Morning all, today is the big Fed day with the news out at 7pm but more importantly Ben Bernanke’s press conference at 7:30pm. Maybe the future of QE will be mentioned and everyone will know where they stand rather than the flip flopping about on the will they won’t they shambles. I imagine that they will keep it as is for the moment and they won’t be tapering. QE Unlimited was sold to everyone with the aim of reducing US unemployment below 6.5%, we aren’t there yet and unless they lied about its reason for being then it should remain as is.

Generally for today I am thinking up down then up again pattern for today. Yesterday was a trifle weird, Draghi’s comments not helping my short by making them just after I entered – typical! That saw the FTSE get a bit of a turbo boost on ended up nearly hitting the 6400. However the drop at the end of the day looked a little suspicious so I expect that we will see an initial rise this morning. We are in the slightly interesting situation where the price is above the 20 day Bianca channel which is pretty rare, suggesting a little overbought. The top of the 10 day Bianca channel is not far away at 6387, however, the Raff channels also look like they might be coming into play shortly, the 20 day that was at 6420 yesterday has moved down to 6390 and the 10 day is at 6430 – also where the 25ema is on the daily. Basically we are nearing some longer term resistance levels.

Asia Overnight from Bloomberg

Asian stocks rose as Japanese exporters rallied after the nation’s shipments increased and the yen weakened ahead of the conclusion of a Federal Reserve policy meeting.  The MSCI Asia Pacific Index rose 0.4 percent to 132.29 as 12:33 p.m. in Tokyo, paring gains of as much as 1 percent. About the same number of shares rose as fell on the gauge. More than $2 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”

“The markets has been fretting over what the FOMC meeting will come out with,” Martin Lakos, division director at Macquarie Private Wealth in Sydney, told Bloomberg Television. “There’s absolutely no explicit indication at all of a change in monetary policy by the Fed until we see the unemployment rate go down to 6.5 percent. We clearly see what the Japanese government is putting in place to get the economy going.”

US Futures

Futures on the S&P 500 Index slid 0.2 percent today. The gauge climbed 0.8 percent yesterday to its highest level this month as investors awaited the outcome of the Fed meeting for clues on the central bank’s plan for stimulus.

“As there was market turmoil on concern about tapering in the U.S., I think the Fed is going to try to bring some calm,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-biggest lender.

Outlook

ftse 100 prediction

As mentioned above I expect today will be an up, down then up again day. Today’s pivot is 6360 which has held as support overnight and while I have been writing this email we have already added 15 points, to nearly test the 10 day Bianca channel at 6387. However 6415 is the main area that I am looking for a rise too, before falling back, possibly as far as 6346, if the 60 pivot level breaks. Its going to be a pretty choppy day and another tricky one to trade with the Fed meeting. While I am thinking about it, this Friday is a quadruple witching day with option expiry so will be really choppy mid-morning too. As you can probably tell this week is a hard one to trade and in all fairness probably a good one to take off and come back next week! For the S&P I am thinking its going to test the 1660 level before dropping back, whether the FTSE can get to the 6415 at the same time the S&P hits that we shall see, but from there a drop back to 1648, which is previous support and its daily pivot, before climbing again to 1680. Stay nimble today, keep the stops close trading off these levels and let’s see what Ben says later on.

Just to confirm, my planned trades are:

• Possible early long at 6370, if we dip from 6387 (where we are at time of writing)
• Short 6415, target 6361 (though might dip to 6348)
• Long 6348 (bulls must hold 6327 though if we do dip), target 6478 (might take till tomorrow to hit that level but depends on Fed – not change to QE could see it hit tonight)

stop of about 20 points on both

Morning all, Monday turned into a tricky one in the end – all looked to be bullish and going according to plan, 6365 broke but then snapped back and then fell right back, with a quick spike down around 7pm to just below 6300. I should have trusted the 20 day Bianca channel more which had a top at 6366 – and gone short. It did look strong at the time though and was looking favourable for a run to 6400. Just goes to show, you never can tell 100%.  A few comments I have read are saying the markets can get a  bit jumpy when the G8 meetings take place so that’s probably why. For today the Raff channels have resistance around the 6400 area. The S&P was giving some clues and I am thinking another dip on that to the 1620 area before a possible bounce. So for today a bit of a V shape. As I mentioned yesterday its going to be a volatile week as the Fed meet today and then Ben is speaking tomorrow

