Good morning. Well that was a pretty bearish Monday in the end, with the FTSE following the oil price down as it made 5 year lows. I mentioned last week that I was expecting the S&P to drop down to the 25ema daily area at 2052 and it nearly got that yesterday. As its nearly there then that could set up bounce today. We are also at the bottom of the Raffs on both the FTSE and S&P. Santa Rally will have its work cut out if it keeps selling off! Bulls will be desperately keen to get the FTSE back above 6700 early this week, preferably today. This has become a bit of a regular pattern though with the weak bearish Monday, and then if we rally today, another bull Tuesday.
Asia Overnight from Bloomberg
Asian stocks fell, after U.S. shares dropped the most in almost seven weeks, as oil extended its decline and a stronger yen weighed on Japanese exporters.
The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 139.70 as of 9:06 a.m. in Tokyo after adding 0.1 percent yesterday. Japan’s Topix (TPX) index decreased 0.7 percent after the yen added 0.6 percent against the dollar yesterday. Brent crude and West Texas Intermediate slumped to five-year lows.
“The oil move we’ve seen has been large and rapid, and whenever you see those large and rapid moves in the market, it creates a large degree of uncertainty,” said Angus Gluskie, managing director at White Funds Management in Sydney, which oversees about $550 million. “In the long term, it will be positive in many ways, but in the short term, it’s an immediate blow to the financial positions of companies participating in the oil sector.”
South Korea’s Kospi index slipped 0.1 percent. Australia’s S&P/ASX 200 Index sank 0.7 percent, while New Zealand’s NZX 50 Index was little changed. Markets in China and Hong Kong are yet to open. The Shanghai Composite Index yesterday topped 3,000 for the first time since 2011 as brokerages surged on bets the world-beating stock rally will continue.
Futures on Hong Kong’s Hang Seng Index fell 0.1 percent in their most recent trading session, and contracts on the Hang Seng China Enterprises Index lost 0.5 percent.
Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The equity measure slid 0.7 percent yesterday, the most since Oct. 22, retreating from a record high as energy shares led declines.
WTI slipped 0.2 percent to $62.93 a barrel today after dropping 4.2 percent yesterday to its lowest since July 2009 amid concern hedge funds and other money managers bet too much on rising prices. Both Brent and WTI tumbled 18 percent in November as OPEC decided to maintain its output target.
FTSE Outlook
Im going to stick my neck out and be bullish today, with support at 6635, 6624 and 6611. Only in the even of the latter breaking will I then change stance to bear. I have been expecting the S&P to drop to test the 25daily ema and its nearly done that; we are at the bottom of the Raffs on the FTSE and the S&P so we could get a bounce after yesterday trending down day. I do hate trending days as that long obviously got stopped out and rather than just flip to short I decided against rushing in.