Good morning, well that’s a tough act to follow today as yesterday played out very well with the dip and rise as per the morning email. Hopefully you managed to catch some if not all of the climb yesterday. Prices stalled at 6440 and dropped back and with the trailing stop the rest of my long was closed out at 6420. Overnight has seen prices dip right back to 6404 again, but then recover. In play into are those 2 levels from yesterday – support at 6390 and resistance at 6440. The US is still being urged by its debtors to solve the debt issue, China and Japan waded in yesterday who between them hold $2.4 trillion! Warnings about global economic destabilisation are being made if nothing is sorted out.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses, with the regional benchmark index trading near a three-week low, as telecommunication shares dropped while utilities advanced.
The MSCI Asia Pacific Index climbed 0.3 percent to 138.25 as of 12:48 p.m. in Tokyo after falling as much as 0.3 percent. The measure closed yesterday at the lowest since Sept. 13 as the partial U.S. government shutdown stoked concern lawmakers will fail to raise the nation’s $16.7 trillion debt limit this month.
“The market isn’t moving anywhere because of the external overhang about the U.S. fiscal situation,” said Tim Leung, a Hong Kong-based portfolio manager who helps manage about $1.5 billion at IG Investment Ltd. “The topic is the likelihood of a U.S. default, and that could be disruptive, but I don’t think at the moment people are assuming this is going to happen. If the market assumes there will be a default, the index won’t be at this level.”
China Economy
“The broad impression I get is that the Chinese economy has pulled back from the slowdown scenario this year, but it’s not taking off,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $131 billion under management.
US Futures
Futures on the Standard & Poor’s 500 Index were little changed after the gauge slumped 0.9 percent to a one-month low yesterday. Without an increase to the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17 and would run out of funds to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
FTSE Outlook
Everything looks weak on the bigger picture still. I mentioned a while back that I still expected 6200 before a year end rally and I still think that’s the case. 6390 held well yesterday but the daily trends on Bianca are still down, and the lower support levels have obviously moved down a little now. If we test that 6385/90 area again today then the bears are certainly propping and if broken I think 6300 is on the cards initially (bottom of the Raff channel area), possibly further, as that would be starting to break all the Bianca channels. That said, the S&P is on a support zone at 1675, and the Dax also so we may actually resume a bit of bullishness today. I have plotted a rise to the ProTrend line at 6452’ish, however the 200ema at 6440 is also a fairly key resistance level to watch for, as well as being yesterday’s high. Longer term I am thinking the next week or 2 will see a climb then a dip going into November. We are testing the Pivot level at 6427 as I write this but its acted as resistance overnight. Bulls will need to break that and the 6440 to get the 6455 area. The EMAs on the 30minute chart are not looking too bad at the open so if the bulls do break the daily pivot then we should get that initial climb. My second arrow drops all the way back to 6400 but that might be a bit too bearish and it will only dip back to the pivot area – we shall have to see as it’s a tricky one to call.