chart below the 10 day channel is pretty narrow so could easily break through either the resistance at 6725 or the support at 6636; the 20 day channel has the top at 6692 for today whilst we are still testing the top of the 50 day area – hence cautiously bull still. The EMAs on the 30 minute chart are bullish which is why I think we will get an initial rise, albeit small, and the FTSE has held up relatively well overnight.
Bottom line is that bulls have to defend 6635 and 6595 if they are to have a hope of pushing higher to 6700/6800 in the near term. Bears will be having a go at 6663 I feel, at least initially. All a pretty tight range at the moment, which is why we drifted around a bit yesterday.