Good morning. Well the pivot held yesterday at 6775 and then the price managed to climb almost to the 6825 resistance area I emailed round with the update before dipping. There was a small dip off the 6802/6807 area earlier in the day but the rise was pretty strong so the bears got trembled. Once again the headlines are about new record highs, the S&P closing at an all time high last night of 1987.119, after strong Apple, Biotech and Facebook results. Asian stocks aren’t far off six week highs at the moment either. This from Bloomberg – “The general tone of earnings has been positive not just on the bottom line but also top-line, and we’ve seen inflation numbers that gave comfort to those who believe the market will be supported by the Fed,” Russ Koesterich, chief investment strategist at New York-based BlackRock Inc., said via phone.
Asia Overnight from Bloomberg
Asian stocks traded near a six-year high, with the regional benchmark index swinging between gains and losses, after a Chinese manufacturing gauge rose to its strongest reading in 18 months.
The MSCI Asia Pacific Index was little changed at 148.45 as of 12:07 p.m. in Hong Kong, having swung between a loss of less than 0.1 percent and a gain of as much as 0.3 percent. The gauge yesterday closed at the highest level since June 2008. Companies from PepsiCo Inc. to Dow Chemical Co. helped drive the Standard & Poor’s 500 Index to a record close yesterday, with about 77 percent of index members posting results this season that exceeded analysts’ estimates.
“Against the backdrop of improving earnings and benign U.S. inflation, the market can continue to grind higher,” Tim Schroeders, a portfolio manager who helps oversee $1 billion on in equities at Pengana Capital Ltd. in Melbourne, said by phone. “Investors are a bit more positive on China as some of the doomsday scenario previously feared have dissipated.”
China PMI
A Chinese manufacturing gauge rose to an 18-month high in July, adding to signs that the government will meet its 2014 economic-growth target of about 7.5 percent. A preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 52, compared with the 51 median estimate of analysts surveyed by Bloomberg News and a final reading of 50.7 in June. Numbers above 50 indicate expansion.
China’s Shanghai Composite Index (SHCOMP) and the Hang Seng China Enterprises Index of mainland shares traded in Hong Kong advanced 0.8 percent, while the city’s benchmark Hang Seng Index added 0.4 percent, heading for its highest close since April 2011. Singapore’s Straits Times Index both rose 0.1 percent, while Taiwan’s Taiex slipped 0.1 percent.
S&P Futures
Futures on the S&P 500 fell 0.1 percent today. The U.S. equity benchmark index gained 0.2 percent yesterday to an all-time high as as Apple Inc. boosted technology companies and health-care shares rallied amid earnings. Facebook Inc. surged in extended trading past its all-time high after posting second-quarter revenue and profit that beat analyst estimates.
U.S. Rates
The S&P 500 headed for a second week of advance as inflation data signaled the Federal Reserve won’t be compelled to raise interest rates in the near future and earnings reports boosted optimism about the economy. Fed Chair Janet Yellen has said rates will stay low for a “considerable time” after the central bank stops its monthly bond purchases. It is on track to end them in October.
The Fed may have scope to keep interest rates at zero for longer than investors anticipate as inflation stays muted and a 2014 slowdown prolongs the labor-market recovery, the International Monetary Fund said yesterday.
FTSE Outlook
Todays pivot is 6798 which we are slightly below, technically that will act as initial resistance, though I think the bulls will be gunning to break that 6824 level that we dropped off yesterday. If they do then that opens up the top of the Bianca channels, both 10 and 20 day being at 6847/6849 so I will be looking at a short off that level. Above that the next level of note is 6878 – don’t think we will see that today. We also have the Raff channels at around the 6847 area for today. If the pivot acts as resistance and we have a little dip then the support level is 6774 after that, which if broken would see the bottom of the 10 day channel at 6747, and then 6727 below that.
I am really hoping that we do reach that 6847 area as a short there could be really good in terms of points, off several daily channels.