Good morning. Here we are, another NFP day so expect things to get rather lively around 13:30 today. We had a nice rise off the 6712 area initially yesterday after quite a sharp drop at the open (it did look like the bulls weren’t even on the pitch let alone in buying mood at one point as the price dipped to 6706, however, we then had a decent rise to 6745, before it went really rather bearish again. I thought we were going to be on for the 6670 but bulls brought it back and we are now back above 6715 as I write this – making that dip and bounce off 6677 look like it might have been flushing out stops in preparation for an NFP rise today. The bottom of the 10 day Raff held pretty well in the end yesterday, so there is still some bull pressure around, also worth watching the Bianca 10 day, with the channel bottom at 6681 and top at 6764 for today.
Asia Overnight from Bloomberg
Asia’s benchmark stock index swung between gains and losses as data showed China’s trade surplus narrowed and investors awaited a report on U.S. payrolls.
The MSCI Asia Pacific Index added 0.1 percent to 139.05 as of 3:04 p.m. in Tokyo, after falling as much as 0.4 percent. The gauge is heading for a 0.9 percent decline this week. A U.S. Labor Department report today is projected to show American employers added more jobs in 2013 than at any point in the past eight years. China’s export growth trailed estimates in December while import gains beat economists’ projections, government data showed today.
“A lot of weight now falls on the official non-farm payrolls reading, which is due out later today,” Stan Shamu, a Melbourne-based market strategist at IG Ltd., said by e-mail. “All this positive data continues to support the argument that perhaps the U.S. economy is ready for a rapid, measured winding back of stimulus.”
China’s overseas shipments rose 4.3 percent from a year earlier, the General Administration of Customs said today in Beijing. That was less than the median estimate for 5 percent growth from economists surveyed by Bloomberg News. Imports increased 8.3 percent, leaving a narrower-than-projected trade surplus of $25.64 billion.
‘Little Correlation’
“There has been very little correlation between U.S. growth and Chinese exports recently,” said Garry Evans, head of global equity strategy at HSBC Holdings Plc in Hong Kong. “It gives you some lead on where the Chinese economy is going, but I think you should not draw any conclusion that the weaker Chinese exports give you any lead on the global economic growth. I think it’s more of a specific Chinese story.”
Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The measure gained less than 0.1 percent yesterday. The jobs report today may show total payrolls rose by 197,000 last month, according to a Bloomberg survey median. That would bring the total for the year to 2.27 million, the most since 2005.
Data yesterday showed applications for U.S. unemployment benefits declined by 15,000 to 330,000 in the period ended Jan. 4. The median forecast of economists surveyed by Bloomberg projected 335,000. The data can be volatile after the holidays as temporary workers are dismissed, a Labor Department spokesman said as the report was released.
The Federal Reserve announced after the December meeting that it would begin trimming monthly bond buying by $10 billion to $75 billion this month as the U.S. economy continues to improve.
FTSE Outlook
Shame the bulls gave up at 6750ish yesterday as a push to the top of the 10 day Bianca would have been ideal. Support wise on the daily we have both the 10 and 20 day Bianca’s at 6681 and 6689 respectively, as well as the 10 day Raff slightly lower at 6671. Basically there is decent support around that area still, as well as being yesterday’s low at 6677. The best trade yesterday was the long off 6712 though it did look a bit dicey initially. The 6705 short also worked out but failed to reach the target at 6670, with hindsight that maybe was a tad optimistic for a downside level.
Bulls will need to break 6722 today to push higher (thick red ProTrend line), to target 6747 initially, then the top of the daily channels at around the 6760 area (10 day Raff and Bianca), possibly even an overshoot to 6777. As with the S&P mentioned above I think the bulls might be a bit hard pressed to push on past those daily channel tops, so shorts around that 6760/70 area should be a good swing entry. That could tally with that 1848 S&P level.
Today’s pivot is 6705 and with the bounce from yesterday’s low setting up a bullish vibe, that may act as initial support. If so and then a breach of 6722 we should be on for a fairly decent climb before a dip, though its Friday, and NFP so some fairly big spanners are probably waiting to be thrown into the works. there is a 30 minute channel in play but its pretty narrow, I therefore expect it to be broken, and if the bulls continue then most likely that will be broken to the upside. I have put a fairly optimistic scenario below for the arrows, based on the assumption (always slightly dangerous to assume!) of the daily pivot holding. I think a few longs will have been stopped with yesterday’s dip, and a few bears might be trapped with shorts opened just sub 6700. The market might want to squeeze them just a little bit harder yet.
However, if 6722 holds as resistance (its actually just been tested while writing this) and the pivot breaks then 6679 and 6667 are supports.
So today, cautiously bullish but thinking we might get a decent dip off the top of those daily channels at 6765ish.