Good morning. Well that was a pretty lively evening session, driven by the US – the Dow was up 200 then dropped 400 points in a couple of hours! Signals from energy and bond markets rattled stocks for an eighth day as the Chicago Board Options Exchange Volatility Index climbed above 20 and the Dow Jones Industrial Average pared a loss that reached 143 points. The euro slumped to a nine-year low on bets policy makers will ramp up stimulus, while yields on 10-year Treasuries fell to match a 20-month low. It meant that whilst the European session was relatively sedate, 2 of the main levels I mentioned – 6555 and 6455 – both got hot out of hours during that 100 point range. Decent bounce off the 6455 for 50 odd points, before the bell. Unfortunately the in hours short was stopped out as the price rose through the pivot level first thing (and just missed the 6455 at that time). With the market doing such a sharp reversal like that it makes it look pretty bearish. The FTSE daily chart has been bearish for all of 2015 so far with the EMAs and a down trend on the daily coral. 6511 resistance today, 6549 above that.
Asia Overnight from Bloomberg
Most Asian stocks declined as the yen gained a fourth day against the dollar and commodity prices slumped.
About five shares dropped for every three that rose on the dollar-denominated MSCI Asia Pacific Index (MXAP), which added 0.1 percent to 137.94 as of 9:53 a.m. in Tokyo. The yen rose 0.3 percent to 117.61 per dollar, bringing its gain since Jan. 9 to about 1.7 percent. Copper sank to its lowest since 2009 as Brent oil fell 1.8 percent to $46.59 a barrel overnight.
“Plenty of risk, plenty of uncertainty and a good dash of fear has welcomed the markets to 2015,” said Evan Lucas, Melbourne-based market strategist at IG Ltd., a provider of trading services in equities, currencies and commodities.
West Texas Intermediate, the U.S. oil benchmark, settled 0.4 percent lower at $45.89 a barrel yesterday, reaching as low as $44.20 per barrel last session to extend last year’s slump amid concern over a supply glut. WTI dropped 0.3 percent today.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent today. U.S. stocks swung yesterday as earnings season began, with analysts cutting profit estimates for companies on the gauge given the slump in oil. The S&P 500 ended the day down 0.3 percent after rising as much as 1.4 percent and dropping 1 percent. The Chicago Board Options Exchange Volatility Index, which tracks expectations of U.S. stock swings, climbed 4.9 percent.
The U.S. reports on retail sales today, while an update on euro-area industrial output is due amid prospects policy makers will bolster stimulus. India reports on wholesale prices.
Japan’s Topix index slid 0.5 percent. Hong Kong’s Hang Seng Index rose 0.2 percent. Australia’s S&P/ASX 200 Index (AS51) lost 0.2 percent as it declined a third day. New Zealand’s NZX 50 Index gained 0.3 percent, poised for a fresh record. [from here]
FTSE Outlook
The bulls will be defending the retest of 6450 first thing today, probably before the market opens as we are sliding towards that as I write this. If that level breaks then I expect we will see a drop to 6350 where we have the bottom of the 20 day Bianca channel, and the 10 day Raff channel bottom at 6340. 10 day Bianca is below them at 6324. The World Bank has cut its forecast for global growth, warning that the world economy remained overly reliant on the “single engine” of the US recovery, and with that volatility last night, the expectation is for more bearishness. Certainly the daily channel lines suggest thats the case! Resistance is at 6521 today, and if the bulls were able to pull the rabbit out the hat and break that then 6550 and 6630 are possible upside targets. I don’t think we will be seeing 6600 today though! 6631 is the top of the 10 day Bianca, just so you know.
I have put in an early bounce from the 6450 level for a high risk long initially, but any break of this area can be shorted down to 6370 or lower. Otherwise shorting at that 6520 area looks a good plan for today. I don’t think he FTSE is going to be overly bullish today but stranger things have happened!