Happy New Year! Morning all, hope you had a good one. So close to the 6800 year end (not bad considering I had that level from about July even if I do say so myself!). US consumer confidence on Tuesday was much better than forecast which may result in a bullish reaction today as the FTSE was closed when that news came out. Asia was weak last night however the FTSE has held up and we are looking at an open around 6762. I expect early January to remain bullish.
I expect that things will remain pretty subdued for the remainder of this week as lots of traders are still on holiday, though we look on track for a continued slow drift up.
Asia Overnight from Bloomberg
Asian stocks dropped, with a regional benchmark index retreating from a three-week high, after gauges of manufacturing in China declined, underscoring challenges for President Xi Jinping as he tries to sustain economic momentum while rolling out reforms.
The MSCI Asia Pacific excluding Japan Index slipped 0.5 percent to 465.67 as of 1:51 p.m. in Hong Kong, erasing gains of as much as 0.2 percent. Japanese markets are closed for a holiday. Global equities soared by more than $9 trillion in 2013 as central-bank stimulus helped the U.S. economy gain momentum and Europe recover from its longest recession.
“We’re seeing some profit-taking today following the recent rally,” Teresa Chow, a Hong Kong-based fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion, said by telephone. “China’s reforms may bring short-term pain for the economy, but over the longer term we see a more positive story.”
China Manufacturing
China’s manufacturing purchasing managers’ index came in at 51 for December, the National Bureau of Statistics and the nation’s logistics federation said yesterday. That trailed the median economist forecast of 51.2 and was a decline from November’s 51.4 reading. “There’s a good long-term story for China with better quality economic growth, but the pains of the reform program are probably going to hold the markets back for the moment,” Gary Dugan, who helps oversee about $53.4 billion as the Singapore-based chief investment officer for Asia and the Middle East at Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, told Bloomberg TV. “People are looking for buying opportunities, but they do need a good story.”
S&P
The Standard & Poor’s 500 Index climbed 0.4 percent on Dec. 31 in New York, ending the year at an all-time high. The Dow Jones Industrial Average gained 0.4 percent to a record.
FTSE Outlook
As per Tuesday, bulls need to take out the high from Monday at 6767 today, which looks distinctly likely as we are just testing that level as I write this. assuming they do then 6807 and 6934 are on the radar, though the latter will probably be later in January. Today’s pivot is 6745 so I expect that will act as support for any dips, as well as having the bottom of the 10 day Bianca at 6734, however, we may just climb from the off, especially if 6767 breaks. As a larger downside level if 6600 breaks at some point then that will invalidate the bullish rises for the time being.
With the S&P looking good for a rise to test the 1855 level then I expect that the FTSE will also follow suit with the rise today so as per earlier this week its better to be on the long side today rather than trying to short, “buy the dips”….. again, especially if the pivot at 6745 is seen.