Support at 6840, resistance at 6870

Good morning. The FTSE was a little flat yesterday really with a fairly tight range – the short at 6857 worked out for a few points; and the 6827 level was hit out of hours (pretty much exactly so allowing for spreads the order didn’t take). As such it still looks bullish on the equities but gold had a fit yesterday and has dropped right down to support at 1260. 1257 next for that, or even lower at 1202? Doesn’t seem that long ago the media were hyping $2000! On the S&P, it still looks like we will get that 1919 level, if the bulls can break 1915. Gold falling, equities rising…. how long will that last? The ECB are on the horizon with further stimulus measures which is helping the Dax at the moment – not far off the 10000 there either. So, some pretty major headline grabbing figures around – US all time highs, Dax 10000, Possible FTSE double top with its all time high soon at 6930, etc etc. Time to keep the guard up with the longs!

Asia Overnight from Bloomberg
Asian stocks rose, sending the regional index toward a six-month high, afterChina reported on industrial profits. Gold slid to a more than 15-week low, while wheat and corn futures fell.

The MSCI Asia Pacific Index added 0.6 percent by 1:28 p.m. in Tokyo, with ameasure of Chinese shares traded in Hong Kong jumping 1.4 percent.Australia’s S&P/ASX 200 Index climbed 0.5 percent as a gauge of the nation’s corporate bond risk headed for a four-year low.

Standard & Poor’s 500 Index futures were little changed after the U.S. equity benchmark reached an all-time high for a second straight session. Gold fell as much as 0.3 percent to its lowest price since Feb. 7, while China’s yuan depreciated to a four-week low. Wheat declined a sixth day and corn touched the lowest since March.

Chinese industrial profits increased 10 percent this year through April from the same period in 2013, a report showed today, compared with 10.1 percent growth in the three months through March. Central bank Governor Zhou Xiaochuan said this week the economy is in a rare “complicated” situation, amid speculation policy makers in the world’s second-biggest economy will do more to bolster growth. An update on first-quarter U.S. economic expansion is due this week after data yesterday showed an unexpected increase in durable goods orders in April and improving consumer confidence.

“China’s 7.5 percent growth target looks achievable as data suggests more stability,” Desmond Chua, a strategist at CMC Markets in Singapore, said by phone. “The government has been providing some spurts of economic stimulus and we expect to see additional support should data show signs of weakening.”

China, Thailand
The MSCI Asia Pacific Index is on course for its highest close since Nov. 29, with Samsung Electronics Co. and Industrial & Commercial Bank of China Ltd. providing the biggest boosts to the regional gauge. A measure of Asian stocks outside Japan headed for its highest closing level since July 2011.

Chinese technology shares climbed the most in two weeks amid speculation local companies will benefit from the government’s dispute with the U.S. over cyber-spying. Thailand’s SET Index rose 0.8 percent as data showed imports and exports declined in April from a year earlier. The nation today sold its first sovereign bonds since a May 22 coup, pricing the 30-year notes at a weighted yield of 4.22 percent.

Gold slipped 0.1 percent to $1,263.84 an ounce in the spot market after earlier touching $1,260.97. The U.S. stock rally and speculation Petro Poroshenko’s election as Ukraine’s president will ease tensions withRussia reduced the precious metal’s appeal as a haven. Gold posted its steepest one-day drop since December yesterday.

Ukraine Tension
Ukraine’s government said it inflicted “significant” losses on pro-Russian rebels and retook a major eastern airport a day after Poroshenko vowed to wipe out separatists. The violence highlights the difficulties faced by Poroshenko in uniting Ukraine after his May 25 presidential election victory.

The yen, also regarded as an asset favored by risk-averse investors, was little changed for a third day today, trading at 101.95 per dollar.

Comments from Chinese Premier Li Keqiang in a May 23 statement and a speech on May 26 from European Central Bank chief Mario Draghi indicating he will act to shake up price growth spurred gains in Asian and European stocks at the beginning of the week. Draghi said policy makers need to be “particularly watchful” of low inflation and officials have said they’re working on a package of possible stimulus measures for the ECB’s June policy meeting.

S&P
The S&P 500 climbed 0.6 percent to 1,911.91 yesterday, while the Bloomberg China-US Equity Index of the most-traded Chinese equities in New York fell 0.3 percent after advancing 1.8 percent last week.

U.S. data showed bookings for goods meant to last at least three years rose 0.8 percent in April after a 3.6 percent gain in the previous month that was revised up by one percentage point. The median forecast of 68 economists surveyed by Bloomberg called for a 0.7 percent drop.

The Conference Board’s index of U.S. consumer confidence increased to 83 in May from 81.7 a month earlier, the New York-based private research group said, while a Markit Economics Ltd. preliminary index for services unexpectedly rose to 58.4 this month from 55.

FTSE Outlook

Well it still looks pretty bullish across the board for the time being. We had a drop off the 10 day Raff yesterday at the 6857 level, of course thats slightly wider today as it didn’t get that bearish yesterday – the top at 6870 today. Todays pivot is 6839 so I expect any dip initially will find support there as the trend is still up for the moment, albeit on low volume. Below that 6840 level the next support is 6822 and then 6803. The Bianca 10 day channel is showing support at 6777, though we are breaking above the top of that channel (the channel is probably slightly effected by the bank holiday on Monday though) at 6846.

If we break through yesterdays high at 6857 then 6874 and 6882 look likely, once again testing the top of the 10 day Raff area. I am going to keep it very similar to yesterday – long off the pivot and short off the 6870 level.