Good morning. Well NFP certainly provided some movement on Friday. Well done to those of you that shorted at 6764 as per the trade plan. I didn’t SMS it as I didn’t take that trade in the end but I know some of you did, and with the stop at 6785 it netted quite a few points on the drop back to 6730. If you are still holding then the stop at breakeven now should be good, though there is a possible rise to 6777 today. That said, the top of the Bianca 10 day channel for today is only 6753, so pretty much the area we are looking at opening. Prices soon bounced back after the NFP as slowing jobs growth might mean slower tapering (and there is always the possibility they have shot their bolt too early tapering last month and might even need to ramp it up). The data is still mixed really in my opinion – a recovery is certainly not a sure fire thing, not in the States and not in the UK (and even elsewhere).
Asia Overnight from Bloomberg
Asian stocks rose after slower growth in U.S. payrolls eased concern the Federal Reserve will accelerate cuts to stimulus.
The MSCI Asia Pacific excluding Japan Index rose 0.6 percent to 459.77 as of 1:22 p.m. in Hong Kong, with all 10 industry groups gaining. Markets in Japan are closed for a holiday today. U.S. employers hired 74,000 workers in December, the weakest growth since January 2011, indicating a pause in the recent strength of the labor market that may partly reflect the effects of bad weather.
“Equities markets liked the payrolls report because it means the pace of tapering could possibly be a bit slower than expected,” Keith Poore, head of investment strategy at AMP Capital Investors Ltd. in Wellington, which manages about $130 billion, said by phone. “Tapering will continue if economic growth pans out as we are expecting, which is for a gradual improvement. The economy is going to improve and ultimately that is going to be good for growth assets like equities.”
U.S. Futures
Futures on the S&P 500 slipped 0.2 percent today after the gauge climbed 0.6 percent last week. Three rounds of monetary stimulus from the Fed helped push the S&P 500 Index 172 percent higher through Jan. 10 from a 12-year low in 2009.
The U.S. jobless rate unexpectedly fell last month, dropping to 6.7 percent from 7 percent, the Jan. 10 payrolls report showed. Economists surveyed by Bloomberg had predicted the rate would be unchanged in December.
The Fed announced in December a $10 billion cut to monthly asset purchases amid signs of recovery in the U.S. job market. Policy makers will trim stimulus in $10 billion increments over the next seven Fed meetings before ending them in December, according to a Bloomberg survey of economists Dec. 19.
FTSE Outlook
We have a narrowing 10 day Bianca channel presently which usually means we can expect a breakout from that channel soon. after testing that 6770 area on Friday prices have stayed below so things could possibly experience a bit of a dip back, and we fail to reach the 6850/950 as per the weekly chart before a more significant dip. That said, a rise above 6770 today could well see 6800/6810 where we have the top of the 10 day Raff, which has also levelled off after the past few sessions showing a weakening rising trend since the climb of 6400 last month.
I have put a couple of shorts off the resistance levels below as the trade plan, and a long off the pivot if there is an initial drop (the 200ema on the 30 minute is also around this 6730 area). With the bounce back on Friday after hitting that level I think we could see an initial push higher towards the 6770 area, possibly even 6800. The latter looks interesting as we have the even longer term 50 day Bianca channel at 6804 but also the 10 day Raff at 6801.