Good morning. Fridays ended up hitting the 6635 area that I had highlight for a short but not until late Friday. Anyway, the short there took though I closed it at 6625 just before 9pm along with a few others still in the chat room. Good job as prices jumped that resistance area overnight on continued talk that tapering isn’t going to happen any time soon. (I did say this months and months ago that I very much doubted they would taper till 2014 at the earliest). Overnight high was 6675 – bang on the top of the 10 day Bianca channel line from Friday’s chart, and has since dropped back, though its worth noting that we are testing both the 20 and 50 day area at this 6650 level. Will we get a little pull back before more upside as the momentum is still with the bulls currently? We have the delayed payrolls data due out tomorrow as well (delayed due to the government shut down) which is forecast to show employers added 180000 jobs.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index extending its advance from a five-month high, amid speculation the Federal Reserve will delay stimulus cuts.
The MSCI Asia Pacific Index added 0.2 percent to 143.76 as of 2:23 p.m. in Tokyo, with about three shares rising for every two that fell. The gauge climbed 1.8 percent last week after China’s economic growth accelerated and as investors shifted their focus from the resolution of the U.S. fiscal showdown to the timeline for the Fed reducing bond buying.
“The market will continue to rally based on improving economic fundamentals and a potential delay in tapering of the Federal Reserve’s stimulus,” Angus Gluskie, managing director at White Funds Management Ltd. in Sydney, where he helps oversee about $550 million, said by telephone. “While the U.S. government still needs to do more work on the debt issue and their budget, we’re going into 2014 with the likelihood of synchronized recovery in Europe, Asia and the U.S.”
Japan’s Topix index advanced 0.4 percent. The country’s exports rose 11.5 percent in September from a year earlier, according to a government report today. That was less than a median 15.6 percent growth estimate in a Bloomberg survey of economists.
Payrolls data due tomorrow in the U.S. will probably show employers added 180,000 workers in September, the most since April, after a 169,000 gain in August, according to the median estimate of 93 economists surveyed by Bloomberg. The Labor Department report, originally due Oct. 4, was delayed by the Oct. 1-Oct. 17 partial government shutdown.
The Fed won’t taper its bond-purchasing program until March next year because the shutdown probably slowed fourth-quarter U.S. growth and also interrupted the flow of data, according to economists in a Bloomberg survey. The monthly pace of asset buying will be pared to $70 billion from $85 billion at the Fed’s March 18-19 meeting, the median of 40 estimates shows.
I feel that the Bianca 20 and 50 day channels will be in play first thing and with the drop off the 10 day from Friday at 6675 think we will drop to the daily pivot area and also the bottom of the 30 minute channel, around the 6610 area. However, the trends are up and if bulls can close above 6635 which has been a long term resistance level then we could be on for a decent push higher – I still have 6800 on the radar (I did have that for a year end close but it may actually come sooner). The bottom of the Bianca 10 day channel for today is 6556 so if the bears did break below that then it takes away the chance of 6800 on this leg. I have put an initial drop this morning, though the EMAs are still technically bullish. Then again, Monday mornings are a bit of a gamble anyway.