Good morning. Well, the pivot didn’t put up much of a fight yesterday though the bounce from Fridays low at 6615 was a bit better, though the price did overshoot to a low of 6607. Still looks weak really with the daily EMAs crossing to bear and the daily channel lines on Bianca and Raff heading down. 6695 area looks pretty major resistance today – top of the 10 day Bianca, 10 day raff and the 10EMA on daily. Good shorting area here, if it gets that high. 6655 is the first resistance.
Protests in Hong Kong took place yesterday, all largely peaceful despite being tear gassed, though they have been told to stop now by Hong Kong’s chief executive, Leung Chun-ying. 80,000 people on the streets won’t be doing HK’s economy much good, as the Central Business District (CBD) was largely deserted yesterday.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional index headed for its biggest monthly drop since May 2012, amid tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. The dollar pared its largest quarterly advance since the global financial crisis.
The MSCI Asia Pacific Index slipped 0.9 percent by 12:33 p.m. in Tokyo, pushing it down 5.4 percent in September. The Hang Seng Indexdropped 1.4 percent as pro-democracy protests continued to choke off roads around the city. The Bloomberg Dollar Spot Index slipped 0.1 percent from a four-year high and New Zealand’s dollar was set for its worst quarter since 2008. Oil in New York slipped 0.3 percent.
Global stocks dropped for the first quarter in more than a year and sovereign bonds are beating corporate debt by the most since 2011 as speculation about Federal Reserve interest-rate increases and geopolitical tensions spur risk aversion. Student leaders of Hong Kong’s protests set an Oct. 1 deadline for their demands to be met. With mainland markets poised to close for a weeklong national holiday, a China purchasing managers’ index from HSBC Holdings Pls and Markit Economics showed a slower-than-estimated expansion this month.
“There’s plenty of excuses for people to take some money off the table,” Ryan Huang, a strategist at IG Ltd. in Singapore, said by phone. “The Fed’s QE is scheduled to end next month in the U.S. and investors are wondering about the timing of interest-rate increases. China’s economy is slowing down and protests in Hong Kong only add to geopolitical concerns.”
World Index
The MSCI All-Country World Index is down 2.7 percent since the end of June, set for its first quarterly retreat since the second three months of last year, and the biggest such drop since June 2012. Standard & Poor’s 500 Index futures were little changed after the U.S. gauge lost 0.3 percent.
While MSCI’s Asia Pacific index lost 3.1 percent this quarter through yesterday, it is trading at 13.4 times estimated earnings, still close to the 13.8 level reached Sept. 3 that marked its most expensive valuation this year.
The S&P 500 trades at 16.6 times estimated earnings and the Stoxx Europe 600 Index fetches 15.3 times projected profit.
The value of global equities has climbed by about $20 trillion over the past three years as Fed measures to stimulate the U.S. economy bolstered liquidity and fueled investment in emerging markets. The central bank has been reducing its asset purchase program, known as quantitative easing, by $10 billion a month this year, putting it on track to end in October.
Hong Kong
The Hang Seng Index yesterday erased its gain for the year and is heading for its biggest two-day drop since February. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in the city slid 1.4 percent today and is on track for the largest monthly decline since January. The Shanghai Composite Index climbed 0.1 percent today.
Hong Kong Chief Executive Leung Chun-ying, whose resignation protesters are demanding, urged people to call off the rallies and to stop spreading rumors that the People’s Liberation Army is being deployed to quell protests.
FTSE Outlook
Todays pivot is 6636 so there is s support there, but the price action still looks messy as resistance is only at 6655, with 6672 and 6683 above that. Coupled with the fact that the daily chart has significant resistance at 6695 I think that we will see weak bull today before a decline at the end, most likely from the 6683 area. If it were to reach that daily resistance at 6695 then that will be a decent short to hold for a few days I feel. I feel that the Dax wants to decline to 9250 yet which will bring the FTSE down a bit further yet, before probably bouncing mid October, and maybe tallying with a low on the S&P at 1950ish.
For today, an initial short at 6655 looks playable and see if it dips to the pivot or further. If it bounces back, supported by the moving averages not he 30min then it should manage to reach those higher resistance levels at 6672/6682, again, worth shorting around this area and see what it does. On the support side, yesterdays low is obviously the next level after the 6636 daily pivot, with the bottom of the 20 day Bianca also here at 6602. 6560 is the bottom of the 10 day Bianca but I don’t think it will get that low today.