Good morning. Rather bullish in the end yesterday. The initial short i took at 6620 got stopped out, but a few were gained off the higher resistance area at 6649. However, the bulls still continued their rally and we saw a high of 6670. Interestingly, the S&P nearly reached that 1875 resistance area, from where I think it will struggle to push on. I mentioned a gold buy at 1301 yesterday and that has worked well, gold now sitting at 1316. With gold rising, the S&P nearly at a decent longer term resistance level, the FTSE likely to encounter resistance at 6685ish today, then it will be the bears time again soon I reckon.
Yesterdays release of the Fed’s latest meeting minutes eased concern about the timing of future interest-rate rises.
“These minutes are calming for the markets,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages about $414 billion, said by phone fromBoston. “It was clearly stated that the projections overstated the likely shift in rates. A slower pace of interest rates seems more likely here than from the statements.”
Several Fed policy makers said a rise in their median projection for the main interest rate exaggerated the likely speed of tightening, according to minutes of their March 18-19 meeting released today.
Asia Overnight from Bloomberg
Asian stocks pared gains and Australia’s dollar trimmed its advance as Chinese trade figures unexpectedly fell, tempering optimism after the Federal Reserve eased concern about when U.S. rates will rise. Indonesian equities tumbled after elections failed to show a clear winner.
The MSCI Asia Pacific Index rose 0.2 percent by 1:03 p.m. in Tokyo, after adding as much as 0.9 percent before China’s data release. Standard & Poor’s 500 Index futures were little changed. The Aussie, which touched a four-month high after a surge in employment, pared its gain to 0.2 percent. South Korea’s won extended a more-than five-year high. Nickel climbed 1 percent, a ninth straight rise, while copper and tin erased gains. The Jakarta Composite Index plunged 3.2 percent and the rupiah weakened.
Chinese exports fell 6.6 percent in March, extending the steepest drop since 2009 in February and missing the estimate for a 4.8 percent gain from a Bloomberg survey of economists. Fed minutes played down forecasts for rates to increase faster than previously projected. Australia’s unemployment rate unexpectedly dropped after the country added more jobs than estimated in March, while South Korea kept its key rates unchanged and boosted its economic growth outlook.
“It’s surprising and disappointing to see that softness in China’s March trade numbers,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “It’s a definite setback for what has been a very positive mood in global markets, and particularly in Asian currencies. The Aussie seemed to be on track for a run at 95 U.S. cents, but the China trade number was a definite setback.”
Chinese Imports
China’s imports plunged 11.3 percent last month down from growth of 10.1 percent in February and below the survey forecast for a 3.9 percent expansion. China’s export data have been distorted by inflated numbers in early 2013, when some companies filed fake invoices to disguise capital inflows.
“The data is fueling concerns about the emerging market economies,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages the equivalent of $474 billion. “March should be free from distortion from Lunar New Year, and the fact that imports dropped this much implies huge impact on the global economy.”
FTSE Outlook
We have a bit of resistance at 6655 initially however I think that will break and we will see stronger resistance at 6685ish. Therefore I am preferring a short there to target the pivot for today at 6626, and possibly lower. If that pivot were to break then lower targets are 6593 and 6583 both being the bottom of the Bianca channels as you can see on the chart below. Should that 6685 level break then the bulls will most likely be aiming for 6710 (around the top of both the Bianca channels) and 6730 (top of the 10 day Raff). Higher resistance are 6770 and 6800 – but i think the S&P will struggle at 1875ish so the chase of the FTSE getting that high are slim, but never say never!
We pretty much had a trending day yesterday with minimal pull backs off the resistance levels, so i think today will see a bit of consolidation as it is prone to do after a run up (or down).