Well the FTSE is turbo charged at the moment (and other indices, all on the hopes of further stimulus – they do realise that it has to come from somewhere right?) – and looking like opening at 5870! You can see what I meant yesterday in that the 20 day Bianca channel, that is usually pretty good, is not acting as resistance much at all. The faint glimmer of hope for the current bears is that the price is now entering some areas of resistance on the daily chart and also, the market in technically “due” a pull back. Yesterday’s analysis was good for the morning session, but then the afternoon was a lot more bullish than I was expecting. That said, despite the FSTE rising, the Dow stayed around the 13200 area and the S&P around 1400. To continue moving higher the longs are going to have to cough up for their shares soon, and therefore that might be a catalyst for the pullback – they might not want to so will start closing positions.
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark index extending a three-month high, afterChina’s inflation slowed a fourth month and industrial output missed estimates, boosting the case for more stimulus.
The MSCI Asia Pacific Index (MXAP) gained 0.8 percent to 121 as of 2:36 p.m. in Tokyo, with almost three stocks rising for each that slid on the measure. Shares have added 3.5 percent in the previous three trading sessions.
“There’s expectations policy makers may add stimulus globally, allowing investors to hope the economy will rebound,” said Tomomi Yamashita, a senior fund manager at Shinkin Asset Management Co. in Tokyo, which oversees $6.6 billion.
The Asia-Pacific gauge retreated 6.9 percent from a Feb. 29 high through yesterday as Europe’s deepening debt crisis and slower growth in the U.S. and China damped the outlook for global demand. Materials and energy stocks have led declines among the index’s 10 industry groups during the period.
Buy Buy Buy. Go long and come back tomorrow. Unfortunately that’s what we should have done last week but hey ho. Trends are still up at the moment, but I am still expecting a pull back. This rally is all built on the hope of stimulus – if that isn’t as wide ranging or as much as the markets want then we will drop. That seems to be the only logical reason for the bullishness at the moment. Of course politicians are happy for it to rise while they don’t actually have to do anything so will maintain this promise for as long as possible. As I mentioned above the long positions are going to have to start thinking about buying their shares soon. We just need a newspaper headline with “is now the time to buy shares” and then the bull run will be complete and it will head right back down! Usually just after its squeezed every penny out of the bears. Today’s pivot is 5830 and we have the gap to yesterdays close at 5845, so I expect that we might see a bit of a drop on open to hit that pivot area. Previous resistance at 5825 will now in theory become support. As you can see on the daily chart we are also nearing some resistance areas, with the first one around this 5870 area. I have plotted my thoughts with the arrows below – these seem to be fine for the morning sessions at the moment but by the afternoon they are out of kilter! That was certainly the case on Tuesday and Wednesday! Maybe that’s the US getting involved with the FED pulling some strings? All that said, this overnight rise seems a bit overdone for that Chinese data which was pretty much on a par with expectations. Tricky!