Asia Overnight from Bloomberg

Asian stocks dropped, with the regional benchmark index heading for its first decline in three days, as Chinese developers fell on concern gains in home prices will limit scope for monetary easing.  The MSCI Asia Pacific Index fell 0.3 percent to 132.02 as of 12:43 p.m. in Tokyo, reversing earlier gains of as much as 0.3 percent. About six shares dropped for every five that rose on the gauge. The measure declined 1.8 percent this month through yesterday amid concern central banks are losing appetite for more economic stimulus.

“We will see continuous volatility amid concern the Federal Reserve will soon taper stimulus,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “A withdrawal would be an issue for companies seeking financing. Liquidity is quite tight in China. The Chinese government isn’t bent on growing credit. It’s quite tough as they attempt to reduce the housing bubble and excess capacity in other industries.”

About $2.7 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”

US Futures

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge climbed 0.8 percent yesterday as investors watched economic reports for clues to whether the economy is strong enough to allow the Fed to scale back its $85 billion in monthly bond buying. Confidence among U.S. homebuilders surged in June to the highest level seven years.

Outlook

ftse 100 prediction

Today’s pivot is 6336 and that is also the top of the 200 day Bianca channel, which ended up holding yesterday in the end. I expect that todays will see a V shape with an initial decline (watching the S&P to hit 1620 or just below before turning up). The bulls really need to take and hold 6370 on the FTSE to have a chance of pushing higher but everyone is on tenterhooks to see what Ben’s speech tomorrow brings. This morning I will be staying short, as yesterday’s bullishness didn’t last. The market lacks a bit of direction presently and is hovering up stops. On the daily we have the 10ema at 6346 so a stop above that, if taking the short at 6336 should be fine. I think a decline to 6307 is on the cards, possibly further and the bulls will defend 6280. That level might tally with 1620 on the S&P, but the S&P will need to dip below 1635 for that to become a viable target.

A lot hinges on tomorrows Fed announcement and I think today and tomorrow will be fairly choppy leading up to that – I do think the market has a slight bullish slant for the time being but participants are just wary about doing too much too soon. this is reflected in relatively low volumes so far this week.

Morning. The big news this week is the Fed meeting outcome which may provide some clarity on the future of QE and finally put paid to the will they won’t they rumours of QE tapering. After the sharp falls on just the rumour its possible that we will continue as is for a while, though with Ben Bernanke nearing the end of his tenure he might be forced into a decision that he might not want. The Bianca chart still paints a pretty bleak picture in terms of the trends and with the channel tops at around the 6350 area but the bottoms at 6150, the bulls really need to get a move on if they are going to wrestle control from the bears. I thought they might try last thing on Friday but it all stayed fairly flat, though we are looking at an opening level around 6320ish this morning, so a little rise since Friday evening. A reason for a bit of optimism is the daily Raff channel for 10 days which has finally levelled off after declining for a couple of weeks. This is putting in a bottom around the 6240 area. I feel that if the FTSE has a weak starts and breaks 6290 then is likely we will see that 6240 level. If that breaks though then the 6150 Bianca areas would be the next support area. However, I feel that we may be in for a rise this week, possibly back to 6500 or higher. I am therefore maintaining a slightly bullish bias for the moment.

