Support 6657, 6651, 6620, 6595 Resistance 6689, 6695, 6709, 6735

Good morning. Well, after that initial dip yesterday which unfortunately only got as far as the 10 day Raff at 6610, the rest of the day trended bullishly. Its hit an area now at 6690 where I think we might see some stronger resistance, so I am initially expecting a little bit of a dip from this 66980/6700 area. If we do dip it might be fairly short lived, Asia was pretty stable over night as Japan awaited a decision by Japanese PM Abe to put off a sales-tax increase, add stimulus and call an election. Even a pessimistic Cameron didn’t dampen the bulls yesterday. There always seems to be a pressure to keep the tin can rolling as long as possible….

Asia Overnight from Bloomberg
Asian stocks rose as investors await a decision by Japanese Prime Minister Shinzo Abe to put off a sales-tax increase, add stimulus and call an election, after data yesterday showed the economy entered recession.

The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 140.29 as of 9:00 a.m. in Tokyo, after slumping by the most in more than a month yesterday. Abe’s administration will announce the plans for the levy and polls today, according to the Yomiuri newspaper. The government will also order the creation of an economic stimulus package, said Ryu Shionoya, deputy policy chief of Japan’s ruling Liberal Democratic Party.

“Spend, spend, spend and less taxation will be cheered by equity markets,” Evan Lucas, a strategist at IG Ltd. in Melbourne, wrote in an e-mail to clients. “Japan isn’t the only nation or fiscal union currently trying to spend its way out of trouble. There are further signs Europe is on the verge of expanding its bond buying program to government bonds.”

Speaking during quarterly testimony to lawmakers at the European Parliament yesterday, central bank President Mario Draghi explicitly cited government-bond buying as a policy tool officials could use to stimulate the economy if the outlook worsens.

Japan’s Topix (TPX) index jumped 1.3 percent after dropping 2.5 percent yesterday. South Korea’s Kospi index added 0.5 percent today. Australia’s S&P/ASX 200 Index increased 0.1 percent. New Zealand’s NZX 50 Index climbed 0.2 percent. Markets in China and Hong Konghave yet to open. Reports on mainland property prices and foreign direct investments are due today.

The Hang Seng China Enterprises Index sank 1.9 percent in Hong Kong yesterday in the largest slump in two months, after mainland investors largely ignored the city’s shares on the first day of the Shanghai-Hong Kong bourse link. More than two shares rose for each that fell on the Shanghai Composite Index, which slipped 0.2 percent.

China Connect
International investors purchased 13 billion yuan ($2.1 billion) of yuan-denominated shares by 1:57 p.m. yesterday in Shanghai, the maximum allowed, triggering a halt in buy orders for the rest of the day. Mainland investors used about 1.8 billion yuan of their 10.5 billion yuan quota in Hong Kong.

Futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent today. The U.S equity benchmark index rose 0.1 percent yesterday to close at an all-time high amid corporate deals.

FTSE Outlook

I am expecting an initial rise this morning to the 6695 area where we have the top of the 30minute channel you can see on the chart below. Above this the next resistance levels of note are 6709 and 6735, the latter being the top of the Bianca channels (both at 6735). The markets are certainly being underpinned by stimulus and other measures at the moment so if we break above 6695 then we may well see a good news “blow off top” before some more measured declines till the Santa Rally kicks in (if it does!). On the other hand, if the 6695 area holds as resistance then we should play out as per the arrows and dip down to the pivot at 6657, and maybe even lower, as support below here is at 6620 (bottom of the 20 day Bianca) then 6595 below that. First thing this morning as I am writing it still looks bullish for the FTSE. Will be interesting to see what pans out at this 6700 area anyway and if the bears are going to put in an appearance soon. Think it will be a case of which one is stronger today – resistance at 6700, or momentum (looking at the moving averages) for a push higher past 6709 to 6735 and maybe more?

Support so entry levels for a possible long

• 6657 daily pivot
• 6651
• 6620
• 6595

Resistance so entry levels for a possible short

• 6689
• 6695
• 6709
• 6735