Good morning, hope you had a good weekend. Well it certainly “looks” like 6070 is the low for the moment, however the FTSe isn’t out of the woods yet (nor the S&P and Dax as per below analysis) as the daily EMAs are still bearish, and the top of the Raff channels will probably be shortly in play. Overnight the FTSE has dropped off the top of the 20 day Bianca at 6350. Over the weekend the financial press took a bit of a break after such a hectic week. Todays pivot is 6270 so we have initial support there to watch, with resistance at 6350. I think we may well get an initial dip to the 62870 (pivot)/6280 (200ema on 30m) then a rise today. We have Apple results out later – always one that is eagerly watched.
Asia Overnight from Bloomberg
Asian stocks rose, with the benchmark index rebounding from an almost seven-month low, after U.S. equities rallied. Japan’s Topix (TPX) index surged amid optimism the nation’s $1.2 trillion pension fund will buy more shares.
The MSCI Asia Pacific Index (MXAP) climbed 1.3 percent to 135.44 as of 9:15 a.m. in Tokyo, buoyed by a 2.8 percent jump for the Topix. The regional gauge slumped last week to the lowest since March, extending its drop to more than 10 percent from a July 29 high, the common definition of a correction. Concern about an ailing European economy, the timing of Federal Reserve interest-rate increases and the spread of the Ebola virus wiped about $2.8 trillion off the value of global stocks in October through last week.
“Shares will bounce back in Asia,” said Angus Gluskie, who oversees about $550 million as managing director at White Funds Management in Sydney. Fears about Ebola and Europe’s growth are overblown, he said. “I think people will become more comfortable this week.”
Pension Fund
Japan’s Topix headed for its steepest rally in more than a year as the yen extended its drop, trading at 107.07 per dollar. The Government Pension Investment Fund will raise its allocation target for domestic shares to about 25 percent from 12 percent, the Nikkei newspaper reported Oct. 18.
South Korea’s Kospi index, Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index each advanced 1.1 percent. Markets in Hong Kong and China are yet to open.
Futures on the Standard & Poor’s 500 Index rallied 0.4 percent today. The underlying measure rebounded 1.3 percent on Oct. 17 as earnings beat estimates, consumer confidence reached a seven-year high and investors speculated that central banks will add more economic stimulus.
The S&P 500 is still down 6.2 percent from a record in September on concern a global slowdown will hurt the American economy just as the Fed weighs when to raise interest rates. Pressure is mounting for ECB stimulus such as government-bond purchases as the 18-nation euro area struggles to rebound from a sovereign debt crisis and subsequent austerity measures.
Futures on Hong Kong’s Hang Seng Index added 0.6 percent in their most recent trading session, and contracts on the Hang Seng China Enterprises Index jumped 1 percent. The Bloomberg China-US Index of Chinese stocks traded in the U.S. soared 1.2 percent on Oct. 17.
China Economy
China’s top Communist Party officials gather in Beijing this week for their fourth plenum, with an update on gross domestic product for Asia’s largest economy due tomorrow. China’s economyprobably grew 7.2 percent in the third quarter from a year earlier, according to the median of 47 economists’ estimates compiled by Bloomberg. That would be a retreat from the 7.5 percent expansion recorded for the second quarter and the slowest pace of growth since 2009.
The People’s Bank of China plans to inject about 200 billion yuan ($32.7 billion) into some national and regional lenders, a government official familiar with the matter said Oct. 17.
FTSE Outlook
Todays pivot is 6270, and we have the 200ema on 30min at 6280. I am expecting an initial dip to this area before a bounce. If that 6270 level breaks then 6250 and 6180 are the next supports to watch. Though we are experiencing a pretty decent bounce off the 6070 area I don’t think that the bears are all done, mainly as we are nearing the top of the Raff channels on the Dax (10day 9052, 20 day here at 8880), and the S&P (1920/1925), but also the daily EMAs on all are still bearish, and I would expect a touch of the 25ema to trigger some selling. That level for the FTSE is 6457 today, along with the 6450 top of 10 day Raff.
Looking at the shorter timeframe 10 min ties in quite well with the 30min at the moment, as its within a decent PRT channel, and you can see below. The bottom of the channel is around the 6260 area, so a long around there could also work out if 6280 is broken.
