Good morning. The FT100 has been trading in quite a tight range for a few days now (6015-6115) and therefore a break up (or down) is probably due. The last time a break happened was around the 6200 level and the market broke down, but hopefully the reverse will be true this time. As previously mentioned the market can not rally successfully without oil and commodity shares leading the move up – yesterday was the first sign this may be occurring. Oil and commodity shares were the best performers with retail and more “safe” shares taking the back seat. The 6035 long turned out well, as did the 32020 S&P, though there was a better rise after the bell, to test the 6135 resistance area. As some bullishness returns traders don’t want to miss any possible rally so were hopping on. 6090 looks a good long entry today if it dip back and same plan as yesterday to buy the dips.
US & Asia Overnight from Bloomberg
- Australian volumes down about 60% as Christmas approaches
- Japanese stock markets shut for national holiday Wednesday
Asian stocks rose after a report showed American consumer spending supported growth in the world’s largest economy and gains in crude oil boosted energy shares.
The MSCI Asia Pacific Index gained 0.1 percent to 130.61 as of 8:01 a.m. in Hong Kong. Australia’s S&P/ASX 200 Index climbed 0.7 percent, with volume about 60 percent below its 30-day average for the time of day. South Korea’s Kospi index rose 0.1 percent, with Japanese markets closed for a holiday. Energy and materials shares, this year’s worst performers, led gains.
Climbing oil prices and a rally in U.S. shares laid the groundwork for gains in Asia Wednesday. The Standard & Poor’s 500 Index advanced for a second day Tuesday as figures showed gross domestic product climbed at a revised 2 percent annualized rate last quarter and West Texas Intermediate rose above $36 a barrel.
“Consumer spending looks like it’s helping the U.S. economy,” James Lindsay, an Auckland-based fund manager at Nikko Asset Management Co., which manages $160 billion globally, said by phone. “Volumes tend to get pretty light at this time of year. Markets have had a reasonable run and value is a lot harder to come by. The key things are still what happens with China, the flow-on effects into commodities and what the Fed does and how that affects sentiment and currencies.”
Household purchases propelled U.S. demand last quarter as employment improved and fuel prices remained low, the latest evidence of the consumer resilience that gave Federal Reserve policy makers confidence that the economy can withstand the first rate increase in almost a decade. Asian equities are on course for the first back-to-back annual losses since 2002 amid concern decelerating Chinese growth will harm the global economy just as the Fed raises borrowing costs.
New Zealand’s S&P/NZX 50 Index rose 0.7 percent. Futures contracts on Hong Kong’s Hang Seng China Enterprises Index climbed 0.1 percent. Markets are yet to open in China.
Futures on the S&P 500 slipped 0.1 percent after the underlying gauge added 0.9 percent Tuesday. The index has fallen 2 percent in December, historically a month when investors reap gains. After rebounding as much as 13 percent from its summer low through early November, the gauge has retreated, leaving it lower by 1 percent in 2015. [Bloomberg]
FTSE Outlook and Prediction
I am thinking a year end around the 6350 area now, with a rise tomorrow peaking about 6250, then a bit more upside between Christmas and New Year before bearishness resumes in January. For today there is decent looking support at the 6090 area, and we also have the daily pivot at 6098. That was a decent rise last night to the 6135 resistance area, so I think we might get a little dip this morning (we are still low volume so its more volatile don’t forget) and then if that support holds a climb to the 6166 area. Above that the next resistance area is 6182, with 6250 above that. If the bears were to break below 6090 then 6000 would likely be on the cards – basically its now or never for the bulls and a possible rally. So, fairly simple plan today, buy the dip to 6090 if it occurs!