Good morning. After the initial dip yesterday and the subsequent long at 6550, the FTSE stayed pretty flat. Even some Fed speakers later in the day and $5billion of POMO/QE money going in didn’t manage to get it above 6565. Yesterday’s pivot level held perfectly in the end at 6536, so was just a bit early with the long. I still have it open in fact and with prices holding up still think it might rise a bit this morning. It seemed to be a case of everything catching its breath after Fridays rises. The FTSE is still not that far away from the top of the various daily channels so I feel that significant upside may be a bit limited – still that 6610 area looks like resistance where the top of the Raff’s are, as well as 6617 for the 20 day Bianca channel top and a slightly lower 6575 10 day Bianca.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses after the biggest rally in three weeks. Telecommunication and retail shares led declines while energy companies rose.
The MSCI Asia Pacific Index slid 0.1 percent to 140.44 as of 2:01 p.m. in Hong Kong, having risen as much as 0.1 percent earlier. The gauge jumped 0.8 percent yesterday, the most since Nov. 18. More than $8 trillion has been added to the value of global equities this year, the most since 2009, as central banks took steps to shore up economies worldwide.
“Don’t let the bumps in the road force you out of your equities positions,” Michael Shaoul, chief executive officer of Marketfield Asset Management LLC, which oversees about $17 billion, told Bloomberg TV. “Between now and the end of the bull market, there’s a lot of upside. You need to avoid the temptation to be panicked if we have a difficult period. This is a time when you want to remain patient with equities.”
S&P Futures
Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The gauge yesterday climbed 0.2 percent to a record as investors weighed the timing of any cuts to Federal Reserve monetary support amid budget negotiations in Washington.
Pimco Forecast
Pacific Investment Management Co. said global economic growth will accelerate next year. Mohamed El-Erian, chief executive officer at Pimco, whose firm has $1.97 trillion in assets under management, said the world economy is likely to expand by between 2.5 percent and 3 percent in 2014, up from 2.3 percent this year.
Federal Reserve Bank of St. Louis President James Bullard, a voter on policy this year, said the odds of tapering bond purchases have risen along with gains in the labor market, and any reduction should be modest to account for low inflation.
The Federal Open Market Committee will probably begin cutting stimulus at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 survey.
FTSE Outlook
Yesterday double topped at around the 6568 area, and after the initial dip to the pivot area, didn’t really do much else. If bulls can break yesterday’s high at 6569 then I feel that the target for the 6550 long at 6610 is still valid, though would probably bank at 6600 just in case. I am being quite optimistic today across the various indices talked about above so I hope it isn’t misplaced. I don’t think the “Santa Rally” is here just yet, mainly as we are not far off the top of the various daily channels across the board, and there is still time for a dip then rise before the end of the year. That said, we could still get a little bit of a rise in the next few sessions, and it feels like the FTSE is being supported quite well at this level, and we have a ProTrend channel on the daily chart in play with rising support at 6532.
With the 10 day Bianca resistance at 6575 this level will need to be the first hurdle if the bulls have any chance of getting prices towards those resistance zones at 6600+. If it all goes pear-shaped for the bulls then movement below 6510 will see the pre Santa Rally dip really kick in with a dip to 6430. That level (6500) if broken would also break an uptrend since June 2009.