Good morning. Two great FTSE trades yesterday which were both done off orders so even easier. Hopefully you managed to replicate them. The bulls are really struggling to hold onto the gains at the moment and the 10 day channels have started to head downwards again, which probably doesn’t help my plan for 6400 in September. Maybe 6300 on the 9th was the limit of the bounce from 5800…. The daily chart EMAs are still bearish so unless the bulls can pull away from the 6030 area if hit today we could be starting the next leg down. Its all still quite jittery over the uncertainty with US rate rises. Will it be this year, will it be next? Whats the real state of the economy, was the China wobble a blip or is everything slowing down? Its no wonder the market doesn’t know what to do! Anyway, for today, I can see a dip down to the bottom of the Bianca channels at 6030ish before a bounce back again.
US & Asia Overnight from Bloomberg
Most Asian stocks rose, following a rebound in U.S. equities. Consumer and material shares led gains.
Four shares climbed for each that fell on the MSCI Asia Pacific Excluding Japan Index, which was little changed as of 8:04 a.m. in Hong Kong. Japanese markets are closed for a holiday. U.S. stocks rose after Fed Bank of Atlanta chief Dennis Lockhart joined Fed presidents from San Francisco, St Louis and Richmond on Monday, saying he remains confident policy will be tightened this year as concern over turmoil in global markets touted by Chair Janet Yellen last week should prove temporary.
“While we may see a moderately positive day for Asian equities following gains in U.S. equities, it’s hard to see such gains being sustained amid concerns over Fed policy,” said Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The reluctance of the Fed to move from very accommodative policy settings seems to indicate how fragile the U.S. economy can be, especially if you look outside the labor market.”
With Fed Chair Janet Yellen slated to speak later this week, potentially providing more clarity as to whether to expect a rate increase this year, interest-rate futures indicate traders remain skeptical of a move in 2015. Odds of a hike at the next meeting in October are at 20 percent, according to fed funds futures, while the probability of an increase at the last meeting of the year, on Dec. 16, is 48.8 percent, down from 58.7 percent a week ago.
Regional Gauges
Australia’s S&P/ASX 200 Index rose 0.4 percent. South Korea’s Kospi index added 0.2 percent. New Zealand’s S&P/NZX 50 Index climbed 0.1 percent. Markets in China and Hong Kong have yet to start trading.
The Shanghai Composite Index gained 1.9 percent on Monday, extending its advance for a second day as President Xi Jinping headed to the U.S. for his first state visit.
Industrial and technology companies rallied on speculation they may see increased orders following Xi’s visit, which concludes with a summit with President Barack Obama on Friday. Deals announced before the trip include the first Chinese-made bullet-train project in the U.S.
E-mini futures on the Standard & Poor’s 500 Index were little changed. The U.S. equity benchmark index rose 0.5 percent on Monday. [Bloomberg]
FTSE Outlook
For today I am expecting the bulls to try again to make some rises stick, after an initial dip to the 6080 area. We have rising PRT channels on both the 10min and 30min with support in that area, so if it is tested then I would expect it to hold. If not then a decline to the bottom of the Bianca channels – 6020 and 6036 – is distinctly possible. Initially I am thinking a dip from the daily pivot area at 6119 to start the day off. That said, Asia was pretty buoyant overnight, though the ASX a bit less so – declining after an initial spike up. The bulls will need to break 6130 to enable a push higher today, ideally to target 6180 where we have the top of the rising 30min channel.