Good morning. Well, I thought it was all going to go very wrong yesterday and the 6700 call was pie in the sky. However, the bulls appeared as we hit 6644 and sure enough 6700 was hit. I was just a bit premature with the 6660 level, and I guess the market wanted to trip some stops. Also a new record for the Dow in the process yesterday, closing above 16000 for the first time ever. Overnight, prices have held steady and all being well we push a bit further up today. The slightly frustrating thing with yesterday was that with 6660 breaking I was all set to go long at 6630 where we had the bottom of the daily channels and had the SMS all set to go. But it didn’t quite reach that level. Interestingly, the S&P futures didn’t dip at all while the FTSE shed the 30 or so points at the open – a decent sign that the move will more than likely be reversed.
I am still feeling bullish for today and expect that if the support level of 6675 holds then we will get 6735 which is mid way between the 2 Bianca channel tops. If they break then the top of the Raff channels will be in play, with a top level around 6760.
Asia Overnight from Bloomberg
Most Asian stocks rose, snapping a three-day loss on the regional benchmark index, as a gauge of mainland Chinese shares traded in Hong Kong headed for its biggest weekly advance in two years.
The MSCI Asia Pacific Index added 0.2 percent to 141.35 as of 2:12 p.m. in Hong Kong, with about three shares rising for every two that fell. The measure advanced 9 percent this year through yesterday as investors bet the Federal Reserve will continue monthly bond buying into 2014. It is down 0.3 percent this week.
U.S. stocks rose, sending the Dow Jones Industrial Average to its first close above 16,000, as data showed improvement in the job market and companies including Union Pacific Corp., Johnson Controls Inc. and Ace Ltd. said they would repurchase shares.
Investors are pouring more money into stock mutual funds in the U.S. than they have in 13 years, attracted by a market near record highs and stung by bond losses that would deepen if interest rates keep rising. Stock funds won $172 billion in the year’s first 10 months, the largest amount since they got $272 billion in all of 2000, according to Morningstar Inc. estimates.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The gauge gained 0.8 percent yesterday, snapping a three-day decline, and the Dow Jones Industrial Average closed above 16,000 for the first time. The S&P 500 has jumped more than 25 percent in 2013, poised for its best yearly gain in a decade.
Minutes of the Fed’s last meeting published this week showed policy makers expect ongoing improvement in the labor market to “warrant trimming the pace of purchases in coming months.” Fed Bank of St. Louis President James Bullard also told Bloomberg TV that a reduction in the Fed’s $85 billion-a-month bond buying program was “on the table” for next month.
The U.S. Senate Banking Committee yesterday voted 14-8 to approve Janet Yellen as the next chairman of the Fed, sending the nomination to the full Senate for approval.
U.S. jobless claims dropped by 21,000 to 323,000 last week, the fewest applications since September, the Labor Department said. The median forecast of 47 economists surveyed by Bloomberg News called for a drop to 335,000. Another report showed wholesale prices fell for a second month in October and the Philadelphia Fed’s index of manufacturing in the region dropped to 6.5 in November, trailing the median economist estimate for a reading of 15.
One day good news means tapering is a worry and the market drops, then a speech that tapering will happen at some point and it drops further, then more good news, tapering is forgotten about and we rise. It will be nice when they finally commit to some sort of plan! As is always the case, the headlines and “reasons” for the moves is just simply matched to what happens. Anyway, today’s pivot is 6674 and I am thinking that will act as support today and as mentioned above I am still feeling a bit bullish for the moment. I still think the S&P wants that 1810 level, possibly 1814 but might run out of steam at that level. A good shorting area there I feel.
Initial resistance as I write this is at 6700, and if that breaks then the FTSE “should” get 6730ish. We have the top of the Bianca channels there, both the 10 and 20 day, so we may stutter there, but with the Raff channel tops around 6760ish then there are some fairly key resistance levels coming up.
With the arrows below I have put in a dip to the pivot though it feel a bit 50/50 as to whether it will do that, possibly a dip from that initial 6713 area where there is a fib pivot and ProTrend resistance line. As per the trade plan below I have shorts at the resistances, and the long off the pivot, however if it looks like 6700 is turning to support then longs up to at least 6730 should be ok. Usual Friday caveat though!