Good morning, well that was interesting yesterday, FTSE had a trending day (days which I hate unless already in a trade) and blew through all of the lower resistances before stopping just shy of the more major 6755 area. Typical! Interestingly the Dax hardly moved while the USA was closed for their public holiday and overnight the FTSE has maintained its strength. With this bounce from the 6400 area the other day things are certainly looking up for the FTSE at the moment and the Bianca channels are now showing 6800 channel top areas – figures that are likely to rise if we have a few more bullish sessions this week, whilst the daily Raffs are topping at 6850 currently. The all-time highs are still there for the double top at 6950ish! Despite that sell off to 6400 things seem to be recovering quite well but it probably won’t take much to upset the apple cart again and the weekly chart has ProTrend resistance at 6793 still.
With the overnight session being quite upbeat, bullish Tuesday and a divi of 14 points, there doesn’t seem to be much to be bearish about. Probably just the reason for it to drop! That said 14 point divi will bring the buyers in just before the close so expect a rise about 16:15 to 16:29 today.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index poised for a three-week high, after the Bank of Japan maintained unprecedented asset purchases and boosted lending programs. Chinese shares fell as the central bank drained liquidity from the financial system.
The MSCI Asia Pacific Index added 0.6 percent to 137.12 as of 1:32 p.m. in Tokyo, heading for its highest close since Jan. 24. Global equities erased this year’s losses after Janet Yellen’s first testimony to Congress as head of the Federal Reserve and China’s record lending buoyed optimism in the world’s largest economies.
“The broad market uptrend remains intact,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital, which manages $131 billion. “Japan is in a unique situation as the BOJ continues to add stimulus, while the Fed is beginning to taper. Liquidity tightening in China shouldn’t be a concern as policy makers need to mop up excess liquidity. There’s enough credit available in China to support growth.”
Japan’s Topix (TPX) index jumped 2 percent as the yen weakened. The nation’s central bank pledged to maintain plans to expand the monetary base by 60 trillion yen to 70 trillion yen ($686 billion) per year, as forecast by all 34 economists surveyed by Bloomberg News. It doubled a funding facility to 7 trillion yen and said individual banks could borrow twice as much low-interest money as previously under a second lending facility.
China’s Shanghai Composite Index fell 0.5 percent, retreating from a two-month high. The nation’s money-market rates climbed as the central bank drained funds from the banking system after new lending reached a record.
“The central bank has realized there’s a need to soak up some liquidity,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The process will pressure stocks.”
FTSE Outlook
Ah the FTSE loves a good game doesn’t it. When everything else remains static the FTSE adds 70 points. News of a slowing China yesterday had no effect whereas a week previously the same news was the end of the world. Just goes to show how the news is matched to the price action rather than the other way round. We are nearly at the resistance areas mentioned yesterday at 6755/65, which ProTrend have conveniently plotted with a 30 minute channel as well. as such I expect an initial dip from this area, ideally to the bottom of that channel at 6710ish, before further rises, though the drop might stall at 6725. That said, we also have the daily pivot at 6714 so a fair bit of support around this area – 6710 to 6725ish. Its bull Tuesday, and we have a big 14 point divi today. As such bear in mind the note above about the buyers coming in at the close to get the divi.