Good morning. Hope you had a good weekend. That was quite a sell off on Friday from the 6685 level that we rose to first thing, the main reason for the sell off was that once again I was doing a seminar that day. Seems that every time I do a seminar the market drops that day (bear that in mind!). The ASX200 Australia had a family positive session today so we may well see the same today and have a little bit of a bouche from the 6550 area as we have the 10 day Bianca support here, as well as the bottom of the 20 day Raff. That said, the moving averages are bearish to start with on the 10min and 30min, so the bulls will need to be quick out the blocks to make that happen.
US & Asia Overnight from Bloomberg
Asian stocks fell, after the Dow Jones Industrial Average posted its worst week since January, as investors awaited data on China amid a selloff in commodities.
The MSCI Asia Pacific Index dropped 0.4 percent to 141.95 as of 9:00 a.m. in Tokyo after the Dow slumped 2.9 percent last week. China reports on industrial company profits Monday, providing further clues on the slowdown in Asia’s largest economy. Gold is trading near a five-year low and oil is in a bear market amid concern raw material supplies are outpacing demand. In the U.S., data are due on durable and capital goods orders, with investors looking to this week’s meeting of the Federal Reserve to gauge the timing for higher interest rates.
“Share markets are likely to remain volatile as we are still going through a seasonally weak period of the year for shares,” said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd., which oversees A$160.5 billion ($117 billion). “Uncertainties remain regarding Chinese economic growth and a likely Fed interest rate hike lies ahead for later this year.”
Japan’s Topix index fell 0.7 percent. South Korea’s Kospi index dropped 0.5 percent. Australia’s S&P/ASX 200 Index lost 0.2 percent and New Zealand’s NZX 50 Index slipped 0.4 percent.
Futures on Hong Kong’s Hang Seng Index sank 0.7 percent in most recent trading, with contracts on the Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in the city, down 1.1 percent. Futures on the FTSE China A50 Index, which tracks the largest Chinese companies, lost 0.8 percent and CSI 300 Index contracts declined 3 percent in Friday trade.
S&P 500 e-mini futures were little changed on Monday. The underlying equity gauge lost 1.1 percent on Friday. [Ref]
We are on 2 daily supports at the 6550 area, the 10 day Bianca and the 20 day Raff so we may see a bounce from here, firstly towards the daily pivot at 6592, then the 200ema area at 6660. As such I think an initial long will be a decent play, especially if we follow the ASX’s lead which has had a fairly bullish session. After Friday’s sell off I wouldn’t be surprised if the bears take a bit of a breather as the Dax and S&P are also near the bottom of the daily Bianca channels. Unfortunately the bears managed to break through that 2100 S&P level in the end, though it put up a brave fight on Thursday night with a bounce to 2110. Back to the FTSE and if the 6550 level breaks first thing then the next supports to watch for are 6526 where we have a Fib and a PRT line, then 6457 for a daily PRT line, with 6432 below that for 30min support. Certainly going to be an interesting open to see who goes for it first – bulls or bears.