Good morning. All fairly quiet over the weekend on the financial news front though Sunday night saw China vow to carry out the broadest expansion of economic freedoms since the 90’s. Nice long trade on Friday which was banked at just the right time as the FTSE failed to break the 6703 area, and never really got another chance. Prices didn’t fall really and just bounced in a fairly tight range for the rest of the day. We still have the top of the 10 day Bianca channel at 6711 to watch at the moment though I still expect the US markets to go for those round numbers – 1800 S&P and 16000 Dow – and probably a bit further to stop out the shorts that go on bang on those levels.
Asia Overnight from Bloomberg
Asian stocks rose for a third day, with the benchmark index extending a two-week high, after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s.
The MSCI Asia Pacific Index added 0.8 percent to 142.75 as of 1:35 p.m. in Tokyo after closing at the highest level since Oct. 31 last week. All 10 of the measure’s industry groups gained. China pledged to allow more private investment in state-controlled industries, ease its family-planning policy and expand farmers’ land rights, according to a Communist Party policy decision published by Xinhua News Agency on Nov. 15.
“The investors who were on the sidelines don’t have to hesitate anymore,” Zeng Xianzhao, an analyst at Everbright Securities Co. in Chongqing, said by phone today. “In the next few years, we will see faster implementation of these reforms and the efficiency of the enterprises will improve as well. There were noises about possible disappointment at the plenum; this got rid of all such negative rumors.”
Futures on the Standard & Poor’s 500 Index declined 0.1 percent. The measure rose 1.6 percent last week to close at an all-time high after Janet Yellen, nominated to succeed Ben S. Bernanke as the Fed chairman, said the central bank should take care not to withdraw stimulus too early from an economy that is operating well below potential.
“They are not willing to move yet on tapering,” said Evan Lucas, Melbourne-based market strategist at IG Ltd. “That’s a positive thing for risk and that means equities are going to be in the green.”
Fridays high of 6704 is the level that the bulls will need to break today and if they do then 6738 and 6780 are likely targets. If that high does break then hopping on the long trade should be fine, though I am mindful of the fact that he 10 day Bianca channel top is at 6711 for today. As with any bet, it’s a gamble. I am feeling slightly bullish at the start of this week, and think that we will definitely see those new record levels on the US markets – probably 1804 on the S&P (might go short at 1804 on this) and 16200 on the Dow (will need a major bull day today to reach this Dow level today though) but those 2 US index levels might tie up at roughly the same time.
Of interest on the FTSE is the ProTrend resistance line at 6715, which tallies with the Bianca 10 day channel top so I am expecting resistance there, at least initially, and the bulls really need to break that to achieve those higher targets – 6738 and 6780. I have put a buy the dip trade in below as I think that they will at least try and we will hit that 6715 though it remains to be seen if it breaks. If not then a drop back to the 6650 level is likely. The blue arrow is my main play for today and looks like it will be ok, but also watching 1804 S&P for a shorting opportunity. What it does at that 6715 level is 50/50 – up to the resistance or fall back down.