Good morning, bull Tuesday came good once again, not really dipping as far as I would have liked for the long entry! The short from 6749 worked out well for a few points in the morning then prices bounce back and walled around 6750 for most of the afternoon. The trends are still up looking at the daily charts with the likelihood of the FTSE reaching 6782 more likely. I think we have a bit further to go higher before we dip. A few blogs and sentiment things are turning bearish so I think the market will want to squeeze these early bears before it drops. Good news on the UK economy front though saw the comply expand 0.8% in Q1 of 2014; not so good for twitter last night as their loss widens, shares falling 10% after hours.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as investors weighed corporate earnings before the Federal Reserve decides on U.S. monetary policy. The Bank of Japan refrained from expanding stimulus.
The MSCI Asia Pacific Index was little changed at 137.42 as of 1:06 p.m. in Tokyo, erasing an earlier gain of 0.4 percent. The measure is heading for a 0.4 percent loss this month amid concern over escalating tensions in Ukraine and a deepening economic slowdown in China. The BOJ stuck with targeting an annual increase in the monetary base of between 60 trillion yen and 70 trillion yen ($683 billion) in a decision released today. Fed policy makers are expected to reduce bond buying for a fourth straight month today.
“We don’t expect much from the two central banks as nothing much has changed since the last meetings,” Keith Poore, who helps manage $131 billion as Wellington-based head of investment strategy at AMP Capital Investors Ltd., said by phone before the BOJ announcement. “While earnings have been good, Asian investors are waiting to see a bit more recovery in China before optimism can return.”
China Manufacturing
A government report due tomorrow is expected to show China’s manufacturing activity continued to pick up in April. Data today showed Japan’s industrial output grew less than forecast in March, while factory output growth in South Korea missed analysts’ estimates. Companies from Nomura Holdings Inc. to Japan Airlines Co. release earnings today.
Taiwan’s Taiex index lost 0.8 percent as the nation’s economy expanded 3.04 percent in the first quarter, in line with economists’ estimates. South Korea’s Kospi index lost 0.1 percent. Australia’s S&P/ASX 200 Index was little changed.
Hong Kong’s Hang Seng Index retreated 1.2 percent after yesterday jumping by most in three weeks. The Hang Seng China Enterprises Index of mainland stocks traded in the city dropped 1 percent and China’s Shanghai Composite was little changed.
Japan’s Topix index rose 0.1 percent and New Zealand’s NZX 50 Index jumped 1.1 percent.Singapore’s Straits Times Index (FSSTI) gained 0.7 percent, heading for its third monthly advance, as lenders led the market higher. DBS Group Holdings Ltd. rose 0.9 percent to S$16.99 after Southeast Asia’s biggest bank posted an unexpected increase in first-quarter profit.
Relative Value
The MSCI Asia Pacific Index traded at 12.6 times estimated earnings yesterday, compared with 16 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
S&P Futures
Futures on the S&P 500 fell 0.2 percent today. The U.S. equity benchmark index climbed 0.5 percent yesterday as results from Merck & Co. to Sprint topped estimates.
FTSE Outlook
Interesting day yesterday that didn’t really feel like it did much really, though the short worked out well off the Bianca 20 day at 6748 area. As such I think we might test that channel again today and a short from 6779 will bear fruit. The pivot for today is 6746 which is pretty much were we are as I write this, and if the uptrend is to continue could/should(!) act as support, at least initially.
We also have a 30 minute channel in play with support at 6738 so after an initial bounce before the open from the pivot i think a decline to that area is possible, before a climb to that 6780 area, which could present a decent shorting spot. The key will be breaking yesterdays high at 6762 though.
If 6780 area breaks then the next resistance is 6810 and 6830 (top of the Raffs), with a move below 6582 invalidating the uptrend. One thing to note is that we are currently at the top of the 50 day Bianca channel and appear to be trying to break out of that longer term trend – I don’t tend to use the 50 day that much, as the levels are often exceeded for a while before snapping back; which would fit in with my hunch of a climb to slightly higher than were we are now, before a drop.