Dip and bounce for a bit today? 6570 support…

Good morning. As expected Merkel won a third term in the German elections so the Dax should remain pretty stable. The main news for the UK over the weekend seemed to be a very upbeat media about the UK economy and how well its currently doing, at the same time talking about the “housing bubble” that is brewing. The FTSE is still hovering around the 6600 area and looking a little bit more positive after the drop on Friday. Unfortunately Friday wasn’t quite as bullish as I expected, running out of steam not far above where I closed that long – stalling at 6635. Knew I should have gone short when I closed it at 6623! The second long on Friday at 6592 didn’t amount to anything at all such is the joys of Friday trading.

Asia Overnight from Bloomberg

Asian stocks were little changed, with a regional benchmark index trading near a four-month high, after a Chinese manufacturing index jumped more than forecast.

The MSCI Asia Pacific excluding Japan Index climbed less than 0.1 percent to 469.44 as of 1:15 p.m. in Hong Kong. The gauge reached a four-month high on Sept. 19 after the Federal Reserve maintained its bond-buying program. Japan’s market is closed today for a holiday.

“It’s an indication of a continuing expansion,” Hao Hong, Hong Kong-based strategist at Bank of Communications Co., told Bloomberg TV. “As long as we continue to see economic expansion, the depressed expectations will continue to reverse and that is positive for the market.”

The Asia-Pacific gauge rallied 7.9 percent this month through Sept. 20 amid signs China’s economic growth is stabilizing. That pushed valuations to 13 times estimated earnings, compared with 15.5 times on the S&P 500 and a multiple of 14.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Chinese Manufacturing

Chinese factory output expanded for a second month in September. A preliminary HSBC Holdings Plc and Markit Economics’ purchasing managers index released today rose to 51.2 after jumping the most since 2010 to 50.1 in August. A pickup in China’s growth may boost Premier Li Keqiang’s odds of meeting this year’s 7.5 percent expansion goal. The final reading of the manufacturing PMI from HSBC and Markit will be released Sept. 30.

Outlook

ftse 100 prediction
ftse 100 prediction

If the bottom of the 20 Raff channel holds today at 6575 then we could retest the recent highs, however the 10 day Raff has turned down a little and has support at 6530, and resistance at 6670. With the Bianca channels at 6654 and 6690 then the bulls I feel will struggle to push much past 6700 in the short term. That said, I think the bulls might have a go today as the 30 minute chart isn’t looking like a busted flush just yet, though this week could turn quite week as it progresses and prices likely to stall at around the 6650 area where we have the top of the Bianca 10 day channel. Initially this morning we are just hitting the 30 minute coral line, so expecting a bit of resistance there, though as long at 6575 holds then the bulls are still in with a chance. So, an initial dip and then hopefully another push from the bulls but the bears are certainly getting stronger now and I expect the general theme this week to be bearish. I have plotted arrows 3 & 4 to go higher and that assumes the bulls can keep the strength and break the 6615 area. If they don’t then the bears will maul them  with a drop from the 6615 area and the pi8nk arrow will play out from 6615, not 6638.