Good morning. A bit of a frustrating day that meandered around for most of the session, and failed to break that 6716 which I thought it would. There weren’t any clear signals really, after that rise from 6680 to 6715. As it turned out a short around that area would have been really good if held till the US close, as there was a pretty rapid drop in the evening (at about 18:30), apparently over Russia/Ukraine still. The fall didn’t quite reach the 6622 either, where there is still support, reinforced by the 10 day Bianca channel for today showing 6623.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional index extending yesterday’s losses, after U.S. equities dropped to a two-month low amid escalating tensions in Ukraine.
The MSCI Asia Pacific Index dropped 0.7 percent to 145.83 as of 11:28 a.m. in Hong Kong, with all of its 10 industry groups falling. The measure slumped 0.8 percent yesterday, which pared its gain since a Feb. 4 low to 13 percent.
“There’s quite a bit of unrest,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion). “It’s unlikely that it will turn into something intractable. But the market is overextended and I think the geopolitical risk we are seeing at the moment is an excuse for people to take profit.”
Poland’s foreign minister warned that a renewed buildup of Russian troops on Ukraine’s border may signal an invasion as President Vladimir Putin ordered a response to U.S. and European sanctions.
Regional Gauges
Japan’s Topix (TPX) index fell 1 percent and South Korea’s Kospi index declined 0.4 percent.Australia’s S&P/ASX 200 Index fell 0.3 percent and New Zealand’s NZX 50 Index lost 0.2 percent.
The Hang Seng Index slid 0.8 percent in Hong Kong, while the Hang Seng China Enterprises Index of mainland shares traded in the city lost 1.1 percent. China’s Shanghai Composite Index dropped 0.7 percent. Taiwan’s Taiex Index lost 0.5 percent after plummeting 2 percent yesterday. Singapore’s Straits Times Index fell 0.3 percent.
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent today. The measure declined 1 percent yesterday to the lowest level since May 29 as energy shares tumbled and concern increased over Ukraine.
Putin is showing no sign of backing down over Ukraine since the U.S. and the European Union tightened sanctions last week, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.
U.S. Services
Service industries in the U.S. expanded in July at the fastest pace since December 2005, according to data from the Institute for Supply Management, indicating the economy was building more momentum at the start of the second half of 2014. Another release showed factory orders rose 1.1 percent in June, above economists’ estimates for a 0.6 percent gain.
FTSE Outlook
Political tensions don’t help trading in terms of picking levels as things get quite sentiment driven. However, for today we have support at 6623 and 6618 so a long (!!) around this area might work out ok. With a tight stop its worth trading off recognised levels I find. Don’t always hold but when they do you usually get a good run. We also have the bottom of the 20 day Raff around 6611.
The 10 minute chart this morning is still trying to rise around this 6640 area but looks pretty weak, as such I have put in an initial dip as Uk traders react to that drop last night and maybe take a bit more profit off the table. Dipping to that support area, though below that 6590 is the next level to watch.
If we don’t get an initial dip and in fact climb out the blocks it will probably rise straight to 6668. Shorting at 6666 for a “devil trade” might be worth a go in that case for the first trade of the day.
Resistance wise, the bulls need to break 6666 to have a run to 6689 where we have he daily pivot, possibly 6716 again after that where we now have the top of the 10 day Bianca channel. The S&P still looks weak and might be aiming for 1900 before too long which will drag the FTSE down further, possibly bottoming around 1888.