Good morning. Well that was a weird and frustrating day. It looked strong out the blocks which is why I closed the 7039 short for just 10 points, to then see it drop to 7000. Thought the 6990 long order would take only for that to just miss and the finally got 7070 after the bell. Hope you managed to get some of the rise though. All very odd but at least the bulls kept the defence of 7000 in tact and the 25ema on the daily still hasn’t broken – 6999 on that for support today. The Bianca chart is showing resistance at the overnight high area of 7080, and support at 6985. Despite poor housing data in the US the S&P pulled away from the 2090 support area, and breached the 2111 resistance pretty easily in the end.
US & Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index set to post a fourth straight weekly advance. Japanese shares retreated as the yen held gains amid weak U.S. economic data.
The MSCI Asia Pacific Index added 0.3 percent to 155.65 as of 9:30 a.m. in Tokyo, poised for a 1.1 percent increase this week and the longest run of weekly advances since February. The index closed Thursday at a seven-year high. Japan’s Nikkei 225 Stock Average slid 0.3 percent after the yen strengthened 0.3 percent against the dollar as rising U.S. jobless claims and weak housing data cast doubt on the nation’s economic outlook. Futures on the Hang Seng Index and the Hang Seng China Enterprises Index climbed at least 0.2 percent.
“There are plenty of positives,” said Andrew Clarke, director of trading at Hong Kong brokerage Mirabaud Asia Ltd. “The investors who have missed the rally in some of the markets are still coming in. But we have also come to a point in some markets where it’s time to take a bit of profit.”
Australia’s S&P/ASX 200 Index added 1.1 percent and New Zealand’s NZX 50 Index climbed 0.1 percent. South Korea’s Kospi index rose 0.7 percent.
Markets in China and Hong Kong are yet to open. China’s securities regulator is increasing the pace of initial public offerings, allowing more companies to take advantage of a world-beating rally that’s sent the Shanghai Composite Index to a seven-year high. The China Securities Regulatory Commission will review and approve two batches of IPO applications each month, up from one previously. Twenty-five IPOs were approved on Thursday, the CSRC said.
Profit-Taking
The HSBC Holdings Plc/Markit Economics preliminary gauge of China factory activity for April fell to 49.2 from a final reading of 49.6 the month before, data showed Thursday.
Markets in China, Hong Kong and Japan have rallied too far too fast and are due for a correction, Clarke said. Investors who bought early are taking profits, and others are waiting for shares to drop, he said.
“The market is a marathon, not the 100 meters,” Clarke said. “You can probably stop for a breather in the marathon and still win.”
Futures on the Standard & Poor’s 500 Index were little changed. The underlying equity measure rose 0.2 percent on Thursday, while the Nasdaq Composite Index climbed to a record, topping its dot-com-era high, as U.S. stocks shrugged off mixed earnings.
Data showed purchases of new U.S. homes slumped more than forecast in March from a seven-year high, a sign progress in the industry will be halting. Applications for unemployment benefits held below 300,000 for the seventh straight week, pointing to a rebound in payrolls after hiring eased last month. [Ref]
FTSE Outlook
We are getting a bit of a pull back from the 7080 area where we have the top of the 10 day Bianca channel, which might go down to the daily pivot at 7048 (IG). The Live charts pivot is slightly lower at 7035 (as it excludes the move higher after 4:30pm). If this level holds then we should be on for further upside today towards the 7095 area, and then the top of the 10 day Raff at 7121. I tend to look at what the ASX200 (Australia) has done for a small clue for the FTSE and that had a very bullish session today – will be interesting to see if the FTSE has similar. If the bears break below the pivot area then the next supports are 6999, 6994 (yesterdays low), 6985 and 6960.
As you can probably tell I am am feeling bullish again today, though of course, being Friday I am ready to switch stance without too much hesitation, and if the daily pivot starts to break (and also the bottom of the 30 minute channel also with the 7048 area as the bottom) then I will flip to short for a test of 7000. The 10minute chart is currently bearish, whilst the 30min is bullish. We have US Durable goods news out at 13:30 which will have a bit of an impact then, forecast is 0.6%.
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