Good morning. Well, we got the dip but not the bounce yesterday. The fall paused slightly at the supports bounced a little then carried on. The US, especially the Dow wasn’t happy and shed 300 points – haven’t had a -300 day for a while, while the S&P shed 40. Looking at the Bianca chart then there is support around the 6660 to 6680 area if it dips below yesterdays low, though if that breaks the next level to watch is 6620. All things considered though the FTSE didn’t drop quite as far compared to the others (250 dax, 300 dow, 40 S&P), as when it opened it actually rose! If the bulls can get above 6735 today then all is not lost for them.
Asia Overnight from Bloomberg
Asian stocks dropped, extending the biggest global rout in six months that saw the Dow Jones Industrial Average wipe out this year’s gains in one session amid weaker earnings and credit-market concerns.
The MSCI Asia Pacific Index (MXAP) fell 0.8 percent to 147.63 as of 12:37 p.m. in Hong Kong as nine of its 10 industry groups declined. The gauge is heading for its first weekly loss in three weeks after climbing to the highest close since June 2008 earlier this week and yesterday capping a 2.1 percent gain for July. The MSCI All-Country World Index sank 1.5 percent yesterday, the most since February.
“The market looks fully valued and investors have been looking for an excuse to sell,” Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, said by phone. “We’ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.”
Regional Gauges
Japan’s Topix index declined 0.4 percent. Australia’s S&P/ASX 200 Index slumped 1.6 percent, heading for its biggest loss since Feb. 4. New Zealand’s NZX 50 Index dropped 1 percent.Singapore’s Straits Times Index sank 0.9 percent and Taiwan’s Taiex index retreated 0.6 percent. South Korea’s Kospi index lost 0.3 percent.
Hong Kong’s Hang Seng Index (HSI) slipped 0.5 percent after yesterday capping its biggest monthly advance since September 2012. The Hang Seng China Enterprises Index of mainland shares traded in the city dropped 0.9 percent after entering a bull market this week. China’s Shanghai Composite Index added 0.1 percent.
Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The U.S. benchmark index sank 2 percent yesterday, while the Dow fell 1.9 percent to erase the year’s gains as Exxon Mobil Corp. to Micron Technology Inc. tumbled amid weaker corporate results.
Volatility Increases
Market volatility increased, with the Chicago Board Options Exchange Volatility Index, known as the VIX (VIX), surging 27 percent yesterday to the highest level since April 11 as concern grew that the improving U.S. economy may force the Federal Reserve to raise interest rates sooner than expected.
Investors are also watching developments in Latin America as Argentina missed a deadline yesterday to pay $539 million in interest after two full days of negotiations in New York failed to produce an accord with creditors. S&P declaring Argentina in default melded with concern over Europe’s debt position as Portugal’s Banco Espirito Santo SA was told to raise capital.
China’s manufacturing purchasing managers’ index increased to 51.7 in July from 51 the previous month, according to data released today by the National Bureau of Statistics and China Federation of Logistics. A private gauge of factory activity from HSBC Holdings Plc and Markit Economics rose to 51.7 last month from 50.7 in June. Levels of 50 or higher signal expansion.
Key Levels to Watch
Support so entry levels for a possible long
- 6690
- 6680
- 6661
- 6622
- 6495
Resistance so entry levels for a possible short
- 6728
- 6736
- 6748 daily pivot
- 6831
FTSE Outlook
Todays pivot is 6748, with resistance slightly below that at 6728 and 6736. I imagine the negative sentiment will persist for a few more sessions yet before bouncing back as global fears persist over just how far out of the woods we are (answer, not that far, if we are even at the edge yet, imho). A debt wobble in Latin America, QE tapering, wars, disasters, ebola – if you let it get to you you’d be shaking like a leaf! Anyway, for the moment, not too much to be bullish about really so few more sessions for the bears then the tide will turn, as it always does. August is traditionally quite a quiet month anyway as lots of people take the month off so yesterday would also have been a lot of cashing in after the pretty decent rise.
Yesterdays low of 6690 is initial support, and we have the Raffs there too, then the bottom of the Bianca channels calculating at 6660 and 6680 today. Worst case for the bulls would be a dip to 6622. Would be a brave long of those supports but probably worth a small go with a tight stop if you fancied a gamble. Be fearful when others are greedy, greedy when others are fearful as Buffet says! It will bounce at some point as it always does! For the moment the trend is down and the market is fearful, but its Friday and 1st of the month so likely to be weird anyway. Start of the month can be positive as new money flows in.
Im going for a risky long at 6680 today – lets see if the 20 day channel holds! And a short off the pivot at 6747….