Good morning. Well that was a decent enough drop from he 6977 Bianca resistance area, which saw a slow decline all the way to 6930, before a bounce back to 6970 at the bell. As expected it was a bit of a consolidation day after the budget and the Fed announcement on Wednesday night regarding interest rates. The Dax continued to languish below 12000, but still with quite a daily range, and the Dow below 18000. Thanks to the Fed, most daily charts are looking a bit more bullish, with EMAs crossing over to bull, and breakouts on Wednesday of the daily channels. Unless the bears do something today then I think we will push higher, especially if the top of the 20 day Bianca at 6966 is broken first thing (with the pivot holding) and a test of 7000 looks pretty likely today.
US & Asia Overnight from Bloomberg
(Bloomberg) — Most Asian stocks dropped, following declines in U.S. shares, as materials and technology companies led losses.
About three shares fell for every two that rose on the MSCI Asia Pacific Index, which added less than 0.1 percent to 146.79 as of 9:05 a.m. in Tokyo. The measure, which closed yesterday at its highest since Sept. 9, has climbed 2 percent this week after the Federal Reserve said data suggest U.S. economic growth has moderated and officials indicated interest rates will rise at a slower pace than previously forecast. The Standard & Poor’s 500 Index slid 0.5 percent yesterday after rallying Wednesday on the Fed’s statement.
“A sense of reality returned to markets overnight after the post-FOMC shenanigans,” said Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand Ltd. “The long-run outlook for gross domestic product and inflation in the U.S. is solid and there is still clear divergence on offer between the Fed and ECB and BOJ policy.”
While the policy makers at the Fed ponder when to begin raising interest rates, the European Central Bank and Bank of Japan continue with stimulus programs aimed at staving off deflation and igniting growth. Policy makers from Australia to South Korea have reduced borrowing costs this year as part of a global wave of monetary easing.
Japan’s Topix index slipped 0.1 percent. South Korea’s Kospi index was little changed and Australia’s S&P/ASX 200 Index added 0.1 percent. New Zealand’s NZX 50 Index rose 0.2 percent.
Futures on the FTSE China A50 climbed 0.3 percent in most recent trading in Singapore. Chinese stocks advanced for a seventh day on Thursday, sending the benchmark Shanghai Composite Index to its highest level since 2008, as gains by industrial companies offset losses in airlines.
E-mini contracts on the Standard & Poor’s 500 Index were little changed. The underlying gauge retreated Thursday as banks slid and energy companies slumped with the price of oil. [Ref]
FTSE Outlook
The pivot is 6958 so not far below the 20 day Bianca channel resistance at 6968 – which one will break. With the strength coming back in yesterday at 6930 for a rise back to the 6970 area, then there is still bullishness around, even at these heady heights, so I wouldn’t be surprised if we ping 7000 today or next week. That said, there is resistance just below that 6998. If we do break that then 7050 and 7100 are the next resistance levels to watch. Support wise, below the pivot we have 6928 (Yesterdays low), 6920 and 6900. As per a usual Friday I expect it will keep us guessing all day, and we also have option expiry so it will get a bit spike around 10:15. And an eclipse at 09:30 though not sure what effect that will have on prices. Astronomy and other outlandish events like eclipses (and even the weather) have had studies done to see the effect on stock markets – conclusion was generally they do, but not any more than anything else from what I can gather. I digress. For the moment the 20 day Raff is still capping the upward push (as it did yesterday) and todays level is 6975. There are some quite tight levels in play today – support 6958, resistance 6966 and 6977 so we will get a break one way or the other, I think a push for 6998 is likely, as long as the pivot holds.