Good morning. As expected a choppy, flat, hard to trade day yesterday.The level for the long didn’t quite reach, though the short at 6812 managed to get a few points. Its going to continue to be a bit topsy turvy till the vote result. If you wanted a week off this is probably a good one to take! We are slightly above todays pivot now, so in theory that will act as support, though the bulls still need to break 6820, though the top of the 10 day Bianca is now only at 6832. Another flattish day coming up, with most traders keeping their powder dry pre vote I expect.
Asia Overnight from Bloomberg
Asian stocks fell, with the regional index headed for its longest losing streak in more than a decade, the dollar weakened against most major peers and government bonds climbed before the Federal Reserve reviews interest rates. Metals rebounded.
The MSCI Asia Pacific Index (MXAP) fell 0.1 percent by 1:03 p.m. in Tokyo, falling a ninth day. Nasdaq 100 Index futures were little changed after the U.S. gauge of technology stocks sank 1 percent in New York. The Bloomberg Dollar Spot Index slid 0.1 percent, with the currencies of Japan and South Koreastrengthening. Ten-year Australian notes rose for the first time in six days as the yield on 10-year Treasuries slipped two basis points. Gold and nickel rose at least 0.3 percent.
Fed officials meet to review policy from today, with an unexpected decline in American factory output tempering speculation that the timeline for interest-rate increases could be brought forward. Morning trading in Hong Kong was canceled because of a typhoon, while Australia’s central bank said it will monitor risks from rising property prices as policy makers reiterated a period of stability in record-low interest rates.
“The big issue is whether the Fed will change its forward guidance to indicate they are getting closer to the decision on putting interest rates up,” Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, which oversees about A$170 billion ($154 billion), said by phone from Sydney. “The transition period as the Fed tightens will be difficult for markets in the Asian region. I think we are in for a few months of increased volatility in markets.”
Nine of the 10 industry groups on the Asia-Pacific equity gauge retreated as the measure heads for its longest run of daily declines since June 2002. About two stocks dropped for each that advanced.
Japan’s Topix index declined 0.3 percent, snapping a five-day advance, while theKospi gauge in Seoul added 0.4 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent.
Trading on the Hong Kong Stock Exchange will start at 1 p.m. local time after the morning session was scrapped due to Typhoon Kalmaegi, according to a statement on the exchange group’s website. The city’s third-highest storm signal was issued for the first time this year earlier today. Markets in Malaysia are closed for a holiday.
Futures on Hong Kong’s Hang Seng Index and Hang Seng China Enterprises gauges dropped 0.2 percent in most recent trading. The Shanghai Composite Index was little changed.
US Interest Rates
The U.S. central bank has been saying since March that interest rates would stay low for a “considerable time” after it completes the asset purchases known as quantitative easing. Speculation the Fed may bring forward rate increases has boosted the allure of the dollar this month and depressed Treasuries.
U.S. factory production fell 0.1 percent in August from July, when it grew 0.4 percent, data yesterday showed. Economists surveyed by Bloomberg predicted an increase of 0.3 percent.
The Nasdaq 100 dropped 1 percent to a one-month low, while the Russell 2000tumbled 1.2 percent, the most since July 31, bringing its retreat in 2014 to 1.5 percent. The Standard & Poor’s 500 Index ended the U.S. day down 0.1 percent, with technology shares leading declines with a 0.6 percent drop. The Dow Jones Industrial Average added 0.3 percent as energy shares rebounded.
Yesterday saw a bit of weak bull and I expect that we will see the same today. The daily pivot is 6797 so we have support there, and the bulls will need to break 6820, the most recent high, to push on to the top of the 10 day Bianca channel at 6832. I expect that we may see a dip there, probably down to the pivot. Generally its all treading water prior to the vote so not really the best trading conditions. Above 6832 we have the next resistance at 6864. Don’t think it will be bullish enough to reach that level though as it will also need to break 6850 where we have the top of the 10 day Raff!
Support wise, below the pivot we have the bottom of the 20 day Bianca at 6789 and the 10 day at 6766. I expect that the 20 day will hold if tested.
Generally I am thinking a rise then a dip today, but again, limited downside and a slow drift up.