Good morning. Well had the dip from 6806 yesterday that turned into a bit of a rout for a little while, hitting a low of 6732 before staging a great come back and hitting the 6818 resistance level at the bell. Then another little dip and then a rise which I think will last for a little while today, and probably see 6860, maybe even 6900. Overnight saw yesterdays other resistance level hit and get a reaction, at 6830. As mentioned yesterday, it was a key area for the bulls yesterday and they had to climb, though the bears gave them a bloody nose at the start. The drop down was mostly caused by a lot of rhetoric between Russia and the West over Ukraine, hence the overreaction. Still, at least it meant that the plan we had for gold yesterday worked a treat, rising from the 1322 to 1332 by midday.
If we do rise today then we should get back to comfortably within the various daily channels – especially the 20 day Bianca at 6816.
Asia Overnight from Bloomberg
Asian stocks fell, paring the regional benchmark’s first monthly advance since October, after the yuan posted its steepest one-day loss against the dollar.
China’s Shanghai Composite Index lost 1 percent, set for a third monthly slide amid speculation a weaker currency will curb earnings. Hong Kong’s Hang Seng China Enterprises Index slid 0.8 percent, erasing gains of as much as 0.8 percent, while the benchmark Hang Seng Index fell 0.3 percent.
The MSCI Asia Pacific Index declined 0.2 percent to 137.66 as of 12:05 p.m. in Hong Kong after rising as much as 0.2 percent. The measure gained 0.2 percent this week. The yuan fell as much as 0.9 percent to 6.1808 per dollar, the biggest intraday drop based on data going back to 2007.
“Investors are very jittery about China’s economic outlook,” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd. in Sydney, which oversees $131 billion, said by phone. “Anything that contributes to uncertainty, whether it’s the currency or money-market rates, just creates a lot of nervousness.”
The yuan has gone from being the most attractive carry-trade bet in emerging markets to the worst in the space of two months as the People’s Bank of China’s efforts to weaken the currency cause volatility to surge. The central bank is forecast to double the yuan’s trading band in the coming quarter as policy makers loosen exchange-rate controls to promote greater usage of the currency in global trade and finance. The National People’s Congress annual gathering begins March 5.
FTSE Outlook
With prices getting above the resistance level at 6820, we should be on for a bullish day today, an the likely targets i have in mind at 6857 and 6900. The bulls made hard work of it Tuesday, Wednesday and Thursday morning with prices just hovering around the bottom of the daily channels, however with that rise yesterday afternoon we are back above the channel bottoms and will hopefully be able to pull away from them a bit. The S&P managed to achieve its record close yesterday at 1854, so a bit more bull before the next inevitable decline is probably the order of the day.