Good morning. Well that was a bit of a surprise this morning to wake up to a +85 FTSE amid a report that Japan’s $1.2 trillion Government Pension Investment Fund will increase holdings of equities. Yesterday dipped a bit further than expected, right down to perfectly test the 6381 bottom of the 10 day Bianca so well done those that nailed that entry. I was far too early with the 6436 one, though it did bounce a bit to start with. The morning was certainly bearish, but the US had to save face and couldn’t have a dip after canning QE so we got the afternoon rise for yet another V shaped day. We have now had a full crossing of the 10 day Bianca channel and are above resistance at 6531, so I wouldn’t be surprised to see some profit taking and shorting of this rise.
Asia Overnight from Bloomberg
Asian stocks rose after the U.S. economygrew faster than forecast and amid a report that Japan’s $1.2 trillion Government Pension Investment Fund will increase holdings of equities.
The MSCI Asia Pacific Index (MXAP)climbed 0.4 percent to 140.82 as of 9:01 a.m. in Tokyo, before markets opened in China and Hong Kong. The gauge has advanced 2.4 percent this week, the first back-to-back weekly gains since August, after the Federal Reservesaid it will end its quantitative easing program as the world’s largest economy strengthens.
The American economy expanded at a more-than-estimated annualized rate of 3.5 percent last quarter, capping its strongest six months in a decade, while other data showed fewer Americans filed applications for unemployment benefits over the past month than at any time in more than 14 years.
“Stronger than expected U.S. GDP growth was good enough to remind investors that the early stages of rate increase cycles are usually good times for stock markets,” said Ric Spooner, Sydney-based chief market analyst at CMC Markets Plc. “It’s providing a solid end to the trading week.”
Japan’s Topix index gained 1.1 percent. The nation’s public pension fund, the world’s largest, will today boost its allocation targets for local and foreign stocks to 25 percent each, and reduce domestic debt to 35 percent, the Nikkei newspaper reported.
Australia’s S&P/ASX 200 Index rose 0.5 percent. South Korea’s Kospi index advanced 0.2 percent and New Zealand’s NZX 50 Index added 0.5 percent.
Well today is going to be interesting… I wouldn’t be surprised if we dip a bit from 6585 now we have come this far. We have broken above the Bianca channels, sitting around 6435 area, and the bulls are holding on to the gains ok so far. If they manage to break 6585 then that does change things slightly as it makes things a lot more bullish, and the drop potentials for the near term are invalidated. Above 6585 we have the 10 day Raff at 6606 (theses were levels I was expecting to be typing today!). Support wise, back test of the 6535 Bianca channels is the first level to watch for (we are not far above these), while the pivot at 6442 would be next. 100 point drop this morning is possible given the volatility. It will be interesting to see how long this bullishness lasts….. Its Friday so likely to be slightly odd, but i would be looking to short at 6565 and 6585. If it were to get very bearish, then 6395, 6355 and 6330 are the levels to watch.
Support so entry levels for a possible long
- 6442 daily pivot
Resistance so entry levels for a possible short