Good morning, bit of a strange day yesterday – didn’t really do much all day staying in a very tight range (that 6711 short came good for a few in the end so well done those that held) and never managed to break the 6720 area, then fireworks later in the day with the stop to 6664 and rise back above 6711. The bottom of the 10 day Bianca channel is now only at 6881 so I expect that any dip today is likely to find support there, as generally speaking her trend is currently up.
A fairly flat day during market hours really – There is still a bit of worry over Ukraine though, as further sanctions were announced yesterday. We also have the Fed probably going to announce further tapering tomorrow so people waiting to see the outcome of that.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as investors weighed corporate earnings and after U.S. equities advanced.
China Petroleum & Chemical Corp. slid 1.3 percent in Hong Kong after Asia’s biggest refiner posted first-quarter profit that missed analyst estimates. Newcrest Mining Ltd., Australia’s No. 1 gold producer, slipped 2.1 percent in Sydney as the price of the bullion headed for a second day of decline. Posco climbed 2.7 percent after the Korean Economic Daily said South Korea’s largest steelmaker is considering the sale of Daewoo International Corp.
The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 475.08 as of 11:16 a.m. in Hong Kong, reversing a gain of 0.1 percent. Major U.S. indexes recovered in the last hour of trading yesterday, paring losses sparked by the U.S. and European Union levying new sanctions against Russia, amid optimism over mergers and acquisitions. Pfizer Inc. added 4.2 percent after proposing to buy AstraZeneca Plc for about 58.8 billion pounds ($98.7 billion).
“When you see M&A activity, that’s enough to drive things a little bit higher as people try to anticipate the next deal,” Tim Schroeders, a Melbourne-based money manager who helps oversee $1 billion in equities at Pengana Capital Ltd., said by phone. “Take the M&A driver out of the market, investors are justifiably cautious. We’ve seen mixed results during this earnings season and the geopolitical situation, particularly in Ukraine, doesn’t seem to get any better.”
FOMC Meeting
The Federal Reserve will probably announce a fourth straight stimulus cut at the conclusion of a two-day meeting tomorrow, economists polled by Bloomberg say.
“It will take a lot to get the Fed to veer off on their current course,” Bruce McCain, Cleveland-based chief investment strategist at Key Private Bank, said on Bloomberg TV. “If we see some signs of inflation along the way, they might be worried but otherwise they’re content to stay the course that they have set and let it wind down gradually over the course of this year.”
U.S. Futures
Futures on the S&P 500 added 0.2 percent today. The U.S. benchmark measure closed 0.3 percent higher yesterday, erasing losses of as much as 0.7 percent.
The Obama administration turned up the slow boil of sanctions against Russia with little expectation that the latest round targeting officials and companies would prompt a turnabout by President Vladimir Putin.
The U.S. yesterday named seven individuals, including Igor Sechin, chief executive officer of oil giant OAO Rosneft, and 17 companies linked to Putin’s inner circle such as InvestCapitalBank and Volga Group. The European Union added 15 individuals to its sanctions list, though their identities weren’t immediately released.
FTSE Outlook
Well we got the dip and rise yesterday, just the dip went a little lower than the 6882 level I had pencilled in. Anyway, it certainly bounced! Resistance is still at 6720 and 6728 in the near term, then 6747 after that which is the top of the 20 day Bianca channel. I have put in a dip today and slightly bearish down to the bottom of the 10 day Bianca channel at 6681. The bulls will want to hold that level otherwise we will get 6656. Todays pivot is 6701 so a little bit of support there initially for the rise to the 6725ish area before a dip back. Presuming that the 6682 area hold then we should get a rise back as the FTSE does look like it wants to head higher on the longer timeframes, 6830 being the top of the 2 Raff channels at the moment and a likely area. To invalidate that it will need to dip below 6569 currently, which is the bottom of the 20 day Bianca channel.
So, for today, I’m thinking the pivot at 6701 will probably hold initially allowing the bulls to build a bit on that rise last night, then dip from the resistance areas at 6720/6728. If the bears manage to get it going then 6682 is likely to get hit, and if that holds then the bulls will be able to target 6786 in the next session or two.