Good morning. Well the short worked out a treat yesterday dropping all the way to the 200ema area before we got pumped back up in a short covering rally. I am still feeling bearish around the 6600 area, but still have the support level around 6550, and 6560 area where we have the bottom of the 10 day Bianca channel for today (and has held for a couple of tests recently). While I have been writing this paragraph the FTSE has just dropped 20 points premarket which isn’t too good for the bull from yesterday as could just be a stop hunt! Pre market manipulation anyone?! We will be all eyes on the Fed next week with regards to the future of QE which will be making a few nervous. We had Mark Carney speaking yesterday in the UK, mainly about the current house prices rises, but also fairly upbeat about the economy. With regard to interest rates, they are still tied to unemployment and the 7% threshold but then also said that they can be increased if other factors permit. He reckons 2016, the market thins earlier. I’m with the market on that one.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional benchmark index on course to snap an 11-day rally, as the U.S. and Russia hold talks on Syria and investors await the outcome of a Federal Reserve meeting next week. The MSCI Asia Pacific Index dropped 1 percent to 136.31 as of 12:43 p.m. in Tokyo, halting its longest stretch of gains this year, as three shares fell for each that rose. The gauge is heading for a 1.9 percent advance this week. The measure’s 14-day relative strength index, an indicator of trading momentum, climbed to 67 yesterday, near a threshold of 70 that may signal to some analysts shares may have risen too far.
“Investors paused for thought in the wake of the market’s recent strong run,” Matthew Sherwood, who helps oversee about $25 billion as head of markets research in Sydney at Perpetual Investments, said in an e-mail. “The global economic rebound still remains fragile and below trend, and earnings growth forecasts are extremely optimistic for this environment.”
Euro-area industrial output fell more than analysts estimated in July as the region struggled with high unemployment. Australia’s jobless rate last month reached a four-year high, while claims for unemployment benefits in the U.S. last week fell. A report today may confirm Japan’s factory output expanded in July.
U.S. Futures
Futures on the Standard & Poor’s 500 Index were little changed today. The gauge fell 0.3 percent yesterday in New York, snapping the longest streak of gains since July.
U.S. jobless claims declined last week to 292,000, the fewest since April 2006, as upgrades to computer systems in two states caused employment agencies to report fewer applications. An agency spokesman said the upgrades played a major role in the drop in claims. Economists were expecting an increase to 330,000 from 323,000 in the previous week.
Fed Stimulus
The U.S. central bank has said any reduction in stimulus will be tied to a sustained recovery in employment. The Federal Reserve will decide to cut its $85 billion in monthly bond purchases when it meets Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg last month.
Syria
U.S. Secretary of State John Kerry is in Geneva to meet with Russian counterpart Sergei Lavrov over a deal for the removal of Syria’s chemical weapons. Syrian President Bashar al-Assad said any deal to surrender the nation’s chemical arsenal must be a “two-way street” in which the administration of President Barack Obama drops its military threats and stops arming Syrian rebels.
Outlook
Friday the 13th – anyone feeling superstitious? With yesterday’s V sign on the FTSE to all and sundry the FTSE keeps the targets from yesterday for shorting levels alive, being the 6627 area. Today’s pivot is 6584, which is also the 10 ema on the 30minute chart which, as we are bearish currently on them, will likely act as initial resistance. We have the 30 minute still in play as has been the case all week pretty much, with support at 6570 and still heading upward. If this pre market dip was manipulation to trip a few stops on the short covering longs from yesterday then we could see a climb initially to the 6600 area, possibly the target mentioned a few times at 6627 ish. For today I am thinking maybe a little dip again, probably to the 6560 area then a bounce back. If 6608 breaks then its pretty likely we will get 6627 (6632 is R2 for today as well as the Bianca 20 day at 6638) so I think a short at around that level will be fine.