Good morning. Interesting day on Friday – managed to get a little bit past that 6724 level before sharply dropping back on, once again, Ukraine/Russia issues, but then bouncing back from the 6665 support level. Choppy! Anyway, over the weekend, there has been more Ukraine/Russia skirmish’s and also the press were laying into Mark Carney yesterday over the dithering about with interest rates and forward guidance. Which is actually nothing of the sort! We have had a pretty decent bounce over the past few sessions, I am not sure how much further it has to run and as I mentioned on Fridays missive, I think shorting the rallies is better. Today’s Bianca channel top area is showing at 6734, while we have the daily T3/Coral line at 6741 – be interesting to see what happens at this area.
Asia Overnight from Bloomberg
Asian stocks fluctuated, after a five-day winning streak, as health-care shares gained while banks slid along with consumer companies.
The MSCI Asia Pacific Index (MXAP) was little changed at 148.04 as of 1:20 p.m. in Hong Kong after rising and falling 0.1 percent. Six of 10 industry groups on the gauge advanced. The measure last week rallied 2.7 percent as investors weighed earnings, Ukraine developments and economic data that fueled bets central banks will maintain stimulus.
We are seeing “a slight reduction in geopolitical risks,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors Ltd., which oversees about $131 billion. “The trend in shares is likely to remain up and, while it’s impossible to be sure given uncertainties around various geopolitical risks, we may have already seen the low.”
Japan’s Topix index was little changed, while Australia’s S&P/ASX 200 Index rose 0.3 percent.India’s S&P BSE Sensex Index advanced 0.4 percent. South Korea’s Kospi index declined 0.3 percent and New Zealand’s NZX 50 Index slipped 0.1 percent. Singapore’s Straits Times Index fell 0.4 percent and Taiwan’s Taiex Index retreated 0.5 percent.
China Investment
Hong Kong’s Hang Seng Index (HSI) declined 0.3 percent, while the Hang Seng ChinaEnterprises Index of mainland shares traded in the city lost 0.8 percent. The Shanghai Composite Index added 0.4 percent. China’s foreign-direct investment slumped 17 percent in July from a year earlier, the Ministry of Commerce said today. Analysts had expected a 0.8 percent rise.
China’s new-home prices fell in July in almost all cities that the government tracks as tight mortgage lending deterred buyers even as local government eased property curbs. Prices fell in 64 of the 70 cities last month from June, the National Bureau of Statistics said today, the most since January 2011 when the government changed the way it compiles the data.
S&P
Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The U.S. equities benchmark gauge last week advanced 1.2 percent, for a second week of gains.
Ukraine Talks
Foreign ministers of Ukraine and Russia began talks in Berlin as European leaders push for an end to the conflict. The U.S. widened its airstrikes on Iraq over the weekend and used bombers for the first time since the offensive began on Aug. 8 to help secure the country’s largest dam near Mosul that had been seized by insurgents.
The Asia-Pacific gauge traded at 13.6 times estimated earnings at the last close compared with 16.4 for the S&P 500 and 14.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
FTSE Outlook
Todays pivot is 6705 so there should be initial support there and I think that we will see some bullishness to the 6735 area today. As mentioned above there are a couple of key areas of resistance around here – the top of the 10 day Bianca at 6734, and the daily coral line (stiller ed, downtrending) at 6742. As such I am looking at a short around here and will see what happens. On the 30 minute chart we have a pretty clear rising PRT channel as you can see so i have used the bottom of that channel as the rising support. If however, that breaks and the pivot is tested then we should get some more upside from there. If not then below 6700 we have 6662 and 6640 as the next supports. So look to short at around 6690 for a run down to them.
If those resistance levels are broken then above 6744 we have 6774 as the main level to watch. The reason I am expecting some pause for though that the 6740 area is that the S&P is not far off its coral line either – 1962 versus the coral at 1974, but more importantly is just testing the top of a declining PRT trend line. If the S&P appear shortly then a trip down to 1930 looks possible