Good morning. Well the bears didn’t really get going off that previous resistance area of 6832 on Friday and the short ended up being stopped at breakeven. That said, it hasn’t really pushed on from that sort of level just yet, so I think we may see a bit of a dip before further rises. It certainly looks and feels like it wants to reach that all time high again around 6950, and possibly even that 7100 area now looking at the weekly chart (though as mentioned on Friday, when everyone seems bullish, be cautious!). Maybe that’s a bit too optimistic but you never know! Last night saw news from China that their economy grew 7.7% in Q4, exceeding estimates, though the reaction on the FTSE futures has been muted. Overall, based on the FTSE action last week we are in a pretty narrow range to start the week, with support at 6810 and resistance at 6840.
Asia Overnight from Bloomberg
Asian stocks fell after China’s economic growth slowed in the fourth quarter as gains in factory output and investment spending eased.
The MSCI Asia Pacific Index dropped 0.3 percent to 139.18 as of 3:08 p.m. in Tokyo, with eight of the gauge’s 10 industry groups falling. The measure finished last week within 2 points of its closing level for 2013 as investors weighed signs of a stronger global economy against concern about equity valuations.
“We’ve not had a fantastic start this year,” Vasu Menon, vice-president for wealth management research at Oversea-Chinese Banking Corp. in Singapore, told Bloomberg TV. “Asia is facing economic headwinds. China is trying to engineer an economic slowdown to ensure more sustainable economic growth. We’re likely to see more volatility in the coming weeks as the U.S. earnings season gains pace.”
China GDP
China’s economy expanded 7.7 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said today. That compares with 7.8 percent growth in the previous three months.
Industrial production rose 9.7 percent in December from a year earlier, data showed, down from a 10 percent gain in November. Retail sales last month rose 13.6 percent from a year earlier, slowing from 13.7 percent in November.
Fixed-asset investment in China excluding rural households increased 19.6 percent in the January-to-December period from a year earlier, when it expanded 20.6 percent.
S&P Futures
Futures on the Standard & Poor’s 500 Index were little changed. The measure slid 0.4 percent on Jan. 17 as earnings at companies from General Electric Co. to Intel Corp. disappointed investors. U.S. equity markets are closed for a holiday today.
“Until we see a clear upside catalyst emerge in the near-term, we may see this lack of enthusiasm persist for some time,” Tim Radford, a strategist at Rivkin Securities in Sydney, wrote in an e-mail.
FTSE Outlook
Looking at the daily chart below, we still have the ProTrend resistance line in play at 6840, which hasn’t broken since the first touch on 16th Jan. As such I do think we might see a dip back to the bottom of the 10 day Raff channel area at 6770ish in the short term, before further rises. That also tallies with the 10 day Bianca channel which has the bottom at 6775. As mentioned above though, we are in quite a tight range between 6810 and 6840 at the moment, and one or both of those levels is likely to break today.
The US market is closed today which will likely make the FTSE muted too.
Basically today is looking at support at 6810 and resistance at 6840 once again. If those levels break look to trade short or long targeting 6792, or 6860.