FTSE 100 Support 6682 6665 6636 6616 6600 6548 6481
FTSE 1oo Resistance 6688 6692 6703 67176755 6860

Good morning. Nice short entry at 6762 yesterday that I was probably a bit too cautious on getting to breakeven as it looks like the 6770 area is the short term top. I had expected that second rise from the 6745 area to reach 6780 for another go but it failed at 6770, and then declined steadily all day. So, we could be on for a drop down towards 6550 now. There are 2 large dividends coming up – 10 points this week, then 36 points next week so we should see a rise towards the close on Wednesday both weeks. More about trading this in Wednesday’s email.

US & Asia Overnight from Bloomberg

Crude oil’s selloff weighed on Asian stocks, with Japanese shares extending declines ahead of details on the government’s fiscal stimulus plans. The Australian dollar dropped after the central bank cut borrowing costs, while gold retreated.

The regional equity benchmark slipped from an almost one-year high as U.S. oil hovered around $40 a barrel after descending into a bear market on Monday. Japanese stocks fell with those in South Korea, as trading in Hong Kong was scrapped due to a typhoon. Australia’s currency slid against all 16 major peers after the central bank lowered its benchmark lending rate to a record 1.5 percent at a meeting Tuesday. Japanese 10-year bond yields rose to the highest since March as demand fell at an auction.

Gold led declines by precious metals.Oil has slumped more than 20 percent from a peak reached in June, with Saudi Arabia cutting crude prices to Asia and further increases in U.S. drilling rigs sparking Monday’s 3.7 percent tumble. Japan’s government is due to unveil details of its 28 trillion yen ($273 billion) fiscal stimulus package Tuesday, as investors continue to mull the outlook for U.S. monetary policy. The Reserve Bank of Australia’s decision, predicted by 20 of 25 economists, is aimed counter disinflation and support a labor market hampered by high levels of part-time work and underemployment.

Oil’s decline “will probably weigh on sentiment a little bit and we may see some risk-off moves associated with that,” James Woods, a strategist at Rivkin Securities in Sydney, said by phone. “We’ll have an update from Shinzo Abe in Japan today, just running through the measures of the 28 trillion yen stimulus package. It’s really what’s going to dictate risk sentiment.”

Stocks

The MSCI Asia Pacific Index snapped a six-day climb, slipping 0.7 percent as of 1:40 p.m. in Tokyo. The 1,019-stock gauge rallied to its highest level since Aug. 17, 2015 last session.

Japan’s Topix index retreated 0.9 percent as the Kospi index in Seoul lost 0.4 percent. Australia’s S&P/ASX 200 Index slipped 0.3 percent, while the Shanghai Composite Index was little changed.

S&P 500 Index futures added 0.2 percent to 2,168, after the underlying equity measure slipped 0.1 percent on Monday.

Currencies

The Australian dollar weakened 0.2 percent to 75.21 U.S. cents, extending Monday’s 0.8 percent slump. While Australia’s economy has grown faster than the central bank predicted, core inflation and wage growth are both at record lows.

The cut reflects that “inflation is likely to stay low for an extended period and the labor market has lost momentum this year,” Felicity Emmett, head of Australian economics at Australia & New Zealand Banking Group Ltd., said before the announcement.

The yen lost 0.1 percent to 102.46 per dollar ahead of the stimulus announcement, extending a 0.3 percent drop on Monday.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 peers, was little changed after rising 0.3 percent on Monday.

Malaysia’s ringgit slipped amid oil’s retreat, weakening 0.7 percent following Monday’s 1.2 percent jump.

Bonds

Australia’s 10-year bond yield fell five basis points to an unprecedented 1.827 percent. Three-year yields dropped to 1.37 percent. Treasuries maintained Monday’s decline, with 10-year yields holding at 1.52 percent following a seven basis-point increase last session.

Commodities

West Texas Intermediate crude climbed 0.2 percent to $40.15 a barrel after sliding to its lowest settlement price since April 18 on Monday. Futures have retreated 22 percent from a peak reached in June, meeting the common definition of a bear market.

While American crude and gasoline inventories are forecast to have declined last week, they’ll likely remain around the highest seasonal level in at least two decades. Nigeriahas also resumed payments to former militants as the government seeks to establish a cease-fire after attacks cut the country’s oil output to the least since 1989.

Gold fell 0.3 percent to $1,356.30 an ounce, while silver lost 0.3 percent and platinum slid 0.2 percent. [Bloomberg]

FTSE 100 Outlook and Prediction

I am thinking that shorting the rallies is the best plan for today and that if 6770 is the short term top then we are on a path to 6600, possibly 6550. There are decent entry levels at the daily pivot at 6703 and then the 6717 area of resistance where we have the 100 Hull MA on the 2 hour and the 200ema on the 30min. 6717 is also 50% fib retrace of the high to low from yesterday. So, fairly simple really expecting an up then down day. News highlights today include US Consumer Spending at 13:30, PCE Deflator, API Crude Oil Inventories, earnings from BMW, AIG, P&G and Pfizer.

We have broken below the 10 day Bianca channel with the 3rd test of the bottom yesterday, so might well get a backtest at 6688 again (it tested that level overnight already) and we are also just below the 20 day Bianca channel at 6682. Hence why the bears have the upper hand at the moment. They will be keen to break 6662 (yesterdays low) for a run down to 6600. If the bulls do fight back then they need to break 6717, which will likely see 6755 where we have the top of the 10 day Bianca channel.