Good morning. Well yesterday ended up being almost a carbon copy of Wednesday and again, somewhat unfortunately, I was too conservative with the opening drop. Still, we got the rise to 6583 before more downside kicked in, somewhat annoyingly just missing the order at 6585 (I had 6588 as the resistance so thought I had set enough room, still if it was always that easy to predict…) the long order just missed too, sitting at 6525, and the low was 6533. Ever feel like some days it just isn’t your day!?! Been fairly quiet in terms of major news as well apart from jobless claims falling unexpectedly yesterday not moving things that much, so it all feels like its coiling up for a big move soon, and probably just being propped up so that the Q3 figures are alright. Maybe that’s me just being overly cynical though. Once Q4 starts early October might get bearish, as yesterday, looking at the S&P could well have been set for a break of 1695 (they tried) before it snapped back to 1700….. again! Bulls are certainly defending that level at the moment.
Asia Overnight from Bloomberg
Asian stocks are headed for the best monthly gain since September 2010 after U.S. jobless claims unexpectedly fell and Japan’s inflation accelerated to the fastest pace since 2008.
The MSCI Asia Pacific Index rose 0.2 percent to 140.83 as of 12:22 p.m. in Hong Kong, as all 10 industry groups advanced. The gauge climbed 8 percent this month through yesterday, touching a four-month high on Sept. 23, after the Federal Reserve unexpectedly maintained its stimulus program. It has jumped 7.7 percent this quarter.
“The U.S. jobs data was a positive surprise,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, said by telephone. “I don’t think the Fed will do anything until December as they’ll want to see not just one good data point, but a series of steady improvements. It’s been a very solid quarter for markets.”
The September gains pushed valuations on the Asia-Pacific gauge to 13.7 times estimated earnings yesterday from 12.7 at the end of August, according to data compiled by Bloomberg. That compares with 15.4 for the S&P 500 yesterday and 14.3 for the Stoxx Europe 600 Index, the data show.
First-time claims for unemployment benefits in the U.S. dropped by 5,000 to 305,000 last week, Labor Department data yesterday showed, compared with the 325,000 median forecast in a Bloomberg survey of economists. The government’s final estimate of U.S. growth showed that the economy expanded at a 2.5 percent annualized rate in the second quarter, unrevised from the previous report.
Dax
The DAX continues to plod along in a fairly narrow range with the top at 8699 and the bottom at 8600, a break of one of those levels should get things moving a bit more, though all the while it bounce between the first resistance and the first support is good for picking up points. If the DAX can get above 8664 (currently where it is as I write this) it should hit the daily ProTrend line at 8694. Breaking that will get bullish for a while. Support is at 8600, break that and it gets bearish for a while instead! I have put a drop off from the 8695 area with the blue arrows below as week end, month end, quarter end could see some profits being booked after a fairly decent month/quarter and I think we may see a test of the bottom of the 20 day Raff at 8590.
FTSE Outlook
We look to be opening bang on the pivot at 6560 but with a fairly bearish looking EMA situation on the 30 minuet chart. They are just in the process of crossing as I write, so we could be on for an initial dip. Again. That said, the coral is also lending support at this level and is still green, showing an uptrend. Just looking to the S&P there is still significant resistance at 1703 and if that holds, and the bears can break 1695 it could well drop to 1680. For the FTSE I am going for the drop of the resistance level again, rather than a break through and then a dip to test the bottom of the 20 day Bianca at 6543. For the open indicators point to a possible drop but there is support at 6560 so it may just pop up to the 6580 area on the open instead. As with yesterday it’s a tricky one to call accurately. Bottom line support is the same as yesterday at 6525 where we have the bottom of the 10 day channel, whilst the Raff channels are a lot wider – support down at 6450 currently on both, but with 10 day Raff resistance at 6615. Basically I am thinking Dax will drop off from 8690, FTSE from 6580 and the S&P from 1703, for the same reasons as mentioned in the DAX section above – month end, week end, quarter end so getting some profits banked. I am therefore more inclined to stay bearish and look for short entries at the moment.