Support at 6850, resistance at 6895

Good morning. Seems this bull run has further to go, with the S&P breaking through the 1920 area, and the FTSE gaining overnight. Gold also continues its fall, while average London house prices are now rising at £588 per day! Ever think some things seem over amplified? We are nearing the top of the Bianca channels again, 10 day is 6887 and 20 day 6896 so I am still thinking we will see a stutter shortly, though it certainly looks like its gunning for the all time highs around 6930. Mentioned in the Telegraph today, China has also been exploring direct purchases of bonds and other assets to support key sectors of the economy in case the slowdown deepens, according to a leading Chinese business publication. Despite that, news last night was that Chinese manufacturing expanded.

We will see this week if the ECB are announcing further stimulus and cutting the deposit rate.The market is also rising on expectation of both.

Asia Overnight from Bloomberg
Asian stocks advanced, with the regional benchmark index heading toward a six-month high, and copper climbed with oil after a gauge of China’s manufacturingexpanded at the fastest pace this year. Australia’s currency led declines against the greenback while crops and rubber fell.

he MSCI Asia Pacific Index added 0.5 percent by 2 p.m. in Tokyo as Japan’s Topix index jumped 1.6 percent. Futures on the Standard & Poor’s 500 Index added 0.1 percent after the gauge closed at a record on May 30. Copper rose 0.6 percent in London while West Texas Intermediate crude climbed 0.6 percent. The Aussie dropped 0.6 percent as the Bloomberg Dollar Spot Index increased for the first time in three days. Wheat slumped 1.5 percent and rubber touched the lowest since September 2009.

China’s official Purchasing Managers’ Index increased to 50.8 in May, while some lenders’ reserve requirements were cut as the government acts to support growth. Economists forecast the European Central Bank will cut the deposit rate to less than zero when policy makers meet on June 5, with a euro-area factory report today estimated to hold steady at the lowest level since November. Equity markets in China, Hong Kong and New Zealand are closed today for holidays.

“Policy fine-tuning announcements in China continue to mount up, adding to confidence that growth will be supported around 7.5 percent this year,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees about $133 billion. “More easing measures are likely.”

Stimulus Measures
Forecasts for a rebound in U.S. growth in the second quarter and stimulus from central banks in Japan, Europe and China, along with higher-than-estimated corporate earnings, helped send the value of global shares to a record $64 trillion last week.

About three stocks rose for each that fell on the Asia-Pacific index today. The measure traded at 142.46, which would be the highest close since Nov. 19. South Korea’s Kospi index gained 0.2 percent and Australia’s S&P/ASX 200 Index added 0.3 percent. Singapore’s Straits Times Index gained 0.1 percent.

ECB
The euro was little changed at $1.3627. The ECB will probably ease monetary policy this week, cutting its deposit rate to minus 0.1 percent from zero, according to a Bloomberg survey of economists.

Data in coming days is likely to reinforce the view that action is needed, with economists predicting reports will show a mixture of a too-low inflation rate and unemployment near a record.

Russia and Ukraine are set to resume talks in Brussels today on a deal that would keep natural gas flowing between the countries amid their conflict over separatists trying to break away from the government in Kiev.

S&P
The S&P 500 last week climbed to 1,923.57 as utility and consumer-staple shares rallied and investors weighed data showing an uneven recovery in the U.S. economy.

The Chicago Board Options Exchange Volatility Index, a gauge of options prices known as VIX, slipped 1.5 percent to 11.40 on May 30. The measure closed for a fifth straight day below 12, the longest stretch since February 2007, data compiled by Bloomberg show.

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

We are now so close to the all time high and haven’t had that much of a dip since the one a few weeks ago, its assumed that it will probably try for the 6930 area. Just prior to that we have the top of the Bianca channels likely to get hit today, between 6887 and 6896, so a possible shorting area here, ON THE PROVISO that 6870 is broken. Todays pivot is 6850 (nice round number too) so initial support is around this level, though for the bears to get interested it would need to fall below 6811 to reach 6780. Upside resistance levels apart from Bianca are 6870, 6909 and 6927.