Good morning. The FTSE just missed my shorting area at 6385 yesterday and then fell away which was a tad annoying. I had expected a retrace to the 61.8% line of Tuesdays falls, but in the end it only managed to get to the 50% line, around 6370. Here was a bit of weird price action just prior to the close when the price was driven down quite hard, almost retesting the 6310 area mentioned, but soon bounced back, thus making it look like a bit of a stop killer. I didn’t get it on my charts but yesterday several people in the chat room experienced a ghost spike on the FTSE to 6600. Ghost spikes have a habit of coming true so bear that in mind over the next month or 2. Obama officially put forward Janet Yellen for the Fed chair job, a move that will see a fairly uninterrupted continuation of Bernanke’s policies of money printing. The impasse in the US continues and while the politicians faff about 800,000 government workers don’t get paid, still, be small fry compared to the fall out if they don’t raise the debt ceiling.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as health care shares rose while energy companies and materials producers declined. Japanese equities climbed as the yen weakened.
The MSCI Asia Pacific Index dropped 0.2 percent to 138.78 as of 1:18 p.m. in Tokyo after rising as much as 0.2 percent. U.S. House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, said congressional aides of both parties who spoke on condition of anonymity.
“The market obviously is expecting the gridlock to be resolved,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion). “But having said that, I think the market is uncertain until this is resolved, and so we’ve got choppy trading conditions ahead for the next week or so.”
Japan’s Topix index added 0.7 percent after yesterday rising the most since Sept. 19. The nation’s machinery orders rose more than expected in August, data showed today.
S&P Futures
Futures on the Standard & Poor’s 500 Index climbed 0.4 percent. The measure rose 0.1 percent yesterday amid signs that lawmakers could raise the debt ceiling and on optimism Janet Yellen won’t rush to withdraw stimulus if she becomes Federal Reserve chief.
President Barack Obama nominated Yellen, the current Fed vice chairman and an architect of its stimulus program, to succeed Ben S. Bernanke as central bank chairman. Most Fed policy makers said they were likely to reduce the pace of bond purchases this year, according to minutes released yesterday of their last meeting, which took place before the U.S. government partial shutdown started.
US Debt limit
U.S. lawmakers for the first time yesterday embraced one possible path out of the fiscal impasse – – a short-term deal to avoid default — even as they remained far apart on how to make it happen. The sticking point remains clear: House Republicans prefer to attach policy conditions to a deal, and Senate Democrats are dead-set against them. Any deal also would require finding a way forward that allows both sides to declare victory, though their deep differences make such a compromise difficult.
Also, the parties must resolve their related fight on ending the partial government shutdown, which only adds to the stakes as the standoff drags into its 10th day.
“We’re not going to vote against making sure that America pays its bills,” Representative Steny Hoyer of Maryland, the second-ranking Democrat in the House, said after leaving a meeting with President Barack Obama yesterday. “We think it ought to be longer-term.”
Obama has already said he could accept a short-term deal without policy conditions. The U.S. is entering the final week before it runs out of borrowing authority with a flurry of activity. Lawmakers are looking for a way to break the deadlock that has brought the country into a partial government shutdown and close to the $16.7 trillion debt limit.
FTSE Outlook
I see some continued bearishness despite what looked like a stop killing spike down at the close last night. in a similar vein to the Dax prediction above, I think the FTSE might dip from the 6380 area to test yesterday’s low at 6316, however if that breaks it opens up 6300 as the round number support and 6280. A break through the 200 ema area at 6382 will invalidate the drop potentials and we could then be on for a test of the top of the 10 day Bianca channel at 6400 and the 20 day at 6456. Today’s pivot is 6342 so that may act as support for a while on any drops. Looking at the 30 minute chart there are a few resistance’s around the 6380/90 area hence why I think the bulls might struggle a bit there, certainly initially.