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Good morning. Yet another trending day yesterday, but stopping just short of the Bianca channel top at 6804 (6802 high). Its dropped back a little from there but with todays pivot at 6775 some initial support at this level is expected. Gold faired a bit better with that 1304 support level getting hit, slightly overshot then a decent climb back of 10 points. Russian sanctions continue, oligarchs move assets out of London and the question is whether Russia will restrict gas supplies in retaliation….

Apple results were out yesterday, Q3 just beat at $1.28 versus $1.23, but talk of an exciting pipeline and China doing well kept the S&P at around the 1980 level.

The 10 day Bianca channel is still heading up, with resistance at 6830 for today, near the 20 day at 6844 as well. Unless it dips below 6715 it looks like we might stay bullish now. Topsy turvy isn’t it!

Asia Overnight from Bloomberg
Asian stocks rose, with the regional index extending gains from a six-year high, as reports bolstered the outlook for the global economy and BHP Billiton Ltd. advanced amid increased iron-ore shipments. Indonesia’s rupiah touched the strongest since May, while crude oil fell.

The MSCI Asia Pacific Index added 0.4 percent by 1 p.m. in Tokyo, rising a third day. BHP, the world’s biggest miner, climbed 1.6 percent while Chinese shares in Hong Kong headed for their biggest two-day rally since March. Standard & Poor’s 500 Index futures were little changed. The rupiah gained 0.9 percent after Joko Widodo won the Indonesian presidential vote. Australia’s dollar jumped 0.4 percent after inflation accelerated more than economists estimated. Oil in New York lost 0.4 percent.

U.S. price growth slowed month-on-month, data yesterday showed, reducing chances for an earlier-than-anticipated increase in interest rates. Chinese equities are surging amid speculation the government will do more to boost expansion and shore up the property market, even as the country may face its second onshore-bond default. The European Union weighed limiting Russia’s access to capital markets as a train carrying bodies from flight MH17 arrived in Kharkiv, Ukraine.

“I don’t think the Federal Reserve is in a hurry to raise interest rates anytime soon given the low inflation data,” Toby Lawson, head of futures, options and cash equities trading for the Asia-Pacific region at Newedge Group SA in Sydney, said by phone. “The market was spooked last week by a potential escalation of the conflict in Ukraine, but such concern probably has eased off a little bit.”

The U.S. inflation rate was 0.3 percent in June from a month earlier, down from 0.4 percent in May. In another report yesterday, sales of previously owned U.S. homes climbed in June to an eight-month high, a sign the housing market is making more headway. Federal Reserve Chair Janet Yellen has also said benchmark rates will be kept low for some time after the end of the central bank’s asset-purchase program.

The extra yield on 30-year U.S. Treasuries over five-year notes narrowed to the least since February 2009 yesterday. The Bloomberg Global Developed Sovereign Bond Index (BGSV) climbed to near the highest this year yesterday as investors assessed reaction to the downing of a Malaysian plane in Ukraine and conflict in the Gaza Strip.

The EU yesterday threatened to restrict Russia’s access to capital markets and sensitive energy and defense technologies unless President Vladimir Putin expedites a probe into the downing of the Malaysia Airlines plane, which was shot down over eastern Ukraine last week killing all 298 on board.

The arrival in the Ukrainian city of Kharkiv of a train carrying victims’ remains ended days of demands that pro-Russia rebels in the former Soviet republic release the bodies. They are being prepared for transport to the Netherlands.

FTSE Outlook

FTSE 100 Prediction

FTSE 100 Prediction

Todays pivot is 6775, pretty much were we are after the drop off the 6802. Its not overly clear what direction it will go in today however, I am thinking that we will test the top of the Bianca channel 10 day at some point – 6830. The charts look fairly positive still but i wouldn’t be surprised to see a dip first today. The key level for the bulls is 6715 – as long as they can keep the price above that then the upward potentials remain intact and the FTSE can push on to 6844 and maybe even 6940!

However, looking at the S&P it looks like yesterday high at 1986 marks the top of the rise for the moment and may drop down through 1977, breaking through that would confirm and see a dip to 1972 – reflecting a dip in the FTSE today. I seem to be front running the FTSE with my analysis by 24 hours at the moment (maybe just as its the slow summer season) so I was thinking long Monday (it was short) short yesterday (it was long) so by that logic today should be a short day as everyone seems to be bullish!

