Slightly bullish still – 6760 next?

Good morning, well a bit of a funny day yesterday that was still bullish but what a slow drift up! The bad news was that the long from 6675 missed as it only dropped as far as 6685, but the good news is that the 6730 short has taken overnight. However, with the updated Bianca chart having 10 day support at 6707 I don’t think the original target is likely to get hit, as its still looking fairly bullish. I have set the stop to breakeven. Really wasn’t expecting that order to take! If it gets back there then I am looking at the top of the 10 day Bianca channel at 6760 then the daily ProTrend at 6800. Today’s news of interest is UK GDP at 09:30, and then durable goods from the US at 13:30 – both of those will affect the prices around those times. UK GDP is forecast to be 1.5%, quite likely as the UK data has been quite positive recently.

Asia Overnight from Bloomberg

Asian stocks fell, extending the regional gauge’s first weekly decline in three weeks, as forecasts from Canon Inc. to Posco disappointed investors. The MSCI Asia Pacific Index sank 0.9 percent to 141.67 as of 1:24 p.m. in Tokyo, extending this week’s fall to 1.2 percent. The gauge climbed to a five-month high on Oct. 22 amid speculation the Federal Reserve would delay tapering stimulus, pushing its earnings multiple to 13.8 times estimated profit, according to data compiled by Bloomberg.

“The earnings numbers are not fantastic,” Evan Lucas, Melbourne-based market strategist at IG Ltd. said by phone. “Many of the export-driven Japanese companies like Canon had the weakening yen supporting them earlier in the year but that is now stagnating. People are starting to reassess those shares that have had that support.”

Of 73 companies in the MSCI Asia Pacific Index that have reported quarterly results this earnings season and for which Bloomberg compiles estimates, 60 percent posted profit that missed expectations.

Regional Gauges

Japan’s Topix index today fell 1.9 percent, Australia’s S&P/ASX 200 Index rose 0.3 percent and New Zealand’s NZX 50 Index advanced 0.6 percent. South Korea’s Kospi index dropped 0.8 percent even after data showed the nation’s economy expanded more than forecast last quarter. Futures on the Standard & Poor’s 500 Index slipped 0.2 percent.

Hong Kong’s Hang Seng Index slid 0.5 percent and China’s Shanghai Composite declined 1 percent. Singapore’s Straits Times Index lost 0.2 percent and Taiwan’s Taiex Index retreated 0.9 percent.

Fed

Fed policy makers are scheduled to meet Oct. 29-30, when they will evaluate the strength of the recovery with a less complete set of figures than usual due to the 16-day partial government shutdown that caused the suspension of reports and collection of data.

China

The odds of a severe slowdown in China or a credit crisis will fall after a Communist Party summit in November as leaders tackle local-government debt and financial reforms, a Bloomberg News survey indicates.

Fifteen of 23 analysts said policies flowing from the meeting will reduce such risks, and a majority said the plans will help China become a high-income economy by 2030. Royal Bank of Scotland Group Plc sees freer interest rates and Barclays Plc says changing officials’ performance benchmarks may help contain local-government spending.

FTSE Outlook

ftse 100 prediction
ftse 100 prediction

I don’t think the bulls are going to give up just yet and with the daily pivot at 6702, as well as the bottom of the 10 day Bianca channel at 6707 there is still a case for some more upside. We haven’t had a big bearish plunge off the 6720 resistance area really, and there are still a lot of retail traders short which the market will want to rob. Sorry, stop out. The trends are still up for the moment, however, its Friday, we have had a good climb and some will be wanting to bank profits I am sure. For the open the 30 minute EMAs have crossed to being slightly bearish, but we are nearing a cluster of supports – the blue horizontal lines I have plotted on the chart. We also still have a fairly strong upward channel on the 30 minute chart. I am not ruling out a rise to 6850 currently – the top of the 20 day Bianca channel is climbing and sits at 6795 at the moment.

So, still cautiously bullish, but more so if this 6730 area breaks today. I have put 2 scenarios below, blue being preferred which is the support at 6700 holding, pink is a possible dip a bit further and then bounce. The 2 trades below cater for both and with tight stops if neither work out then losses are minimal.