Good morning. It felt a bit odd going long when the price dipped down yesterday as we are at such high level but it came good, though very close to the stop! The bears started off the proceedings with the drop from 7040, but the bulls defended well, and it still remains positive for the moment. The bottom of the 10 day Bianca has support at 7003 today, a level that could well hold again (will we see a bull Tuesday today? Been a bit sparse recently!). In his first formal talks with Germany since taking office, Greek Prime Minister Alexis Tsipras put on a show of solidarity with counterpart Angela Merkel, promising to “avoid division and find a common solution” with his European partners during talks last night. In other news overnight, a Chinese manufacturing gauge fell to an 11-month low in March, suggesting more stimulus may be needed to bolster factories in the world’s second-largest economy.
US & Asia Overnight from Bloomberg
(Bloomberg) — Most Asian stocks fell, following a drop in U.S. equities, as industrial companies declined and investors awaited manufacturing data from China.
About three shares dropped for every two that rose on the MSCI Asia Pacific Index, which traded little changed at 148.77 as of 9:03 a.m. in Tokyo. The measure closed yesterday at its highest since Sept. 4, and traded at 15 times estimated earnings, the highest multiple in almost five years. Preliminary manufacturing data due today in the region may be mixed, with a private report from China expected to show growth is slowing and a purchasing managers’ index from Japan likely to signal accelerating expansion.
“Markets are a little bit uncertain on where to turn next as equity valuations are starting to look stretched,” Tony Farnham, an analyst in Sydney at Patersons Securities Ltd., said by phone. “Commodity shares will struggle to find support if China’s manufacturing numbers disappoint.”
Japan’s Topix index slid 0.3 percent. South Korea’s Kospi index sank 0.2 percent. New Zealand’s NZX 50 Index fell 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent. Markets in China and Hong Kong have yet to open.
Chinese equities were cut to neutral from overweight by strategists at Bank of America Corp.’s Merrill Lynch led by Ajay Kapur, who said the weakening property market and intensifying anti-corruption campaign will crimp consumer spending. The Shanghai Composite Index advanced 2 percent Monday, gaining for a ninth day to cap the longest winning streak since April 2007.
Macau slashed its monthly gambling revenue forecast 27 percent, as Chief Executive Fernando Chui pledged a five-year plan to make the world’s largest gaming hub less dependent on casinos.
U.S. Markets
E-mini futures on the Standard & Poor’s 500 Index were little changed. The U.S. equity benchmark index lost 0.2 percent Monday, and the Nasdaq Composite Index retreated from a 15-year high.
Global stock values climbed by more than $2.4 trillion last week as Fed policy makers signaled a more gradual pace of monetary tightening than previously estimated. San Francisco Fed President John Williams speaks to economists in Sydney on Tuesday after Stanley Fischer, the U.S. central bank’s vice chairman, said there won’t be a “smooth upward path” for rates, even with the first increase potentially warranted by late 2015. [Ref]
FTSE Outlook
Todays pivot is 7024 so as we are just below that then its initial resistance. Looking at the moving averages on the 30minute chart I think weight see an initial drop today, down to support at 7003 where we have the 10 day Bianca channel, but more likely the 200ema at 6978 (if hit around midday). Below this level the next support is 6950 (10ema on daily) then 6900/6915 area where there are a few supports, including the 25ema on the daily (should be good support, 6900). Resistance wise, yesterdays high was 7047 so anything above that will likely try and reach 7070 (top of 20 day Bianca) and then the 7100, where we have the top of the 20 day Raff. Slightly higher is the top of the 10 day Bianca at 7115. I’d be more inclined to try the short at 7100 though.
So, if we get a bull Tuesday then I think we will get a dip and rise, and I think the bulls will be keen to defend the 200ema on the 30min if we dip that low, 6980. I still feel its going to push up a little bit higher towards 7100 before dropping to test the 25ema on the daily. If it drops back today then that 6900 level is worth a long.