Good morning. A bit of a choppy day in the end yesterday that saw both the levels mentioned in the trade plan hit, though the stop was just a tad too tight for the short off 6862. From the emails I think some of you went for the wider stop on that so that paid off. Annoyingly I got stopped out only to watch a very quick drop to 6820! Anyway, the long off the pivot at 6828 was alright, as that had a wider stop. If the target was set at 6860 then that has been hit overnight and once again, despite a good show from the bears , it all looks bullish still. The bulls will be keen to break yesterday’s high at 6868 today. I expect resistance at 6888/6900 though, which is the top of the Bianca channels. The 30 minute channel worked very well yesterday and probably will again today, with support at 6835 (pivot 6840) and resistance at 6880.
Asia Overnight from Bloomberg
The Australian dollar jumped the most in a week after inflation data dimmed rate-cut prospects. Asian stocks advanced, led by shares in Shanghai, as Chinese money-market rates fell and the yen slipped.
The so-called Aussie climbed 0.7 percent against the greenback as of 2:26 p.m. in Tokyo. The MSCI Asia Pacific Index gained 0.3 percent as Chinese shares rose the most in two months after the central bank injected funds to ease a cash squeeze. Standard & Poor’s 500 Index futures increased 0.2 percent. Japan’s Topix index increased as the yen swung to a drop of 0.2 percent. Natural gas headed toward the highest close in 2 1/2 years as cold weather boosts demand for heating fuel.
Australian consumer prices rose faster than economists forecast, reducing the central bank’s scope to cut record-low interest rates. Benchmark money-market rates fell for a second day in China, as the central bank made more funding available for smaller lenders. The Bank of Japan maintained stimulus amid unchanged economic forecasts today, while Thailand is projected to reduce key interest rates after a state of emergency was declared. Textron Inc. and eBay Inc. report earnings in the U.S.
“There isn’t a great deal of conviction about anything,” said Tim Condon, Singapore-based head of Asian research at ING Groep NV. “You’ve got better liquidity in China so that helps there. Everybody’s in a bit of an uncertain mindset about what’s going on and how quickly the Federal Reserve withdraws stimulus and whether the Bank of Japan does more or not.”
FTSE Outlook
Major support still exists at 6810 and I think if that breaks the bears are really going to go for it. For today there is support at 6840, being the daily pivot and the bottom of the 30 minute channel, a channel which worked well in the end yesterday. 6810 is likely to be seen if yesterday’s low at 6822 breaks, but with Bianca channel support also at 6830 with the 10 day channel, there is a bullish overtone for today. I think we might see an initial dip off the 6861 area, probably to those lower levels then as per usual the buy the dip brigade swoop in. I don’t think ti will be long before we test the top of those daily channels on Bianca at 6890ish, maybe today. The key level for the bulls will be to break and hold above 6861, whilst for the bears it will be break and hold below 6810. With the Dax at the bottom of its 30 minute channel, the S&P on support at 1844 and looking like rising to at least 1851 there momentum is with the bulls across the board (apart from gold hopefully!).