Good morning, unfortunately the drop was a bit further yesterday and the 6640 support didn’t last very long. As it happened it dropped right down to the 6606 area, which was the bottom of the 10 day Raff channel area. With the speed that it dropped over the morning it looked like it was going to carve through it, but the bulls defended and we got the rise right the way back, almost to the 6685 area where we had the resistance. Messy! Overnight has been a bit weaker dropping off the highs, a level that might be hard to break today. As you know I was bearish for the end of this week; I was expecting it more today than yesterday I grant you; however, with gold rising strongly (the long on that from 1288 worked well yesterday if anyone else took it), I would say that there is a bit of safe haven money flow going on. Gold looks good for 1320 next I feel. Of note is that the bottom of the 10 day channels are as follows for today, Bianca 6618; Raff 6638.
The media were pretty upbeat yesterday with the £/$ rate hitting a 2.5 year high on a strengthening UK economy (even if it still feels flimsy in reality).
Asia Overnight from Bloomberg
Asian stocks outside Japan rose and silver headed for its longest rally since March 2008. The yen climbed against most major peers, Indonesia’s rupiah led emerging-market currencies higher and palm oil advanced to a two-month high.
The MSCI Asia Pacific excluding Japan Index added 0.7 percent as of 1:04 p.m. in Hong Kong, and is on track for a 2.5 percent increase this week. Japan’s Topix index tumbled as the yen climbed 0.4 percent versus the dollar. Standard & Poor’s 500 Index futures slipped 0.4 percent after the gauge closed at the highest since Jan. 22. The rupiah increased as much as 1.2 percent to a level not seen since Dec. 3. Spot gold traded at $1,305.28 and silver climbed for an 11th day. Palm oil advanced a third day in Kuala Lumpur.
Stocks and developing-nation currencies are rebounding from a rout fueled by two rounds of Federal Reserve stimulus cuts. Chinese consumer prices rose faster than estimated in January, while producer prices fell in line with expectations before money-supply data due today or tomorrow. Italy’s Prime Minister Enrico Letta plans to resign today, while Germany and France release final-quarter gross domestic product figures. Reports in the U.S. may show industrial output growth slowed last month and consumer sentiment is weakening in February.
“We remain positive on risk assets and don’t see any reason to pull back,” Manpreet Gill, a Singapore-based senior investment strategist at Standard Chartered Bank, said by phone. “Economic data in the U.S. hasn’t been brilliant but the overall uptrend hasn’t really changed. Things need to materially become worse before we change our positive view on equities. Chinese inflation isn’t a worry as monetary policy in China remains pretty tight.”
U.S. Stocks
Futures on the S&P 500 dropped after the measure rose 0.6 percent yesterday. Better-than-forecast earnings and a $45.2 billion takeover of Time Warner Cable Inc. (TWC) outweighed a drop in retail sales. The U.S. equity benchmark has added 170 percent since a March 2009 low.
FTSE Outlook
That was a decent bounce in the end yesterday that stalled at pretty much the resistance area we had at 6685. Today I think the resistance level is going to be around that same area – 6682, the overnight high, and likely to be seen if 6664 is broken in hours. Its Friday so likely to be a little weird(!) anyway. I did have a drop pencilled in for the end of this week, though with that drop yesterday maybe that was it come early. The 10 minuet chart shows those 2 resistance areas, and I think that a rise to the top of the channel where the 6882 is, then a drop down is quite likely. Should however the bulls manage to break that then 6700 would be an obvious target, being a round number. Today’s pivot is 6647, so I expect that may hold as initial support, if the bulls aren’t going to waste their climbing efforts from yesterday.