Support 6800, 6768, 6750, 6710 Resistance 6849, 6878, 6890, 6926

Good morning. Well that was a good drop yesterday morning, though it failed to retest the 6905 area before it did so. Despite the bulls fighting it back to 6860 in the early evening, yet another Greece development brought the price back down – this time that the European Central Bank said it will stop offering preferential loans to Greek lenders. Today has initial support at 6800 which has held OK overnight, though a break below this I can see testing the bottom of the 10 day Raff at 6711ish. Unfortunately Google haven’t updated the prices here so the Bianca charts can’t be updated, though looking at the levels from Wednesday there was support around the 6750 area.

Asia Overnight from Bloomberg
(Bloomberg) — Chinese stocks climbed and the country’s bonds rallied after the central bank cut reserve requirements. U.S. equity-index futures retreated while Australian bonds and gold climbed as the European Central Bank said it will stop offering preferential loans to Greek lenders.

The Hang Seng China Enterprises Index climbed 0.8 percent by 2:53 p.m. in Tokyo, trimming a gain of as much as 2.7 percent, while the yield on sovereign notes due September 2024 declined to 3.41 percent, the lowest closing level since May 2013. Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. Ten-year Australian bond yields fell seven basis points as gold rose 0.2 percent. U.S. oil fell 0.7 percent, extending its biggest drop in 10 weeks. Industrial metals fell.

China joined a global wave of monetary easing as it seeks to free up funds amid capital outflows, with economists from Deutsche Bank AG, Bank of America Corp. and Nomura Holdings Inc. among those forecasting more reserve-requirement and interest-rate cuts ahead. The ECB said it will no longer accept junk-rated Greek collateral, citing doubt over the new government’s commitment to previous reform pledges. The decision will force Greek lenders to seek more-expensive emergency funding from their own central bank.

“The good news out of China could help offset the bad news out of Greece,” Nader Naeimi, who helps manage about $125 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors, said by phone. “We’d get strong market reaction to China’s move to cut reserve requirements, while the Greek situation is going to induce some volatility.”

Developers Gain
The People’s Bank of China said Wednesday that it will cut the percentage of deposits banks must set aside as reserves by at least 50 basis points, lowering the ratio for major banks to 19.5 percent. The first reduction since May 2012 will free up about 600 billion yuan ($96 billion), according to an estimate by Australia & New Zealand Banking Group Ltd., and comes as policy makers seek to stem capital outflows amid signs the economic slowdown may be deepening.

The Shanghai Composite Index cut its advance to 0.6 percent after surging 2.4 percent at the open. Hong Kong’s Hang Seng Index rose 0.4 percent, led by state-controlled developers China Resources Land Ltd. and China Overseas Land & Investment Ltd., which each advanced at least 2.3 percent.

The yield on China’s five-year securities fell five basis points to 3.32 percent while the country’s benchmark interest-rate swap fell as much as three basis points to 3.14 percent, the lowest level since Dec. 4. That drop follows a 19 basis-point slide on Wednesday that was the biggest since the PBOC lowered key borrowing costs in November. The yuan dropped 0.1 percent to 6.2533 per dollar in onshore trading.

Sony Surge
The MSCI Asia Pacific Index fluctuated today, with five shares falling for every four that advanced. Japan’s Topix index slid 0.4 percent, paring a drop of 0.8 percent as Sony Corp. surged by 13 percent after raising its operating earnings forecast.

South Korea’s Kospi index was 0.6 percent lower, while Australia’s S&P/ASX 200 Index climbed for an 11th day, heading for its longest winning streak since October 2003.

The announcement from the ECB dragged the S&P 500 lower, with the U.S. benchmark finishing 0.4 percent lower after surging 2.8 percent through the previous two sessions. The ECB moved because it can’t assume Greece will successfully conclude its reform program, according to an e-mailed statement. The decision came about two weeks after Greece elected a new government dominated by anti-austerity party Syriza.

No Grexit
“While we don’t foresee Greece ultimately leaving the European Union or a collapse in the European currency, until this problem is resolved it might be hard for stocks to reach new highs,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo said by phone today.

The euro was little changed at $1.1343 after sliding as much as 1.4 percent on Wednesday after the ECB announcement.

West Texas Intermediate crude oil traded at $48.13 a barrel, after Wednesday’s 8.7 percent retreat snapped a four-day, 19 percent advance. Brent crude was 0.4 percent higher at $53.93 a barrel in London today.

The biggest rally in WTI oil since 2009 stalled after the Energy Information Administration said supplies in the U.S., the world’s biggest oil consumer, climbed by 6.33 million barrels in the week ended Jan. 30 to the highest level since the data was started in 1982. It was almost double the increase projected by analysts surveyed by Bloomberg. An index of oil price volatility jumped to its highest level since 2011.

Copper in London fell 0.8 percent, retreating from a two-week high, while nickel declined 1.7 percent, falling for a third day, the longest losing streak in three weeks.

The ECB and oil resuming its drop fueled bond gains, with Australian government notes due in a decade yielding 2.40 percent, after the rate surged 18 basis points to 2.47 percent yesterday. Yields on 10-year Treasuries slipped one basis point to 1.74 percent, after sinking four basis points on Wednesday. Gold climbed a second day to $1,272.39 an ounce on the spot market. [Ref]

FTSE Outlook

Todays pivot is 6849 and I think we might get an initial bounce from the 6800 support area to that level before more downside. Looking at the Dow I think a fall to around 17400 is on the cards, which will pull the others down too. Above the 6849 pivot the next resistance levels to watch are 6878 and 6926 – with an inevitable stutter at 6910 – the most recent high. I think he bulls will have a job on their hands to break much higher than the pivot today though, so I am still more bearish than bullish for the moment. Support wise below 6800, the next level is 6768, then the 6750 area (Bianca channels from the previous update – if Google update those figures I will send round an updated Bianca chart). Below that we have the bottom of the 10 day Raff at 6711 – having dropped off from the top of this channel yesterday at 6910ish. A test of this level would also be the 25ema on daily so if seen i expect that area to hold for another push higher mid February.