Good morning. Well here we are, the first day “proper” back after the break and the start of the new trading year. The 2014 outlook was published in the Spread Bet magazine here (am on page 99) and there are a few other articles in there that are interesting. What is slightly disconcerting is that an awful lot of people are predicting 2014 to be bullish and a bit of a one way street, which is something that hoists the warning flag in my eyes, as the market often does the opposite of what the masses expect. I am sure you have probably seen this too!
Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index headed for its biggest loss in more than three weeks, as a gauge of China’s services industries dropped, signaling growth may slow in the world second-biggest economy.
The MSCI Asia Pacific Index slipped 0.8 percent to 139.23 as of 2:06 p.m. in Tokyo with nine of its 10 industry groups falling. It’s headed for the biggest loss since Dec. 12. Energy and telecommunication services shares led the decline.
This year “is going to be a year of consolidation,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said by telephone. “China’s growth is slowing down structurally. Our expectation out of China’s economy is it will grow just over 7 percent this year.”
The Asia-Pacific gauge added 9.3 percent in 2013, rising for a second straight year, as central banks across the globe acted to spur growth. The measure traded at 13.1 times estimated earnings as of Jan. 3, compared with 15.5 for the Standard & Poor’s 500 Index and 13.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
US Futures
Futures on the S&P 500 were little changed today. The measure lost less than 0.1 percent on Jan. 3, falling for a second day. Fed Chairman Ben S. Bernanke said the headwinds that have held back the U.S. economy may be abating, leaving the country poised for faster growth.
U.S. central bank officials said last month they will reduce their monthly purchases of assets to $75 billion from $85 billion starting this month, citing faster-than-estimated economic growth.
FTSE Outlook
I am still holding a bit of the long from last Friday at 6700 as I think that we will see a bit more upside this week before any bearishness kicks in. Either way the stop is at breakeven on that position. The FTSE has held up quite well since hitting that 6700 level, even with a weak Asia overnight, and I still think we will see 6800 shortly, as the 20 day Raff channel is holding as support pretty well still. The spanner in the works for that plan will be a break below 6700, which would lead to support at 6642 and 6620.
Resistance is at 6748 which might stall an early advance, as that is the top of the 30 minute channel that we are currently in. I think a dip from there down to the pivot at 6725 is possible, then more bull for a rise to the 6766 area. If that breaks then we should reach the 6800 level. As we are at the bottom of the 10 day Bianca and 20 day Raff I am still feeling upbeat for the early part of this week, though it will be interesting to see how today plays out with everyone now “back in the game”.