Good morning. Well that was a pretty flat day and the 6383 long spent a long time doing nothing much, till the end of the US session when it eventually decided to run to the 6435 target. Prices stalled around there, awaiting the Fed later today regarding QE3 and its most likely demise. How long till QE4 then….?
All fairly quiet yesterday (everyone on half term?), though initially today the FTSE needs to break 6440 (yesterdays high) to invalidate the chance of a drop to 6325, though there is initial support from the pivot at 6393. If it breaks 6440 then the top of the 20 day Bianca at 6471 is in play.
Asia Overnight from Bloomberg
Asian stocks rose for a fourth day, after the Standard & Poor’s 500 Index closed near a record, amid optimism about U.S. earnings and economic data before a Federal Reservepolicy announcement.
The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 139.32 as of 9:01 a.m. in Tokyo, before markets opened in China and Hong Kong. The S&P 500 jumped 1.2 percent yesterday as investors dissected corporate results and confidence among U.S. consumers rose in October to a seven-month high. The Fed is on pace to end its monthly bond-buying and leave its key interest rate unchanged near zero when its end a two-day policy meeting today, according to Bloomberg News surveys of analysts.
“We saw strong consumer confidence and the expectation of a dovish Federal Reserve,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc, which provides trading services on equities, currencies and commodities. “As long as the Fed holds up its end of the bargain and implicitly pledges to keep rates low, then markets should have what they need.”
Japan’s Topix index gained 0.7 percent as Nomura Holdings Inc. posted profit that beat estimates and data showed industrial production rose in September. South Korea’s Kospi index rose 0.7 percent. Australia’s S&P/ASX 200 Index advanced 0.2 percent and New Zealand’s NZX 50 Index added 0.3 percent.
Futures on the S&P 500 slipped 0.3 percent today after the underlying gauge’s rally yesterday. Earnings from Amgen Inc. to T-Mobile US Inc. helped drive shares before the Fed’s policy announcement. The S&P 500 has rebounded 6.6 percent from a six-month low on Oct. 15 amid better-than-expected profits.
Beating Estimates
Almost 79 percent of S&P 500 companies that have reported so far have beaten earnings estimates, while 62 percent have surpassed revenue projections, according to data compiled by Bloomberg. Profit for S&P 500 companies rose 6.3 percent in the third quarter and sales increased 4.1 percent, analysts predicted.
Fed Chair Janet Yellen and her colleagues will focus on the U.S. economic outlook and end their bond-buying program as planned, according to 62 of 64 economists surveyed by Bloomberg News. Minutes from the last meeting, when policy makers pledged to keep U.S. borrowing costs low for a considerable time, showed officials expressed concern that U.S. growth may be at risk from a global slowdown.
FTSE Outlook
We have had a decent bounce from the lows last week but I am not sure how much longer it is going to run. The S&P has resistance at 1986, Dax at 9120 (then 9229), and the FTSE at 6461 initially, if it breaks through yesterday high at 6440. On the downside the bears will need to break 6400 to visit the 6326 area, which all may get helped by the Fed announcing the end of QE3 later. I do wonder if we are going to need a QE4 at some point in the future though, given that QE1 and 2 didn’t really get the job done. If the bulls manage to break the 6460/70 area where we have daily resistance then 6495 is the next level to watch.
For today I am expecting an initial dip from yesterdays resistance level of 6435 down to 6400, possibly the pivot at 6393, before a bounce to the 6460 area. At that point its fairly crucial – break through to test 6495, or drop and keep going. I favour the latter.
Support so entry levels for a possible long
- 6400
- 6393 daily pivot
- 6363
- 6337
- 6325
Resistance so entry levels for a possible short
- 6440
- 6461
- 6471
- 6495
- 6531