Good morning. I hope you had a good weekend. Friday saw a rather steep rise last thing on the Dax, adding nearly 150 points from about 3pm, which carried the FTSE up with it, to test the 6770 level going into the weekend. A level that it has held for the moment. I still have the top of the Bianca 10 day and the 25ema resistance on the daily at the 6811/6831 level so I think if we pop up a little today/tomorrow then this area will be worth a swing short. The S&P has 25ema resistance at 2073 as well. With all eyes on the Fed this week and looking for some clue on interest rates it could be a slightly choppy one. Will they drop the word “patient” and thus the market will expect rate rises sooner rather than later?
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks fell as investors awaited this week’s Federal Reserve meeting for clues on the timeline for higher U.S. interest rates. Energy companies led losses as oil resumed last week’s decline.
The MSCI Asia Pacific Index dropped 0.3 percent to 143.50 as of 9:02 a.m. in Tokyo after sliding 1 percent last week as a better-than-expected U.S. jobs report spurred speculation the Fed would raise rates sooner than some investors expected. E-mini futures on the Standard & Poor’s 500 Index slipped 0.2 percent after the underlying equity measure sank 0.9 percent last week for a third weekly drop. The Federal Open Market Committee meets March 17-18.
“The tightening cycle will be very gradual given the impact of the U.S. dollar’s strength on U.S. corporate earnings,” Nader Naeimi, who helps manage about $118 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors, said by phone. “The U.S. can delay rate hikes as growth isn’t overheating and inflation isn’t an issue.”
Japan’s Topix index sank 0.1 percent after rallying the past eight weeks. South Korea’s Kospi index fell less than 0.1 percent. Australia’s S&P/ASX 200 Index dropped 0.9 percent, while New Zealand’s NZX 50 Index added 0.3 percent. Markets in China and Hong Kong have yet to open.
Chinese Premier Li Keqiang promised to intervene if China’s growth lags too much, even as the government pushes forward with reforms. The government will take steps if economic growth, targeted at about 7 percent this year, drifts toward the lower limit of its range and cuts into jobs or income, Li told reporters at the end of the national legislature’s 10-day annual session.
Oil Slides
West Texas Intermediate crude lost 2.2 percent to $43.87 a barrel after sinking 4.7 percent on Friday, and capping a weekly plunge of 9.6 percent, its steepest drop this year.
A record surplus in U.S. crude inventories may soon strain the country’s storage capacity, renewing the slump in oil prices, the International Energy Agency said Friday. The largest oil-storage hub in the U.S., located in Cushing, Oklahoma, is 70 percent full, the agency said. [Ref]
FTSE Outlook for spread betting
Today’s pivot is 6744 (live charts) and 6750 (IG) and with initial resistance at 6776, I have put in a dip first thing to that area. If that holds then I am expecting a rise to test the 6799 area, where we have the top of the declining 30 minute channel. My third resistance level is then the 25ema on the daily at the 6831 area, a level that I think ties in quite nicely with the S&P hitting 2074 and the ASX200 at 5831, which all look like decent shorting areas. The Dax is in its own little bullish world, helped by lots of QE and looks to want 12000! The bulls will need to break the 6799 though to test that 6830 area, which may be a tough ask today. Inbetween we do have the 10 day Bianca at 6811 to take note of, as well as the top of the 10 day Raff at 6801. Basically a few daily resistance levels in the range 6800/6831. I have plotted the arrows with 6799 holding as resistance but bear in mind these slightly higher areas. Support wise, we have the pivot first up, then the bottom of that same 30min channel at the 6715 area, Below this 6687 and 6672 for the bottom of the 20 day Bianca channel. Lower down if it got really bearish is the bottom of the 10 day Bianca at 6601. I am still of a mind to expect some bearish action during the rest of March and as such maintain that shorting the rallies (especially those that test the top of the daily channels and the 25emas on the daily) is a decent play for March.