Good morning. Well that turned into a bit of a consolidation day yesterday, and the bulls failed to break above the 6900 level, while the bears failed to break below the 6860 area, which was the low from a few sessions ago, and has now set itself up as the bottom of the 10 day Bianca channel. At the moment we are at a make or break – if the 6860 goes then we will dip down to 6835 (the bottom of the 20 day Raff) then 6800, whereas if it holds then another push for 7000 is likely. The 10 day channel is heading down now, so the bears are in control, and after that choppiness in the first week of March I would say the drop is more likely.
US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks rose, following a rebound in U.S. equities, as a weaker yen boosted Japanese exporters and investors awaited data on China’s inflation.
The MSCI Asia Pacific Index advanced 0.1 percent to 144.08 as of 9:01 a.m. in Tokyo. The gauge sank to a three-week low on Monday after U.S. jobs data spurred traders to bring forward bets on higher interest rates for the world’s largest economy. The Standard & Poor’s 500 Index climbed 0.4 percent on Monday after tumbling Friday following the employment report. China reports on consumer and producer prices today, the first in a slew of data this week that will give clues about its growth.
“The China data will provide us with an update with what’s happening as people just want to see that there’s some traction in the economy at this stage,” Tony Farnham, an analyst in Sydney at Patersons Securities Ltd., said by phone. “The authorities are mindful of the slowdown in demand and will continue to address that.”
Japan’s Topix index gained 0.5 percent as the yen slid 0.2 percent to 121.44 per dollar. South Korea’s Kospi index also climbed 0.5 percent. Australia’s S&P/ASX 200 Index rose 0.2 percent, while New Zealand’s NZX 50 Index was little changed.
Futures on Hong Kong’s Hang Seng Index were little changed in most recent trading. Cash markets in Hong Kong and China are yet to open.
Futures on the S&P 500 slid 0.1 percent. U.S. equities entered the seventh year of a bull run Monday, with the S&P 500’s advance paring the biggest drop in two months on Friday. The S&P 500 has gained just 1 percent this year, the third-worst performer of 24 developed markets tracked by Bloomberg.
European finance ministers piled pressure on Greece to open its books and follow through with pledges agreed to in its rescue package, as the country tries to avoid running out of cash as soon as this month. Greece will resume talks with its creditors in Brussels on Wednesday, alongside technical talks in Athens to comb through data. [Ref]
FTSE Outlook
Still hovering around the 6860 level and if this breaks then a dip down to the bottom of the 20 day raff at 6835 is most likely. 6858 has now set itself as the bottom of the 10 day Bianca channel, but as yesterday showed the bulls failed to pull away from this level with any conviction, leading to a bit of a consolidation day. Below 6835 we have 6805 as support and also a possible bounce point as 6800 has looked to be support while we were rising towards 7000. Todays pivot is 6882 so initial resistance there, and setting up a tight range for first thing. To make things bullish again the bulls will need the price above 6935, but resistance at 6902 (200ema on 30min) stands in their way. As mentioned yesterday I am more inclined to short the rallies at the moment, at least till we have tested the 6830 area. Tricky trading at the moment as its hard to get a decent runner – short sharp trades seem to be working better during this choppy period. The S&P played to the plan better yesterday with the rise to the 2079 pivot then a dip back.