Good morning. Well yesterday was certainly bullish and broke through both the upper targets (6500, 6520) before stalling at the 6530 area. We then had a slow drift down as expected though only as far at 6490. Would seem that the start of a new month and a diminishing threat of all-out war over Syria boosted markets, coupled with the small Vodafone deal! Mostly its off the back of improving economic data and with the US closed yesterday, low volume.
Asia Overnight from Bloomberg
Asian stocks rose for a fourth day, with the regional benchmark gauge climbing the most in a month, as Japanese shares were boosted by the yen weakening against the dollar and amid optimism the global economy is recovering. The MSCI Asia Pacific Index gained 1.4 percent to 132.79 as of 12:46 p.m. in Hong Kong, on course for the highest closing level since Aug. 2, as all 10 industry groups on the gauge advanced. More than three shares rose for each that fell. Futures on the Standard & Poor’s 500 Index rose 1 percent from Aug. 30, with U.S. markets due to reopen after a holiday.
“Markets have started the week in a positive frame of mind,” Mike Jones, a currency strategist in Wellington at Bank of New Zealand Ltd., said by e-mail. “Manufacturing data out of China and Europe essentially confirmed the global economy is on the mend.”
A Chinese services industry index today confirmed the world’s second-biggest economy is strengthening following a two-quarter slowdown, after a weekend report showed manufacturing rose to a 16-month high. A euro-area manufacturing index yesterday increased more than economists forecast.
Has resistance at 8269, and above that 8307. Support at 8224 then 8196. Would need to break 8400 to cancel out the bearishness for the next few months.
With resistance now set at 6532 and the overnight action testing the ProTrend line on the 30 minute chart at 6520, as well as the daily channels around this level (6532 for the 10 day Bianca exactly) I still expect a dip. I think yesterday’s rise was slightly over cooked myself, and with the Dax hitting resistance at 8269 as I write this, there is more likely to be a drop at open than a rise. I have resistance on the S&P at 1655 (1649 currently) and Dow at 15082 – both of which could coincide.
The 2 daily Raff channels have their tops at 6535 (20 day) and 6560 (10 day) and usually these are pretty good as levels where the price is likely to stall. If swing trading a short off the 10 day with a stop above the 20 day should be pretty viable for a few days. We have NFP on Friday this week which is likely to see a lot of volatility this time.
I am thinking that with the price still slightly above the top of the 20 day Bianca (basically joined the August highs with a declining resistance line) we should still see a bit of a dip this week. For today I think an initial dip to the pivot would be good as with the US coming back later on, some might want to book profits from yesterday’s rise.