I think if the pivot breaks then we will see 6724 – bottom of the 10 day Bianca, but its likely to hold as initial support. As mentioned above 6715 is key – if the bears break that then there is likely to be a bigger drop.

Good morning. Well that dipped a bit further than I wanted it to yesterday, finding support at around that 6715 level I mentioned that the bulls had to defend. Unfortunately it meant the earlier longs got stopped out (from 6730). The rhetoric continues over Russia and MH17, with increased sanctions looking like the only recourse. With that support holding the bulls need to break 6757 now, though the top of the Bianca channels are hoving into view, being at 6804 and 6831.

Asia Overnight from Bloomberg
Asian stocks rose, with gains in Tokyo and Hong Kong propelling the regional index toward a six-year high, while government bonds rallied with oil. Indonesia’s rupiah strengthened before election results.

The MSCI Asia Pacific Index added 0.6 percent to 147.71 by 1:35 p.m. in Tokyo, heading for the highest close sinceJune 2008. (MXAP) Japan’s Topix index rose 0.8 percent while a gauge of Chinese shares in Hong Kong jumped the most in two months. Standard & Poor’s 500 Index futures gained 0.1 percent after the U.S. gauge retreated 0.2 percent. Australian and New Zealand bond yields fell at least three basis points. Oil climbed 0.5 percent. The rupiah gained 0.5 percent.

Rebels in Ukraine’s east began releasing the bodies of the 298 people killed in the shooting down of a Malaysia Airlines passenger jet last week as European foreign ministers meet to discuss sanctions against Russia today. Chinese shares are rallying as some cities reduce property-market restrictions amid speculation that the central government will do more to support growth. In the U.S., inflation is projected to come in unchanged at 2.1 percent for June, while Apple Inc. (AAPL)and Microsoft Corp. report earnings.

“Markets will start ignoring what’s happening in terms of geopolitics,” Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion, said in an interview in Sydney. “As sad as it sounds and as tragic the shooting of the plane and loss of life, the broad impact on economic activity is likely to be quite minimal. The broader focus in markets is likely to be economic fundamentals and the earnings season.”

Recovery Progress
U.S President Barack Obama urged a diplomatic solution to the crisis in Ukraine and Malaysian Prime Minister Najib Razak said pro-Russia rebels had agreed to hand over bodies and grant access to the jet’s debris. The insurgents are accused of shooting down the Malaysian plane last week.

The Australian dollar strengthened 0.1 percent to 93.85 U.S. cents. The Group of 20 nations’ growth pledge could “considerably help” revive activity, Reserve Bank of Australia GovernorGlenn Stevens said in a speech that didn’t directly address his nation’s economy or currency.

West Texas Intermediate crude oil advanced 0.5 percent to $105.15, the highest level since July 2, while Brent added 0.2 percent to $107.22. Crude inventories probably shrank by 2.8 million barrels last week, according to a Bloomberg News survey before a report from the Energy Information Administration tomorrow.

Indonesia Election
The rupiah strengthened for a fifth day as unofficial election tallies put Jakarta Governor Joko Widodo on course to become Indonesia’s first leader without ties to the Suharto era. Indonesia’s currency strengthened to 11,518 per dollar after touching 11,505, the strongest since May 21, according to prices from local banks compiled by Bloomberg.

The Jakarta Composite Index, Asia’s second-best performing emerging-market stock measure this month, was little changed. Official results from the election are scheduled to be released at 3 p.m. local time. Outgoing President Susilo Bambang Yudhoyono, whose term ends in October, has urged supporters on both sides to remain calm following the vote.

FTSE Outlook

FTSE 100 Prediction

FTSE 100 Prediction

With that support area at 6715 holding yesterday the bulls have taken advantage and prices have risen to the resistance area at 6757 now (channel on the 10 minute chart), though looking at the 30 minute, I think 6765 and possibly 6777 look likely upside targets. Todays pivot is 6733, so there could be some initial support there today, again that tallies with the 10 minute channel. There is a case for it to head down from these resistance areas, possibly to a double bottom at 6716, though the bottom of the 10 day Bianca channel at 6694 looks more likely for a support base to form. As such, I think shorts off the resistance area could come good today, but as its quite volatile presently, i think wider stops and smaller stakes are better, so that you don’t get (a) stop hunted and (b) stopped out on slight over reaction and movement through levels. For example, the longs yesterday would all have come good, just needed a bit more breathing room as the FTSE is following the arrows, but just moving past the turn points.

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