Good morning. Well that was pretty bullish yesterday in the end with the 5880 level from overnight holding pretty well. 5920 short got stopped out for a small loo but the 5970 one managed to run pretty much to target, closing at 5935 in the end. Then the bulls came charging back and took us back over 6000 where we have pretty much stayed since. Looks like decent support at 5975 today so the bulls will be keen to defend any dip to that area, and get things back above 6000.
US & Asia Overnight from Bloomberg
Asian stocks fell, dragged down by a retreat in Japanese shares as the nation’s markets opened after a three-day holiday. Energy and material companies led losses.
The MSCI Asia Pacific Index dropped 0.2 percent to 125.49 as of 9:01 a.m. in Tokyo. Global shares retreated and equity volatility surged while Japan was shut as investors weighed comments by Federal Reserve officials about the timing of U.S. interest-rate increases and renewed concern over China’s slowing economy sent raw-material prices tumbling.
Fed Chair Janet Yellen will deliver a speech Thursday in Amherst, Massachusetts, on “Inflation Dynamics and Monetary Policy.” This will give her an opportunity to emphasize that U.S. rates remain on track to rise in 2015, or validate the view of many investors that liftoff will be delayed until next year. European Central Bank President Mario Draghi said Wednesday it’s too soon to say whether risks to the economic outlook warrant a step-up in ECB stimulus.
“Japanese markets have still got some catch up to do after the uncertainty that’s been washing through global markets,” Tony Farnham, Sydney-based strategist at Patersons Securities Pty Ltd., said by phone. “The issue is gauging the extent of the slowdown in China and the ongoing debate about whether the Fed is doing the right thing.”
Fed Odds
With two Federal Open Market Committee meetings remaining this year, investors see the chances of an increase in October at 18 percent, and a move by December at 41 percent, according to trading in federal funds futures. Regional Fed presidents John Williams of San Francisco and Dennis Lockhart of Atlanta, both 2015 FOMC voters, have said they expect higher rates this year.
“Depending on whether you’re in the bear or the bull camp, every time a Fed speaker comes out, it either cheers you or sends you running for a handkerchief to cry into,” said Farnham.
Japan’s Topix index retreated 1.2 percent. South Korea’s Kospi index rose 0.7 percent and Australia’s S&P/ASX 200 Index added 0.4 percent. New Zealand’s NZX 50 Index rose 0.4 percent. Markets in Singapore and Malaysia are closed for holidays, while those in Hong Kong and China are yet to open.
Futures on Hong Kong’s Hang Seng Index slipped 0.3 percent in most recent trading. Contracts on the Hang Seng China Enterprises Index of mainland firms listed in the city lost 0.4 percent. Futures on the FTSE China A50 Index gained 0.6 percent.
China Growth
China will further cut its target for economic growth next year amid excess capacity, sluggish investment and weaker manufacturing, economists said. Government leaders will announce a growth objective between 6.5 percent and 7 percent for 2016, according to eight of 15 economists in a Bloomberg News survey conducted Sept. 17-22. Four said they expect a 6.5 percent goal. [Bloomberg]
FTSE Outlook
It appears that the 5975 area looks a good spot to try a long. The bulls will be helped after yesterdays action for a push up again and certainly on the 2 hour chart there is a bullish set up at the moment. Daily charts are still bearish so we may still get that decline to 5700, but certainly we bounced back well yesterday. There is a pretty decent rising 10 min channel which also has support at 5975, with resistance at 6060 area, however, the moving averages on 10min and 30min charts are bearish to start with so we may see a dip off that 6035 resistance initially. The daily pivot is at 5995 so there is initial support there, which may prevent the dip to 5975 though. Can be with a small long there and add at 5975 – fade in at the two supports instead. Below that 5975 then the bottom of the Bianca channels are 5934 and 5906 which would probably get hit, and if the momentum stayed bearish, the bottom of the Raffs at around 5850. If the 5975 trade in the trade plan breaks/gets stopped out then flip to short would be worth a go.