Good morning, well that was a full on bull day in the end yesterday. We got the dip and rise, though unfortunately the initial long order for 39 took and then got stopped before the FTSE spent the rest of the day rising. In the chat room we retook the long as it started to bounce back which was good. The later short took and managed a few points before the bulls grabbed control and never looked back. It has remained bullish overnight and with 6836 trying to get broken, 6860 looks like the next area of interest. I had a drop pencilled in for January/February after the Christmas rally to maybe as low as 6200. It looks like that fall took place but stopped at 6400 (still quite a sizeable dip from 6880) as maybe the power that be didn’t want too bad a start to the year. Anyway, its now climbing and it looks quite bullish for the moment (exactly the time to start thinking bearish), though the 10 day channels still seem to be the ones to watch – Bianca channel top at 6881 and the 10 day Raff at 6894 – good shorting areas here for a few days hold I think. I see a rate rise is being mooted for Spring 2015 as well.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index rebounding from its biggest drop in two weeks, after a larger-than-forecast climb in a measure of U.S. manufacturing tempered concern about global growth.
The MSCI Asia Pacific Index gained 1 percent to 137.05 as of 12:11 p.m. in Hong Kong, extending this week’s advance to 1.3 percent. The gauge sank 1.3 percent yesterday as a preliminary reading for a China purchasing managers’ index unexpectedly fell to a seven-month low. A U.S. manufacturing index jumped more than expected, a separate report showed yesterday.
“We are in the relatively optimistic camp on the U.S. economy,” David Cassidy, a Sydney-based strategist at UBS AG, said by phone. “Investors are positioned for an improving growth trend in the U.S. Earnings growth is getting better and that will be enough to lift the market further this year.”
Japan’s Topix index today rose 1.7 percent. Minutes from the Bank of Japan’s Jan. 22 policy meeting showed some board members said the central bank should provide a clearer explanation that an expected decline in second-quarter domestic growth was factored into its outlook.
S&P Futures
Futures on the S&P 500 advanced 0.3 percent today. The measure yesterday gained 0.6 percent after the manufacturing data and as Facebook Inc.’s $19 billion purchase of messaging service WhatsApp Inc. fueled optimism about deals.
U.S. Manufacturing
The Markit Economics preliminary index of U.S. manufacturing increased to 56.7 in February, surpassing economists’ estimates, while Labor Department figures indicated fewer applications for unemployment benefits last week. The Conference Board’s index of U.S. leading indicators, a gauge of the outlook for the next three to six months, rose in January in line with estimates.
Group of 20 finance ministers meet in Sydney this weekend, with U.S. stimulus cuts and political turmoil from Ukraine to Venezuela stoking concern over emerging-market volatility.
Investors have been dismissing lower-than-forecast U.S. economic data over the past two weeks, pointing to harsh winter weather as a reason for unexpected weakness in reports from housing to hiring. The Bloomberg ECO U.S. Surprise Index, which measures how much recent data has beaten or missed economists’ estimates, fell to minus 0.423 yesterday, the lowest since September 2011.
Yellen Comments
Federal Reserve Chair Janet Yellen last week said the economy has strengthened enough to withstand continued cuts to monetary stimulus, adding that only a notable change in the outlook for the economy would prompt the central bank to slow the pace of tapering.
FTSE Outlook
The FTSE is in bull mode still I feel, and is actually sitting within some fairly decent channels on the lower time frames (10 and 30 min). With the daily channel tops at 6881/6903 area we could be on for a dip from that area if seen later today. For the moment though, whilst its bullish I think that 30 minute channel will hold things up. initial resistance is 6860 where I am going to try a short though if that breaks then the next obvious area of resistance is those daily channels. I have put in for the rise to continue initially. The bottom of that 30 minute channel is around the 6800 area, though that is a pretty big drop, but could be likely as the daily pivot is a lot lower at 6786. Don’t think ti will hit that unless sentiment really changes today. There is option expiry today so there might be a little bit of choppiness at 10:15ish this morning (plus its Friday so usually weird anyway!). am also watching for some Dow support at 16080 today.