Asia Overnight from Bloomberg

Asian stocks rose and the yen retreated after its biggest weekly advance in four years as investors awaited this week’s U.S. Federal Reserve meeting and weighed prospects of reduced economic stimulus. Corn declined and natural gas rebounded. The U.S. Federal Open Market Committee meets this week, and may provide clues on when policy makers will begin curtailing quantitative easing. India’s central bank is expected to keep its repurchase rate unchanged at a review today, while European data on the region’s trade balance is due today after March’s record surplus. Almost $3 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 that U.S. policy makers may curb stimulus if the job market improves.

“The key event, front and center, for markets is going to be the FOMC rate decision this week,” said Chris Green, an Auckland-based strategist at First NZ Capital Ltd., a broker and wealth management company. “The Fed will probably make some comments to calm the volatility we’ve seen. It’s likely to stick to the September timeframe for withdrawing some stimulus, but if there’s any indication that the Fed will withdraw stimulus sooner than expected, then we will see a big reaction.”

Lower Volumes

Investors have been watching U.S. data to assess whether the recovery in the world’s largest economy is strong enough to warrant a scaling back of the easing programs. Bernanke is scheduled to speak after the two-day FOMC meeting.

“U.S. growth and policy expectations remain a key driver,” Michael Kurtz, head of global equity strategy at Nomura Holdings Inc., Japan’s largest broker, wrote in an e-mail. “Lower trading volumes betray a growing wait-and-see approach by many investors, with focus now on the upcoming FOMC” meeting.

The S&P 500 fell 0.6 percent June 14, sliding 1 percent in the week, after the International Monetary Fund cut its forecast for U.S. economic growth in 2014 to 2.7 percent from 3 percent and said any tapering of Fed support needs to be handled properly.

More than $500 billion wiped off the value of U.S. stocks is providing opportunities for investors who remember that equities tend to rise when the Fed begins reducing stimulus. The S&P 500 (SPX), which has fallen 2.5 percent from its May 21 record, rallied an average 16 percent over two years the last four times the central bank started raising interest rates, according to data compiled by Bloomberg.

Outlook

ftse 100 prediction

As mentioned above this is a fairly key week for the bulls and personally I am keeping a slightly bullish bias, I expect a decent rise over the course of this week. The FTSE is back above 6310, and if it can hold this level I have 6460 and 6531 on the radar as potential targets this week. In the run up to the Fed meeting, buy the dips is the order of the day (that old chestnut again!). Certainly opening the charts this morning paints a fairly optimistic picture – the 30 minute looks fairly happy and in a bullish EMA mode, the 10 minute is also quite happy with the shorter EMAs (5 versus 34) showing a nice steady rise since Sunday night, tracking a more optimistic Asia. The Nikkei is up 2.5%, but most of all, we are due a bounce! The S&P hit the 1599 level last week but since regained a lot of ground now back at 1634.

Today’s pivot level is 6314 and I expect that to hold as support today.

Initially I see a rise to 6360 this morning, maybe after a very quick dip to the 6314 pivot area (a fast spike I think) – we are obviously near the top of the Bianca channels here as well so the bulls are going to have to push quite hard to test these – if they can breach these then 6460 should be easily achievable tomorrow or Wednesday. Resistance level 1 is 6337 so there may be an initial stutter there, though early signs from 7am till now are looking bullish. If we do test the 6365 then there will be an inevitable dip but I feel that the bulls might be a bit stronger this week. Any dips to the pivot should be a great long opportunity.

Morning all. Well what a day yesterday – we got the bounce as expected from the 6200 area rising to our 6240 target, then the dip started, but halted at 6215 before rising for the rest of the day – and rise it did, getting all the way to 6350. Quite a turnaround when you consider that there weren’t any bulls around on Wednesday night! Makes the drop look like it was purely a massive stop killing exercise to get any “buy the dip” people that started going in around 6500. Wouldn’t surprise me if we get a decent rise for the rest of June now. We are back above the bottom of the 50 day Bianca channel now, as expected. The Raff channels on the daily chart are presenting me with an interesting picture though – we are currently above the 10 day which is very rare and not far off the top of the 20 day at 6380ish. With an overnight high at 6350, and then a slight dip back to 6337, I think today might be fairly flat and any rallies up towards 6380 might see some bearishness. I think the bulls will be back next week. The bounce was to be expected yesterday, especially as the S&P hit 1599 – however the US data later on wasn’t bad so that helped too, though as is often the case the news fits the price action – i.e. good news and if the market dropped they would have just said something like “on continued fear of QE tapering” etc. That’s why focussing on the charts are more important than the news.

