Good morning, well that was a bit odd, FTSE did indeed drop down to the target level for the longs around the 6745 area, but then stayed there for the rest of the day, disconnected from the rest of the world, namely the US which went on to make and close at record highs. Talk about a disconnect! Unfortunately, as it didn’t actually bounce nor follow the US the stop level got hit at 6736 (it was fairly tight as it was a risky long anyway being counter trend), which was probably just as well as it remained weak overnight. For today I have some support at 6718 and a bounce around here (possibly 6725 though) which exceeds 6750 should give the bulls some cheer. The climb in the US yesterday was yet again fuelled with stimulus talk and no tapering. US data out later today and tomorrow should provide some fuel for some moves. Considering that it isn’t far away I am pretty sure that the US bulls would like the Dow to hit 16000, if nothing else but to generate some headlines and show what a success QE has been/is.
Asia Overnight from Bloomberg
Asian stocks fell and copper rose before U.S. economic reports and the European Central Bank’s policy meeting. Australia’s dollar weakened against all its major peers after disappointing jobs data.
U.S. growth data today and payrolls figures tomorrow may help investors gauge the outlook for Federal Reserve policy after two papers from central bank officials said the level of slack in the world’s biggest economy justifies an accommodative stance. The ECB is projected to keep its main interest rate on hold. Australian employers cut full-time workers in October by the most in more than a year, as traders increased bets the central bank will keep interest rates at a record low.
“It is hard to see where the global economy can surprise significantly on the upside to provide a further leg up for major indices,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said by e-mail. “The markets have bid prices up and are likely to side-trend for a period.”
ECB Meeting
The euro was little changed at $1.3514 after rallying 0.3 percent yesterday and the British pound held three days of gains, trading steady at $1.6071. The ECB will leave its benchmark rate at 0.5 percent today, according to all but three of 70 estimates compiled by Bloomberg. The Bank of England is projected to do the same, a separate survey showed.
The U.S. economy probably grew at a 2 percent annualized rate in the third quarter, compared with a 2.5 percent increase in the previous three months, according to a Bloomberg survey before today’s report. Economists predict data tomorrow will show payrolls climbed by 120,000 in October and the unemployment rate increased to 7.3 percent from 7.2 percent in the previous month, according to a separate survey.
William English, head of the Fed’s Division of Monetary Affairs, wrote that the strategy of not raising interest rates when unemployment is above 6.5 percent has provided effective stimulus, and that an even lower threshold could be helpful. A paper by David Wilcox, the research and statistics chief, says that slack in the economy argues for loose policy at a time of contained expectations for inflation.
FTSE Outlook
I have fairly decent support on the daily chart still at this area 6718/25 area and if that holds we could well get a fairly decent bounce to 6760. If 6768 can be broken in the near term then we still could reach that 6810. However, looking at the 10 day Raff its levelling off now so could pretty easily turn down. If 6716 breaks then the bears are gaining full control and we should get the dip down to 6600 or lower before any Christmas rally kicks in. So, basically this area is fairly key! I may just have been a bit early with the long yesterday but it’s in the bull’s hands now as to whether they pack up for a bit or take it to the bears.