Good morning. Well there was some movement in the FTSE yesterday wasn’t there! Where did all that come from? The good news was that it bounced between the 2 levels mentioned, 6585 and 6530, and from the emails I see a few of you picked up points, however the initial dip was a bit deeper than expected so my initial long got stopped out, however the short order at 6580 came good for +50. We are still flirting with the bottom of the Bianca channels at 6530/6550 with the bulls not able to really build any gains. I wouldn’t be surprised if as mentioned yesterday we get a bit of a further dip and then the bounce later today/tomorrow. Ed Milliband continues to upset shares with his socialist rhetoric – house builders were the latest in the line of fire over the land grab proposals, hot on the heels of the energy companies losing market value over the threat of freezing prices the day before. Wonder who it will be today!
Asia Overnight from Bloomberg
Asian stocks fell for a third day, trimming the biggest monthly advance on the regional benchmark index since January 2012, as industrial and health care companies retreated. The MSCI Asia Pacific Index dropped 0.3 percent to 139.97 as of 11:34 a.m. in Hong Kong. The measure climbed 7.8 percent this month through yesterday, touching a four-month high on Sept. 23, after the Federal Reserve maintained the pace of its stimulus and data showed China’s economic growth is stabilizing.
“If some of the froth comes out of the market then I will be adding to positions, but in the short term the markets are vulnerable,” Nader Naeimi, the Sydney-based head of dynamic asset allocation who helps manage more than $130 billion at AMP Capital Investors Ltd., said by phone. “The market has gone up a long way on the back of the liquidity expansion and we now need to see some real improvement in earnings.”
US Futures
Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The measure yesterday completed its longest slump this year as Wal-Mart retreated and concern grew that a political showdown over government spending poses a threat to growth in the world’s largest economy.
Outlook
Volatility was certainly back yesterday with some good movements but we are still hovering around the bottom of the Bianca channels, whilst the Raff channels are short term (10 day) down, and slightly longer term (20 day) still heading up. The latter has support as 6500 so I feel that any bearishness will have support around that 6490/6500 area. If prices can break the daily pivot at 6555/60 today then we should see a test of yesterday’s high around the 6588 area, but on the flip side, if 6525 (yesterday’s low) breaks then we should get 6500/6490. It actually a little tricky to call today, however with the vast majority of retail investors looking at shorting indices and longing gold, I expect that it may well do the reverse over the next few weeks. If the 6590 area breaks then we could be on for a decent rise over the next few sessions. On the 30 minute chart the EMAs are just about crossing over, hence the dip back to the 10ema after the cross as per the arrows.