Good morning. Well that was close, was 2 out from picking the high of the day, saying 6560 was a good spot to start layering in the shorts and the market topped at 6558 before dropping for the rest of the day. But, while the FTSE was so weak, the S&P went up most of the day, topping at 2025. I think the FTSE is leading the way again, as it did a while back so we can expect falls on the US markets soon. That said, the Nikkei climbed to its highest level since 2007 last night. I will be watching for 6473 to hold today if the bulls are going to have any fun, otherwise a visit to 6457 and 6400 looks feasible. In theory the daily chart has support as 6457ish today….. we shall see.
Asia Overnight from Bloomberg
Japanese stocks climbed to a six-year high on optimism central-bank stimulus will boost earnings, while the country’s bonds surged. The dollar weakened for the first time in five days and oil extended declines.
The Topix index jumped 3.2 percent by 12:45 p.m. in Tokyo, spurring a 1.5 percent jump in the MSCI Asia Pacific Index. An MSCI gauge that excludes Japanese shares was little changed with Standard & Poor’s 500 Index futures. The 30-year Japanese bond yield plunged 13 basis points. The Bloomberg Dollar Spot Index fell 0.2 percent as Australia’s currency strengthened after the central bank held rates. Oil in New York declined 0.6 percent after closing below $80 a barrel.
Macquarie Securities Ltd. and Credit Suisse Group AG lifted their targets for Japanese share indexes after the Bank of Japan unexpectedly boosted asset-purchases and the country’s public pension fund increased its allocation to equities. The BOJ action and the prospect of further easing from the European Central Bank as the Federal Reserve winds up its bond buying underscores how the U.S. is diverging from other economies. The Reserve Bank of Australia kept rates at a record low today, while Alibaba Group Holding Ltd. will report earnings.
“The impact of the BOJ’s additional easing was big, so it couldn’t be priced in during just one day,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo, said by phone today, referring to the Bank of Japan. “There is a risk in not holding Japanese shares, and those that sold them off will have to buy them back.”
The Topix is trading at levels last seen in June 2008. The Nikkei 225 Stock Average climbed above 17,000 yen today for the first time since 2007. The BOJ boosted its target for enlarging the monetary base to 80 trillion yen ($709 billion), from a previous range of 60 to 70 trillion yen.
The $1.2 trillion Government Pension Investment Fund lifted its allocation targets for Japanese and overseas equities to 25 percent each, up from 12 percent each. The amount dedicated toward bonds was reduced.
The 30-year bond paid 1.39 percent, a level unseen since April 2013, while 20-year yields slid as much as seven basis points to 1.17 percent, the lowest level in 19 months. The yield on the country’s 10-year note dropped 1.5 basis points to 0.435 percent and the rate on similar maturity U.S. Treasuries fell one basis point to 2.33 percent.
The won retreated for a fourth day, declining to as low as 1,081.93 per dollar, the weakest intraday level since March 24. The Kospi index dropped 0.9 percent in Seoul as the yield on the benchmark three-year note retreated to 2.09 percent.
Inflation in South Korea quickened to 1.2 percent in October from a year earlier, up from 1.1 percent in September though trailing a median estimate of 1.3 percent in a Bloomberg survey of economists. The yen’s weakness makes some Japanese exporters more competitive and has fueled speculation the Bank of Korea may have to cut interest rates again.
Markets in India and Russia are closed for a holiday.
The so-called Aussie strengthened 0.5 percent to 87.20 U.S. cents even as the RBA said the currency remains above most estimates of its fundamental value. The S&P/ASX 200 Index climbed 0.4 percent in Sydney.
Most Group of 10 currencies were stronger against the dollar today, with the yen rebounding after its biggest five-day retreat since December 2007. The Dollar Spot Index closed at the highest level since April 2009 yesterday.
The Institute for Supply Management’s U.S. manufacturing index increased to 59 in October, matching August’s level, which was the highest since March 2011, data yesterday showed. It dipped to 56.6 in September. Readings above 50 indicate expansion. A similar gauge for the euro area showed manufacturing there barely grew last month, while an official barometer out of China at the weekend dropped in October.
West Texas Intermediate crude oil dropped to $78.34 a barrel, set for a fourth day of declines. Saudi Arabian Oil Co. said in an e-mailed statement yesterday that it will cut prices for all oil grades that is sells to the U.S. The state-owned producer, known as Saudi Aramco, will sell Arab Light to clients in Asia for 10 cents less than Middle East benchmarks, compared with a November discount of $1.05. Brent declined 0.5 percent to $84.37 a barrel.
Energy shares in the S&P 500 slipped 1.7 percent amid the selloff in oil, while the broader gauge closed down less than 0.1 percent at 2,017.81. The Russell 2000 Index of small-cap shares dropped 0.3 percent as the Nasdaq 100 Index, which covers technology companies, gained 0.3 percent amid gains in Apple Inc.
Alibaba Group, operator of China’s biggest online marketplace, will report results before U.S. markets open, its first such announcement as a New York-listed public company. The stock hit an intraday record of $102.80 yesterday before closing at $101.80 for a daily advance of 3.3 percent.
Gold climbed to $1,168.03 an ounce in the spot market after losing 0.6 percent yesterday. The precious metal slipped as much as 3.1 percent Oct. 31 to $1,161.35, the lowest intraday price since July 2010. Platinum fell 1 percent to $1,226.75 per ounce. [from here]
Todays pivot is 6508 and I think we will get some initial resistance. 6473 i9s support, though we did dip slightly below that overnight, with stronger support at 6452/6457 area, a level that may well see a bit of a bounce – its the 25ema on the daily chart, who’s EMAs have crossed over to bull, though I think it is probably weak bull at the moment. Don’t fall in love with the upside as they say! The S&P has dipped off the 2025 area and is still just tracking he mid point of both the Raff channels, so slow and steady on that at the moment.
Initially today I see a dip to 6473, then a bounce to the pivot before more downside. A short at the pivot 6508 might well be a good trade this morning. If the 6452 area holds as support then we could well get a decent rise from there, otherwise a dip to 6400 looks extremely likely. As such, if a long at 6452 failed then flip to short if the stop gets hit.
Support so entry levels for a possible long
Resistance so entry levels for a possible short
- 6509 daily pivot