Good morning. Well that was a bit frustrating, the rise continued yesterday but didn’t dip back to the entry level I had identified so I was wary of hopping on the long, mainly as it had come quite far from the 6696. Hindsight is wonderful but made me regret closing the long at 6770! That said, it struggled at the 6725ish area, where we had the top of the 10 day Raff for yesterday, and todays 10 day Bianca channel top is 6831. If it breaks that 6860 is still likely, though after 2 days of strong rises a little dip is possible. The S&P stalled at the higher resistance level at 1851 and only tested that level the once. Asia levelled off overnight, staying quite flat. It was Bank of America’s turn for results yesterday which were welcomed well, adding 2.3% to the share price.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses as financial stocks led declines and Japanese shares pared an earlier advance.
The MSCI Asia Pacific Index added 0.1 percent to 139.43 as of 2:37 p.m. in Tokyo after falling as much as 0.1 percent. Shares earlier gained as much as 0.3 percent followed a global rally that saw the Standard & Poor’s 500 Index climb 0.5 percent to a record and the Stoxx Europe 600 Index jump 1 percent yesterday as the World Bank boosted its global economic growth forecast.
“The market is being sold after rising yesterday and this morning fast, but it’s not that something changed the market’s direction,” said Takuya Takahashi, a senior strategist at Daiwa Securities Group Inc., Japan’s second-largest brokerage. “We don’t see anything that casts a cloud over the U.S. economy or any negative earnings results.”
Futures on the S&P 500 added 0.1 percent today. Bank of America Corp. climbed 2.3 percent to $17.15 yesterday, the highest since May 2010. The second-biggest U.S. lender’s profit more than quadrupled as the company quelled claims tied to defective mortgages.
The Federal Reserve said “moderate” growth across most of the U.S. last month was buoyed by gains in holiday spending by consumers, an improving labor market and strength in manufacturing.
‘Positive’ Outlook
“The economic outlook is positive in most districts, with some reports citing expectations of ‘more of the same’ and some expecting a pickup in growth,” the Fed said yesterday in its Beige Book business survey, based on reports gathered on or before Jan. 6.
International Monetary Fund Managing Director Christine Lagarde said yesterday that momentum in the world economy in the second half of last year should continue in 2014. The Washington-based fund plans to raise its forecast for global growth when it releases a report later this month.
“For the time being, I think the fundamental story is real and strong enough to keep the market going,” said Mikio Kumada, a Hong Kong-based global strategist for LGT Capital Partners. “We just bought more into developed equity markets a few days ago.”
FTSE Outlook
The EMAs on the 30 minute chart are still positive for more bull but we are at some fairly key resistance at 6830, being the top of the 10 day Bianca and there are also a couple of ProTrend lines of resistance at 6830 and 6840 on both the daily and 30 minute charts. That said, I think after the decent rises of the past 2 days a little pull back is possible, probably to the daily pivot area at 6777, and also the bottom of the channel on the 30 minute chart (bottom is at 6785). If the bears were to break that 6780ish area then the 10 day Bianca channel bottom at 6730 is distinctly possible, but I don’t think the bulls will give up these gains that easily, though they might struggle to break this 6830 area today. If they do then the top of the 10 day Raff at 6860 is likely to be hit next.