Good morning. Well that was a frustrating day. Got the movement right with up, down then up again, but the stops got hit on all the trades – shorts got stopped out then the 5975 long got stopped out, before it rallied 100 points. The joy of bear market trading with increased volatility. Anyway, its back above 6000 now so could see a little bit more upside in the short term before another leg down. The Bianca resistance is 6125 (10day channel) first, then 6200 for the 20 day. Can the bulls add 100 today to hit that resistance? Yellen was still inferring a 2015 rate rise during her speech yesterday.
US & Asia Overnight from Bloomberg
Asian stocks rose after Federal Reserve Chair Janet Yellen said the central bank is on track to raise interest rates this year.
“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Yellen said during a speech Thursday in Massachusetts. “But if the economy surprises us, our judgments about appropriate monetary policy will change.”
The MSCI Asia Pacific Index added 0.2 percent to 125.11 as of 9:11 a.m. in Tokyo. The regional benchmark measure has fallen 15 percent since the end of June, on course for its worst quarter in four years, as the Fed prepares to raise rates with financial markets rattled by concern slowing Chinese growth.
“The framework the Fed has provided is a reasonably comforting one,” Shane Oliver, global strategist at AMP Capital Investors Ltd., which manages $112
billion, said by phone. “Of course markets are unusually twitchy at the moment and that’s not going to go away any time soon. The Fed will only be raising rates when they’re confident growth is on a sustainable track. It’s a more positive message.”
New Arrows
Japan’s Topix index added 1.1 percent. Prime Minister Shinzo Abe unveiled a new economic growth target Thursday and vowed to halt the nation’s population slide. The premier laid out three new “arrows” of his Abenomics plan: a strong economy, increased support for families with children, and social security. The Bank of Japan’s main inflation gauge dropped into negative territory, data showed Friday, as weak domestic demand and plunging oil prices wiped out the impact of Governor Haruhiko Kuroda’s unprecedented monetary stimulus.
New Zealand’s S&P/NZX 50 Index gained 0.3 percent and Australia’s S&P/ASX 200 Index climbed 0.9 percent. South Korea’s Kospi index rose 0.2 percent.
Slower demand from China, where growth is projected to drop below 7 percent this year, has helped push down commodity prices, sapping already low inflation in the U.S. The Fed’s preferred measure of prices rose 0.3 percent in the year through July and has been under its 2 percent target since April 2008.
Resuming Schedule
Yellen is resuming her planned schedule after feeling unwell toward the end of her speech, Fed spokeswoman Michelle Smith said in an e-mailed statement. The Fed chief felt dehydrated, Smith said.
Futures on Hong Kong’s Hang Seng Index lost 1.6 percent and contracts on the Hang Seng China Enterprises Index of mainland firms listed in the city slid 1.8 percent in most recent trading.
E-mini futures on the Standard & Poor’s 500 Index added 0.4 percent. The underlying gauge, which closed before Yellen gave her speech, declined 0.3 percent. [Bloomberg]
FTSE Outlook
We have the daily pivot at 6009 today and looks like it would be worth a long there, for a possible rise to test the 6075 area today. There is also a chance that we see the 6125 10 day Bianca level which could well be worth a short, though it’s probably going to hit later today so you may not want to hold that over the weekend. There is a possible rise on the Dow brewing to 16600 with a few gaps to close on the way up also, so that may drag the FTSE up with it while it climbs another 300. That was certainly a decent bear market rally last night, just a shame that the 5975 long was stopped out just before it started. With hindsight needed a 30 point stop but that felt a bit wide…. very annoying sometimes! Anyway, for today I can see last night bullishness continuing with a rise towards 6070 so favouring the long side for the moment. Buy the dips today!