Good morning, the gamble for the short at 6708 paid off yesterday in the end though it looked like a very risky one at the time – every man and his dog was/is bullish and we had a decent climb getting to that level. As it turns out its looking like that might be it, especially as we haven’t had the retest and overnight has been pretty weak. We are now around 6653 as I write this. I mentioned earlier this week that I was a expecting a bearish end to the week, most likely on Friday 14th, I still think that’s the case though maybe it will start today? Asia has just ended a 6 day bull run.
Asia Overnight from Bloomberg
Asian stocks dropped after the regional benchmark index climbed for a sixth day yesterday to cap its longest run of advances this year.
The MSCI Asia Pacific Index slipped 0.6 percent to 135.64 as of 11:25 a.m. in Tokyo after rising as much as 0.1 percent. The measure rebounded 4.8 percent through yesterday from a five-month low on Feb. 4. The Standard & Poor’s 500 Index slid less than 0.1 percent yesterday as Procter & Gamble Co., the world’s largest consumer-products maker, cut its forecasts and Amazon.com Inc. was downgraded at UBS AG. Futures on the U.S. equity gauge declined 0.2 percent today.
“The softness that we’re seeing in January and February should be expected,” Mark Matthews, Singapore-based head of Asia research for Julius Baer, which oversees about $377 billion, said on Bloomberg TV. “Markets can’t go up in a straight line. We got so much money after the global financial crisis here in Asia and now we’re seeing a lot of outflows.”
The Asia-Pacific equity benchmark climbed back after losing 4.6 percent in January, its worst start since 2009, amid concern about the Federal Reserve’s stimulus cuts, a slowdown in China and volatility in developing markets.
Global Rebound
Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to less than $1 trillion, data compiled by Bloomberg show. Foreign investors pulled a net $9.6 billion out of Japanese equities last month, according to the data.
Japan’s Topix index dropped 0.8 percent. South Korea’s Kospi index swung between gains and losses. Taiwan’s Taiex index and Hong Kong’s Hang Seng Index both lost 0.4 percent. China’s Shanghai Composite Index slid 0.3 percent.
Australia’s S&P/ASX 200 Index slipped 0.1 percent, erasing gains of as much as 0.4 percent. A government report showed that the nation’s unemployment rate rose to 6 percent, the highest in more than a decade. New Zealand’s NZX 50 Index fell 0.2 percent. Singapore’s Straits Times Index added 0.2 percent.
“It does look like this rally is coming to a halt,” Evan Lucas, a markets strategist in Melbourne at brokerage IG Ltd. “We have to watch earnings, particularly in Japan. The earnings so far have been OK but they’re not fantastic.”
FTSE Outlook
Today’s pivot is 6686, and with yesterdays close at 6675, I think the bears are going to be gaining some strength,. As such shorts around this area (I am thinking maybe that 6708 was a the money shot for the next few days now and maybe should have been so hasty to close!). However, should that level break then the 6727 area mentioned yesterday is still valid resistance, closely followed by 6752, the top of the 10 day Bianca channel.
We are bang on support at 6653 as I write this with the next support not far away at 6640. As mentioned I think we are going to see some bearish action, possibly starting today but mainly I am expecting it tomorrow and Monday. I’ll put my neck on the line and commit to that – it may or may not come to pass.
The bulls (as with the German bulls) will need to get prices above that pivot area asap today for any hope of reaching 6710, or higher. I am thinking a dip to 6640 (if this 6653 breaks) then a rise to the pivot at 6685 then more downside leading into tomorrow.