FTSE 100 Support 6713 6701 6681 6677 6635 6600
FTSE 100 Resistance 6766 6795 6804 6830 6842

Good morning. Well that rallied higher than I was expecting on the Italy result – didn’t think we would nearly reach the top of the 10 day channel at 6804. Despite all the bullishness, Italian bank shares had their worst session since 2011. And so the rally proved a false rally though as it soon fell back down to 6730 where it then stayed in the mid 6700’s for the rest of the day. This was despite the UK PMI rising from 54.4 in October to 55.2 in November. Any score above 50 indicates the sector is expanding. Gold was also on a bit of a wild ride, dropping to S3 at 1158 before climbing to 1174. All these fairly major macro events such as Brexit, Trump, Italy etc certainly make the market harder to predict. I dont think it knows what it wants to do half the time! For the moment the FTSE 100 has dropped off the 10 day Bianca and that has resistance at 6766 today, whilst the 2 hour is bullish, with support at 6713.

US & Asia Overnight from Bloomberg

Asian stocks joined a global relief rally as investors switched their focus back to the outlook for U.S. monetary policy following the defeat of Italy’s constitutional referendum. Bonds and crude oil retreated.

Mining and consumer shares led the Asian equity benchmark higher after the Dow Jones Industrial Average’s return to a record. The won strengthened for the first time in three days, and the euro was near its strongest level since mid-November after wiping out an initial slump Monday on the Italian premier’s resignation. Australia’s bonds fell with debt in the region as the nation’s central bank held its benchmark interest rate at a Tuesday meeting. Oil snapped a four-day climb.Traders — burned by the shock Brexit vote and Donald Trump’s surprise victory — correctly anticipated Italy’s rejection of Senate reform, helping contain the financial market fallout. Investors are pivoting back to the U.S., with the Federal Reserve’s policy review just over a week away and data bolstering confidence in the world’s largest economy. American services industries grew at the fastest pace in 13 months in November, a report Monday showed, further embedding bets on the Fed hiking rates.

“Investors shrugged off the anti-establishment messages from the Italian referendum to drive share prices higher,” said Michael McCarthy, chief market strategist in Sydney at CMC Markets. “Attention now turns to the Fed’s interest-rate decision next week, the last listed major risk event for the year.”

The Reserve Bank of Australia kept its cash rate target at 1.5 percent Tuesday, as forecast by economists. Inflation in Taiwan and the Philippines unexpectedly accelerated in November from a year earlier.

Stocks

The MSCI Asia Pacific Index jumped 1 percent as of 1:01 p.m. Tokyo time, with Japan’s Topix index rising 0.8 percent
The Kospi index in South Korea climbed 1.2 percent amid optimism that President Park Geun-hye’s looming impeachment vote may usher in new leadership with a mandate to boost fiscal spending
Hong Kong’s Hang Seng Index added 0.8 percent, while the Shenzhen Composite Index rose 0.3 percent on the mainland. Trading through an exchange link between the cities was muted on the program’s second day
S&P 500 Index futures slipped 0.1 percent. The Dow Average swung back to gains Monday, increasing 0.2 percent to an all-time high as banks and technology stocks drove the S&P 500 Index up 0.6 percent

Currencies

The euro traded at $1.0755 after ending Monday up 0.9 percent, erasing an earlier slide of as much as 1.5 percent
The won gained 0.2 percent
Japan’s currency inched up by 0.1 percent to 113.77 per dollar
The Aussie slipped 0.2 percent to 74.55 U.S. cents, after capping a three-day climb of 1.2 percent
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, added 0.1 percent after falling 0.4 percent last session

Bonds

Government bonds in Asia fell, with 10-year yields in Australia rising for the fifth time in six sessions, up two basis points to 2.81 percent
Yields on similar-maturity New Zealand debt climbed four basis points

Commodities

West Texas Intermediate crude slipped 1 percent to $51.26 a barrel, taking a breather after soaring more than 14 percent following the OPEC-led deal to curb global production
Gold for immediate delivery added 0.2 percent to $1,172.34 an ounce following Monday’s slump of as much as 1.7 percent to its weakest price since February
Copper in London was down 0.9 percent, falling from an almost 18-month high as nickel and aluminum also declined
[Bloomberg]

FTSE 100 Outlook and Prediction

I’m still feeling bearish at the moment despite that rise to 6800 yesterday (felt like it was just being pumped to get there to be honest) and thinking that we are still on course for seeing 6600 before too long. The bears will need to break the 6677 recent low area to push lower but if they manage that then 6600 is pretty likely. On the flip side, if the bulls can break above 6802 which was yesterdays high, then that opens up 6842 and 6890. I am thinking we dip a bit before the Santa Rally effect is seen though. 6680 has now held two attempts on it so if tested a third time is likely to break. Below 6600 it looks really bearish, with the bottom of the 20 day Raff at the 6420 area….

With the top of the 10 day Bianca at 6766 and the weakness remaining overnight since the drop back yesterday, I think we will test the 6713 support at some point this morning, mainly as the 10 minute chart is starting off bearish, with 6749 resistance. The 30min chart has also given me a sell signal at 6747. They can be a bit unreliable out of hours though, so something to consider but not rely on. The 6713 level is off the 2 hour chart which has gone bullish after the rise yesterday, and might well see some buyers come in at that area. The two main levels I am therefore watching today at 6713 and 6766. Wider levels are 6680 and 6790.