Good morning, sometimes it just isn’t your day. I had the long order set yesterday and it just missed taking with the initial dip before spending the rest of the day climbing. Interestingly the climb stopped at pretty much that 6883 level mentioned as resistance though I was expecting it to keep going. Of course, hitting that level has got the media in a frenzy about new all-time highs (yesterdays was the highest close since 1999 – the dot com bubble era). That is usually the time to start exercising some caution as I don’t think many (well apart from some retail investors) will be piling in with prices at all-time highs, the smart money I am thinking will wait for the dip back before buying in.
From today’s telegraph, “Vodafone jumped 4.1pc following its share consolidation in the wake of its $130bn (£79bn) deal to exit its US joint venture. Vodafone shareholders have started to reinvest some of their windfall from that deal, which helped to lift the FTSE today and is expected to continue to push it higher in coming days.” “While stockbroking firm Charles Stanley expects the FTSE to end the year at 7,400, its investment director, Douglas McNeill, said: “There are lots of risks still around. We mustn’t forget that we’ve had a pretty good run in equities”. Stress tests measuring health of the eurozone banking system and the threat of deflation in Europe could unsettle markets, he said, as might tensions between Japan and China.” From here
We had the daily channel tops around the 6900 area yesterday, maybe that would have just been too convenient! What was interesting was that the Dow fell quite sharply after hitting the 16300 level, which means that bulls were quick to take profits, though it still ended the day positive buoying up Asia markets. Today could well fit the usual pattern of bull Tuesday though the dividend today is only 2.7 – not a level that will see buyers rushing in at the close.
Asia Overnight from Bloomberg
Asian stocks climbed, with the regional benchmark index at its highest in a month, while the South Korean won rallied and nickel rose. China’s yuan fell the most since December 2012 and gold retreated.
The MSCI Asia Pacific Index added 0.7 percent by 2:44 p.m. in Tokyo as SoftBank Corp. led a rally in telecommunications firms after it was said to be interested in buying a stake in South Korea’s Line Corp. mobile messaging service. Standard & Poor’s 500 Index (SPX) futures were little changed. The won rebounded from a two-week low and Turkey’s lira weakened 0.6 percent. China’s currency slid 0.24 percent while the country’s money-market rate halted a 10-day decline. Nickel advanced 0.2 percent in London and gold declined from its highest close in almost four months.
Telecommunications services companies led gains on the MSCI Asia Pacific Index after people familiar with the matter said SoftBank, Japan’s third-largest carrier, has made an offer for the messaging service owned by Naver Corp. Germany may confirm economic growth accelerated in the fourth quarter, while a U.S. report will probably show home prices rose 0.3 percent in December from a month before, according to Bloomberg surveys. China’s central bank is draining funds from the financial system as lower money market rates signaled ample supplies of yuan.
“The global economy looks solid enough,” said Evan Lucas, a markets strategist at IG Ltd. in Melbourne. “It’s not what you would call booming growth but it’s not anemic. Europe looks better than probably most would have expected, you’re also seeing reasonable numbers coming out of the U.S. and that gives us confidence. The lift from Wall St overnight was good, it certainly propped up Asian markets.”
The MSCI All-Country World Index climbed 0.2 percent, set for a third straight advance and the highest close since December 2007. The S&P 500 advanced 0.6 percent to 1,847.61 in New York, less than one point shy of a record close reached Jan. 15 after paring gains of as much as 1.2 percent.
FTSE Outlook
Well yesterday’s strong close has got everyone in a froth and calling for an assault on the record highs of 6950. Its looking more and more like the dip from the Santa Rally’s 6880 to 6400 was the early year dip before the rally (rather than the 6200 where the ProTrend supports were) so I think the FTSE is just racing ahead of my 2014 plan. I expect it to stutter a bit around that all time high level if its seen soon, and probably dip from there before breaking on the 3rd test later this year to then get the year end close around 7200.
For today the pivot is 6838 and we also have the Bianca 10 day channel lending support at 6828 so if we do get the initial dip from 6860, to that level I think we will then see a bounce, most likely to yesterday’s high point around 6885. We are still within a pretty large 30 minuet channel with extremes at 6835 support and 6940 resistance. Should it close above that channel resistance area then I think we might see a spurt upwards, but it needs to CLOSE above it.
Support wise today if the pivot breaks is 6817 after the channel has broken, which is roughly where the 200ema is likely to be later on today, after that level 6777 where the green ProTrend line is on the zoomed out 30 min chart below.