Good morning. I had four trades pencilled in for yesterday but only one took, the long at 6770 which ended up running to target at 6804. The price never got quite high enough for any of the 3 shorts to kick in, but the bulls certainly defended the 6770 despite it being tested by the bears for most of the day. Yellen was speaking yesterday and reiterated that the fed will continue to underpin the US Economy. Overnight saw news of improving Chinese export/import numbers. The Dax was the wild one yesterday – bouncing just above the support at 9390 and then running all the way to resistance at 9545, certainly one for the braver traders!
Asia Overnight from Bloomberg
Asian stocks rose, recovering some of yesterday’s largest drop in seven weeks, as Chinese exports and imports unexpectedly climbed and Chair Janet Yellen said the Federal Reserve will continue to support theU.S. economy.
The MSCI Asia Pacific Index gained 0.6 percent to 137.64 as of 10:41 a.m. in Hong Kong, with nine of its 10 industry groups rising. Yellen told U.S. lawmakers the economic stimulus that has fueled global asset gains is still required because employment and inflation are well short of the central bank’s goals. China’s exports and imports unexpectedly rose in April, helping leaders put a floor under a slowdown in the world’s second-biggest economy.
“Primarily we are looking at an improvement” in China trade data, Hao Hong, Hong Kong-based chief China equity strategist at Bocom International Holdings Co., said told Bloomberg TV. “For the time being, we don’t have to worry about tightening liquidity in the economy. The trade surplus is going up in the right direction.”
Japan’s Topix index climbed 0.9 percent, with volume 17 percent below its 30-day average for the time of day. Australia’s S&P/ASX 200 Index rose 0.7 percent, maintaining gains after employers in the country hired an extra 14,200 workers in April. South Korea’s Kospi index rose 0.1 percent, while New Zealand’s NZX 50 Index slid 0.3 percent.
Hong Kong’s Hang Seng Index (HSI) climbed 0.7 percent and the Hang Seng China Enterprises Index of mainland shares traded in the city added 1.4 percent. The Shanghai Composite Index rose 0.4 percent. Singapore’s Straits Times Index and Taiwan’s Taiex Index both advanced 0.3 percent.
Chinese exports rose 0.9 percent in April from a year earlier, topping economist forecasts for a decline. Imports grew 0.8 percent.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The U.S. equities benchmark gained 0.6 percent yesterday as optimism that the Fed will continue to support the world’s biggest economy overshadowed a drop in Internet stocks led by Yahoo! Inc. and Groupon Inc.
Well yesterday was the big test of the 6770 support level which held, at least so far. if tested again today I’d class that as the second test (also likely to hold) but then any fort her tests tomorrow onwards will probably break. Similar to yesterday we have resistance at 6816 and 6830, though we also have the channel top on the 30 min chart at 6842 where I have drawn the pink arrow to. Therefore the short at 6830 will need to have the stop slightly above that, and possibly will even be a good place to add to the 6830 short in fact. As such i will probably go half stakes at 6830, and add at 6840. Todays pivot is 6787 so that could act as support on any initial dip, and in fact if we do get those first two arrows, is likely to. Shorts from 6830/6840 will be decent today I think!
As I mentioned yesterday it does feel like the bulls are running out of steam a bit, and I am also mindful of the sell in May mantra that people will be considering at the moment. As such, shorts of the resistance levels should work well today. We nearly saw 6815 yesterday (mid price, excluding the spread) out of hours and have since fallen back to 6800 despite that improved news from China. Usually if the head of the Fed says that they will continue to underpin the economy the bulls go mad, its quite telling that they didn’t yesterday.
I dont lend an awful lot of weight to this but it is worth a glance and that is on IG you get a snap shot of retail traders activity as per the image below. The buys are just edging out the shorts at the moment, and bearing in mind that the market will want to cause pain to the maximum number of participants will want to trap all these longs.