Bit late today as had to go to a Hospital appointment this morning which took ages!
Good morning. Yesterday went a bit higher than the main resistance and a bit lower than the main support, but did drop back from the Bianca 6650 level I emailed round. I expect that 6659 will now be the line in the sand for the bulls to break. Yellen’s speech was once again bearish and sent the FTSE down at the close, though the Dow seemed pretty upbeat. Maybe that was a stop killer on the FTSE with the drop to previous support at 6585? Bull Tuesday today (is it going to play out yet again) and also the first day of the month, plus nearing the end of the opportunity to pump some ISA money in. If we play to form then we should get a dip this morning then a rise this afternoon to 6670 I think – there is a decent ProReal Trend channel on the hourly chart with resistance there. Yellens speech seemed to have more effect on the FTSE yesterday, though she basically said that QE is still an available option.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as investors weighed reports on China’s manufacturing that pointed to weakness in the world’s second-biggest economy.
The MSCI Asia Pacific Index rose 0.1 percent to 138.13 as of 12:58 p.m. in Tokyo, reversing losses of as much as 0.4 percent. Japan’s Topix index also fluctuated as investors weighed a weaker yen against a survey of sentiment among large manufacturers that missed estimates.
A Chinese Purchasing Managers’ Index fell to 48 in March, the lowest reading since July, from 48.5, HSBC Holdings Plc and Markit Economics said today. A separate PMI from the government, with a larger sample size, registered 50.3 from 50.2 in February.
“State-owned enterprises are seeing a slowdown in growth, but it’s not as severe as small, mid-size enterprises,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which oversees about $55 billion. Chinese policy makers “definitely understand the economy has been slowing and they are implementing a number of policies to stabilize growth between 7 percent and 7.5 percent. But it’s not a comprehensive stimulus package yet.”
The Chinese reports underscore what Premier Li Keqiang last week called “difficulties and risks” in the world’s second-largest economy as he tries to control surging debt and pollution shrouding cities across China. Li said the nation has policies in reserve to support growth after the cabinet said it would accelerate construction spending.
Regional Gauges
Hong Kong’s Hang Seng Index added 1 percent. The Hang Seng China Enterprises Index of mainland shares traded in the city gained 0.1 percent.
Japan’s Topix index was little changed, swinging between gains and losses of 0.4 percent as the nation’s sales tax rose to 8 percent from 5 percent today. The Tankan index of sentiment among large manufacturers was at 17 in March, climbing from 16 in December, a Bank of Japan report showed today, below the median estimate of 19 in a Bloomberg News survey of economists. The index is forecast to drop to 8 in June, worse than economists’ forecast of 13. The yen was little changed against the dollar after dropping 0.4 percent yesterday.
South Korea’s Kospi index was little changed. Australia’s S&P/ASX 200 Index lost 0.2 percent as the nation’s central bank kept its overnight cash rate target at a record low 2.5 percent today. New Zealand’s NZX 50 Index dropped 0.4 percent. Singapore’s Straits Times Index added 0.4 percent, while Taiwan’s Taiex index was up 0.1 percent.
US Futures
Futures on the Standard & Poor’s 500 Index added less than 0.1 percent today. The measure gained 0.8 percent yesterday after Federal Reserve Chair Janet Yellen said the economy will need stimulus for “some time.”
Yellen said “considerable slack” in the U.S. labor market is evidence that the central bank’s unprecedented accommodation will still be needed for “some time” to put Americans back to work.
FTSE Outlook
We are hovering around the daily pivot at 6613 as I write this, however there are a few supports between the 6590 and 6610 areas on the 30 min chart – the green ProTrend lines. I have put an initial drop down to the bottom of that channel but with those supports it might not get that low. It’s possible therefore that the pivot all hold so a long at 6613 with a tight stop is worth a “knife catch”.
As mentioned above the bulls will need to break 6659, and with the 10 day Bianca channel top still sitting at that level (well 6657) they might have a bit of a task to do so. That area might be worth speculative short as well. If it does break then 6674 is the next area of resistance which is around the coral area on the daily chart. There is a ProTrend line there too at 6664 note.
I think for today that 30 minute channel is a good one to watch, and the daily pivot tallies with a rising trend line on the 10 minute also, hence the knife catch trade.