Good morning. 6920 held for a brief moment, but it dipped down to the lower support at 6905 in the end, which then saw a bit of a bounce. Breaking below that 6920 makes things look a little weaker for the short term. I think we might see the 20 day Bianca at 6878 today, as there was no clear direction yesterday. Yellen repeated in her second day of testimony to U.S. lawmakers that inflation and wage growth remain too low to warrant rate tightening at the Fed’s next meeting.

US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks swung between gains and losses as consumer stocks and utilities declined and energy shares rallied after a surge in oil yesterday.

The MSCI Asia Pacific Index gained less than 0.1 percent to 146.25 as of 9:15 a.m. in Tokyo. The measure climbed to its highest level since Sept. 11 yesterday after Federal Reserve Chair Janet Yellen indicated an increase in interest rates is unlikely before mid-year. Yellen repeated in her second day of testimony to U.S. lawmakers that inflation and wage growth remain too low to warrant rate tightening at the Fed’s next meeting.

“While fears of an earlier-than-expected hike in U.S. interest rates have been calmed, valuations in many markets are starting to look stretched,” Michael McCarthy, chief strategist at CMC Markets in Sydney, said by phone.

The regional benchmark index traded at 14.6 times estimated earnings at Wednesday’s close, the highest since March 2013, according to data compiled by Bloomberg.

Japan’s Topix index gained 0.2 percent. South Korea’s Kospi index slid 0.2 percent. Australia’s S&P/ASX 200 Index lost 0.4 percent. New Zealand’s NZX 50 Index was little changed after closing at a record high yesterday. Markets in China and Hong Kong have yet to open.

Brent crude surged 5.1 percent in London on Wednesday as Saudi Arabia signaled stronger demand for oil, countering a rise in U.S. stockpiles.

Futures on the Standard & Poor’s 500 Index were little changed today. The U.S. equity benchmark lost 0.1 percent yesterday, while the Nasdaq Composite Index halted its longest rally since 2009. Hewlett-Packard Co. tumbled the most in 18 months after saying earnings will be hurt by dollar gains, while Apple Inc. slid 2.6 percent.[Ref]

FTSE Outlook

FTSE 100 Prediction

FTSE 100 Prediction

After yesterdays price action and the break with the 3rd test of the 10 day Bianca channel, I am feeling a bit bearish now, especially if 6904 breaks today, as then I expect we will test the bottom of the 20 day Bianca at 6878 – a level that is likely to see a bounce. As with the 10 day channel test, 2 times it will bounce and then probably break through on the 3rd test. If this level holds on the first touch today then we could get a decent bounce back to 6938 and higher – the top of the Bianca channels are 6977/6987. 6886 is also the bottom of the 10 day Raff so couple of decent supports around this area. If the bulls do their thing today though, then they will need to break 6938, which will lead to the top of the Bianca’s – 6977 to start. Bit of a slow day yesterday so pausing for breath. Todays pivot is 6936 so I think an initial short here for a dip down to the 6878 level is worth a go.

Good morning. Nice hold of the 6902 level for a slightly slow run to 6955 late in the day, and it stalled around there as expected. The bears were not quite as vicious from that level as I expected, dipping to 6930 before a slight bounce. The bears weren’t helped by Yellen saying that interest rate rises were unlikely till at least mid 2015. The trends are of course still up, with support for today at 6920 initially.

US & Asia Overnight from Bloomberg
(Bloomberg) — Asian stocks gained, with the regional benchmark extending a five-month high, after Federal Reserve Chair Janet Yellen indicated an increase in interest rates is unlikely before mid-year.

The MSCI Asia Pacific Index climbed 0.3 percent to 145.82 as of 9:01 a.m. in Tokyo after closing at its highest since Sept. 12 on Tuesday. The Standard & Poor’s 500 Index advanced to a fresh record after Yellen told the Senate Banking Committee that wage growth remain too low even as the job market improves, and signaled that a change in the Fed’s guidance on interest rates won’t lock it into a timetable for tightening.

“Equities are slightly fully priced but aren’t unduly expensive,” Angus Gluskie, managing director at White Funds Management in Sydney, where he oversees about $550 million, said by phone. Yellen’s statement “doesn’t alter anything from our perspective as investors. We’re not yet in a fully synchronized global recovery but broadly most economies are developing in a right way. There are black spots. Chinese economic activity has been a concern.”

Japan’s Topix index added 0.3 percent. South Korea’s Kospi index advanced 0.7 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent. New Zealand’s NZX 50 Index jumped 1.4 percent as it headed for a record close.

Markets in Hong Kong and China have yet to open, with mainland markets resuming trading following the Lunar New Year holidays. A preliminary gauge of China’s manufacturing due today from HSBC Holdings Plc and Markit Economics is expected to signal a third month of contraction.

Energy shares were the only group to decline on the MSCI Asia Pacific Index after West Texas Intermediate oil posted the longest losing streak since August. U.S. crude stockpiles are expected to have swelled by 4 million barrels last week from a record, according to a Bloomberg survey ahead of the official government report Wednesday.

U.S. Futures
Futures on the S&P 500 were little changed. The U.S. equity benchmark climbed 0.3 percent yesterday to a fresh record high. The Nasdaq Composite Index added 0.1 percent, climbing for a 10th straight day to bring it within 1.6 percent of its 2000 record.

Yellen repeated that the Fed’s pledge to be “patient” on beginning to raise the benchmark interest rate means an increase is unlikely for “at least the next couple” of meetings.

Euro-area finance ministers agreed to extend a bailout program for Greece after the government said it would undertake measures including a revamp of tax collection. International Monetary Fund Managing Director Christine Lagarde said Greece’s policy proposals fall short on key changes and may not meet the lender’s benchmarks for aid to continue.[Ref]

FTSE Outlook

FTSE 100 Prediction

FTSE 100 Prediction

6935 is the daily pivot for today so initial support is at this area, and is in fact the after hours low so far, Below this then the bottom of the 10 day Bianca at 6920 looks to be worth a long. Below 6905 sees the bottom of the 20 day Bianca at 6864 being tested, and a sign that maybe the current rise is running out of steam. Above 6960 (most recent high) sees the top of the Bianca’s 6973/77. A break out from here would likely reach 7000ish, either stalling at 6992, or overshooting to 7020 where we have the top of both the Raff channels. Worth a short here….

I shorted the 6954 area yesterday but it really hasn’t done too much, though I expect a test of 6920 today. From here I think we will get a bounce back up as the 10 day Bianca has been holding quite well this week. If it does break (as indeed it might, being the 3rd test of that support), then 6905 is support, with 6874 bottom of 10 day Raff and then 6864 below that, followed by 6849 where we have the 25ema on daily that still hast been tested and should hold as support if we are going to push higher. I’m just going to go for the 2 trades in the trade plan below and see how it pans out.

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