Holding above 7000 | Resistance 7056 | Support 7023 | Santa Rally to continue

FTSE 100 Support 7023 7003 6999 6998 6911 6906
FTSE 100 Resistance 7054 7065 7078 7085 7132 7158

Good morning. Bulls finally showed up at just below 7000 yesterday for a quick run up to the 7040 level where it then stalled and remained for most of the session. Bit annoying that the 7023 resistance level was just missed first thing as it dropped to 6992 but broke the second time so the short took a small hit. Frustrating – that was off the 2 hour chart as well which is usually pretty good. Being a fairly low volume week some overshot is expected at the levels though. I still think that buying the dip this week is the best plan though to target 7065 and possibly 7100.

US & Asia Overnight from Bloomberg

Asian stocks followed advances in U.S. and European equities as the prospects of faster U.S. economic growth propelled markets toward the close of a turmoil-filled year. Oil extended its advance and the yen climbed.

Stock gauges from New Zealand to Hong Kong advanced after the Dow Jones Industrial Average closed at a record and the Stoxx Europe 600 Index reached its highest level this year. The yen gained after reaching the weakest since February versus the dollar on Tuesday. Oil traded above $53.5 a barrel as data showed U.S. stockpiles declined last week.

Investors are focusing on the likelihood of increased U.S. government spending that has buoyed equities and pummeled bonds since Donald Trump won the Nov. 8 presidential election. Traders shrugged off geopolitical concerns following the killing of Russia¹s envoy to Turkey and a separate attack that left 12 people dead in Berlin. Volumes are thinning and swings in global equities are muted, with a volatility gauge for European stocks at the lowest since 2014.³Noteworthy is the resilience of equity markets and low volatility in the face of two horrific terrorist attacks in Europe,² Jason Wong, a currency strategist at Bank of New Zealand in Wellington, wrote in a note to clients Wednesday. ³They seem to have had little impact on the market.²

Stocks

The MSCI Asia Pacific Index advanced 0.2 percent as of 2:27 p.m. in Tokyo, paring back some of Tuesday¹s losses.
Hong Kong¹s Hang Seng Index increased 0.6 percent, ending a four-day losing streak that brought the index to a five-month low.
The Shanghai Composite Index rose 1 percent as Chinese stocks climbed from a six-week low.
Japan¹s Topix Index dropped 0.5 percent. The gauge climbed as much as 0.5 percent earlier after the Bank of Japan signaled it remains committed to easy monetary policy.
Australia¹s S&P/ASX 200 Index and New Zealand¹s S&P/NZX 50 Index gained at least 0.2 percent, with Sydney shares at the highest in more than a year.
South Korea¹s Kospi index was little changed.
Volumes were down across Asia, with trading in Hong Kong about 30 percent below the 30-day average.
Futures on the S&P 500 Index were little changed. The gauge rose 0.3 percent to 2,266.5 on Tuesday, a point below its all-time high. The Dow closed at an unprecedented 19,974.62

Currencies

The Bloomberg Dollar Spot Index fell 0.1 percent after climbing for two straight days. The measure¹s gain for the quarter is 7.4 percent, heading for the biggest three-month advance since the third quarter of 2008
The yen was up 0.3 percent to 117.55, after falling 0.7 percent on Tuesday

Bonds

Yields on 10-year Treasury notes fell less than 1 basis point to 2.57 percent, after gaining two basis points Tuesday to pare the previous day¹s drop of five basis points
Yields on Australian 10-year bonds slid two basis point to 2.82 percent, while those in New Zealand increased 1 basis point to 3.44 percent

Commodities

Gold rose 0.3 percent to $1,135.92 an ounce, after closing near a 10-month low Tuesday as concerns eased over geopolitical events that had briefly supported the price.
Oil climbed 0.4 percent to $53.49 in New York. Crude inventories dropped by 4.15 million barrels, the American Petroleum Institute was said to report. Data from the Energy Information Administration on Wednesday is also forecast to show supplies shrank.
[Bloomberg]

FTSE 100 Outlook and Prediction

As mentioned I feel that buying the dips this week is still a decent plan of action. For today we have initial support at the daily pivot at 7023. The ASX200 and Asia markets were fairly flat overall, with the ASX dropping from 5637 to 5623 during the entire session so far. If that follows through to the FTSE for today then it might be a bit of a boring one! Anyway, if the 7023 support level holds then I can see a rise towards the 7056 resistance level (and maybe a slight overshoot again to 7065) and then a fairly static day from there. We have the top of the 10 day Bianca at 7085 so if it pushes further up then this level is likely (and may some bears appear too).

The 2 hour chart, having had the bearish entry fail yesterday, has gone bullish again, though its pretty weak. Should the bears break the 7023 pivot level then the 200ema is at 7004 for the next support area. We also have the bottom of the 10 day Bianca at 6998. I would expect 7000 area to hold today if it got that low. There is a very small 0.2 divi today. So, simple plan really, slight bullish bias and buy the dips!