Asia Overnight from Bloomberg

Asian stocks climbed, after the regional benchmark index yesterday erased this year’s gain, as U.S. economic data beat estimates and on concern eased that the Federal Reserve will reduce record stimulus.

Japan’s Nikkei 225 Stock Average and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose after entering a bear market yesterday.

The MSCI Asia Pacific Index rose 1.2 percent to 130.69 as of 12:52 p.m. in Tokyo, heading for a 0.2 percent gain this week. The gauge yesterday closed at the lowest since Dec. 27 after dropping more than 10 percent from a May 20 high, meeting some traders’ definition of a correction, and erasing $1.06 trillion in value.

“You get good data plus reduced fear about a premature rate hike from the U.S. Federal Reserve, and that helped the U.S. share market and that’s helping Japanese and Asian markets today,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has $126 billion under management. “Look at the underlying global growth dynamics and they remain favourable.”

Bear Market

The Hang Seng China Enterprises Index gained 0.4 percent after yesterday capping a 21 percent decline from this year’s high to enter a bear market. Hong Kong’s Hang Seng Index climbed 0.9 percent, while the Shanghai Composite Index was up 0.2 percent. Taiwan’s Taiex Index fell 0.3 percent. Singapore’s Straits Times Index gained 0.8 percent.

U.S. Data

Futures on the S&P 500 lost 0.2 percent after the gauge added 1.5 percent yesterday, the biggest gain since January, when reports showed retail sales climbed the most in three months and the number jobless claims dropped by 12,000 last week. The Wall Street Journal reported that the Fed may “push back” on market expectations of higher interest rates.

Outlook

ftse 100 prediction

Well here we are at another freaky Friday after quite a week! Hit 6360 today and its as if Wednesday never happened… Anyway, today’s pivot is 6273 – which should provide support. Overnight has held up well off the back of the decent Asia session, however as mentioned above I expect some resistance at 6380 which is the top of the 20 day Raff channel. It’s a bit dodgy that we are above the 10 day Raff, suggesting that the bounce might be a little overdone. However I still remain bullish for the remainder of June. The Fed aren’t going to taper QE any time soon, they are just testing the market reaction with the “rumours” and as we have said all along its still on a knife edge and economies are flat lining.  I am not sure that we will see so many bears today to drive down to that pivot and I expect a fairly flat day, though with a slight bullish edge to probably test that 6380 area. The 10 day EMA is also at 6383. So I think a short at around that level could pay off and would expect bulls still holding from 6200 to book some profits at around that level.

As I have been writing this IG did a quick spike down to 6325 from 6340 which looks like it might have been to take out some stops as its bounced back to 6343 almost instantly.

Fib lines plotted against yesterday’s high and low, give support areas at 6315 (23.6%), 6292 (38.2%) and 6274 (50%) the latter is also the daily pivot. Trends on the 30 minute chart are still bullish looking at the EMAs, as is the 10 minute chart, so I expect the day to start off alright and see some bullish action.

So, short at 6380, stop above 6400 target 6325 and a long at 6325, stop below 6315 are my 2 plans for today, but as its Friday I’ll just caveat that with a word of warning to stay nimble and if those trades don’t start going into profit quite soon after entering, cut and run!

Bigger picture

On a longer term picture, the 6200 level is the line in the sand now – if that breaks then 5985 or lower, possibly the 5900 mentioned a few times is distinctly possible, but I expect that later in the summer. However, for the moment while we are above 6325 I expect we will remain bullish for June and soon be back at 6500.