Good morning. Well the short from 6675 got a few points, but it was the bulls turn in the end yesterday, unfortunately not dipping as low as the 6620 or the 6600 level in the end. Initial resistance is at 6720 today, whilst we have the daily pivot lending support at 6688. Also the bottom of the Bianca 20 day at 6683 so another support around that area. We have pulled away from the bottom of the Raff channels so I wouldn’t be surprised to see a bit more bull to take the S&P to 2007, Dax to 9735 and FTSE to 6755 in the very near future, probably today. 6755 is the 10ema on the FTSE daily chart so thats where that figure comes from. Initially though the pressure is on the bulls to break 6720.
Asia Overnight from Bloomberg
Asian stocks outside Japan slipped and the dollar climbed to a four-year highas surging U.S. new-home sales signaled improvement in the world’s biggest economy. Gold retreated and New Zealand’s dollar plunged after the central bank said again that its strength is unjustified.
The MSCI Asia Pacific excluding Japan Index dropped 0.4 percent at 2:22 p.m. in Tokyo. Chinese shares in Hong Kongdropped with copper after the country’s foreign exchange watchdog said it uncovered $10 billion of trade fraud. Japan’s Topix index advanced 1.2 percent. Standard & Poor’s 500 Index futures declined 0.1 percent. The U.S. currency strengthened against most peers as the yen slid and the so-called kiwi plunged to a one-year low. Gold fell to $1,214.44 and silver dropped 0.6 percent.
Some banks had played roles in fake trade at the port of Qingdao, Wu Ruilin, deputy head of China’s State Administration of Foreign Exchange said, pledging to severely punish perpetrators. The U.S. reports durable-goods orders and initial jobless claims numbers today after new-home sales surged in August to the highest level in more than six years. Reserve Bank of AustraliaGovernor Glenn Stevens signaled he’s considering steps to limit home loans to investors.
“The dollar has gone near vertical,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “In the near term, the momentum is very strong. And the economic data has continued to surprise on the upside more often than not.”
The Bloomberg Dollar Spot Index is climbing for a fifth straight day after yesterday closing at the highest in more than four years. The measure is heading for its biggest quarterly gain since the period ended Sept. 30, 2011.
Relative Value
Six of 10 industry groups advanced on the Asia-Pacific gauge that includes Japanese shares today. The measure trades at 13.6 times estimated earnings compared with 15.5 times projected profit for the Stoxx Europe 600 index and 16.7 times for the S&P 500.
The Nikkei 225 Stock Average increased 1.1 percent, while Australia’s S&P/ASX 200 Index climbed 0.1 percent. South Korea’s Kospi index slipped 0.2 percent and Taiwan’s benchmark index dropped 1 percent.
Hong Kong’s Hang Seng Index was little changed. The Hang Seng China Enterprises Index of mainland firms listed in the city dropped 0.2 percent after rising as much as 0.7 percent.
The Shanghai Composite Index rose 0.6 percent after closing at the highest since March 2013.
Chinese President Xi Jinping is considering replacing People’s Bank of China Governor Zhou Xiaochuan, the Wall Street Journal said yesterday, citing unidentified officials. The China Times this month published an opinion piece on prospects for ex-securities regulator Guo Shuqing taking the job.
Six of 13 economists in a Bloomberg News survey this month cited Guo, 58, as the most likely successor when Zhou does leave. Five predicted it would be People’s Bank of China Deputy Governor Yi Gang, 56.
Data yesterday showed sales of new U.S. houses jumped 18 percent to a 504,000 annualized pace, the most since May 2008. The median forecast of 74 economists surveyed by Bloomberg called for the pace to accelerate to 430,000. The one-month increase was the biggest since January 1992.
“The U.S. economy continues to exhibit strength,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by e-mail. “U.S. data overnight was more constructive, with a strong surge in new home sales and upward revisions to the historic data also supportive for the U.S. economy.”
U.S. Shares
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX (VIX), decreased 11 percent to 13.27 yesterday for the largest decline since Aug. 4. The index had surged 24 percent over the prior three days.
A measure of health-care stocks had the biggest gains among 10 groups in the S&P 500 yesterday, jumping 1.7 percent, amid signs that cross-border deals may continue despite the government’s efforts to curtail inversions.
The S&P 500, which rallied 0.8 percent yesterday, had dropped 1.4 percent during a three-day losing streak after closing Sept. 18 at a record.
FTSE Outlook
Initially I have resistance at 6722 which the bulls will need to break to then reach 6755 as the next level of note. I have put a little dip from that first resistance down to the pivot at 6688, and we also have the bottom of the 20 day Bianca there, along with the coral on the 30minute. Judging by the Dax I think we might push a little bit higher today before more bearishness. At least its bounced back well after all that doom and gloom earlier this week. Gold still looks like its on a path to 1200, which would tally with a bit more equity upside. If the pivot breaks then the next support is 6662, a break of which keep yesterday 6604 in play as support.