Japan’s Topix neared a 10% decline over the past 2 sessions, dropping a further 3.3% today, after seeing a gain of 3.3% at one point. Again all stimulus related, with Kuroda saying that the BoJ has announced enough stimulus. The markets are like a drug addict while stimulus is flowing and one that stops…… will the economies be strong enough to support themselves – based on these drops – not at the moment.

Asia Overnight from Bloomberg

Asian stocks fell, with the region’s benchmark index set for its biggest weekly loss in a year, as the yen strengthened after Bank of Japan Governor Haruhiko Kuroda said the central bank had announced sufficient stimulus. The MSCI Asia Pacific Index slid 1.7 percent to 136.29 as of 1:46 p.m. in Tokyo as Australian banks also headed for the largest weekly drop in a year. The gauge is heading for a 4.4 percent decline this week, the most since May last year. Japan’s Topix Index reversed an earlier 3.3 percent gain to fall 2.7 percent after Kuroda’s comments. It plunged 6.9 percent yesterday. Japan’s Nikkei 225 Stock Average (NKY) lost 2.8 percent after plummeting 7.3 percent yesterday.

“Investors are scared,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “We have just had Kuroda speaking and all we got was a re-read of the script he used earlier in the week. They are scared that the BOJ doesn’t have a longer-term plan, which may mean that the megaphone economics of talking up a recovery is just that — talk.”

U.S. Futures

Futures on the S&P 500 Index lost 0.2 percent today. The gauge yesterday fell 0.3 percent, the first back-to-back drop in a month, as a contraction in Chinese manufacturing offset American housing data and investors weighed Federal Reserve stimulus comments.

Outlook

ftse 100 prediction

Somewhat bizarrely I feel like we may see a climb today, especially if we can break 6723. Overall on longer timescales I am bearish, but for today I feel like we may see a bounce. Today’s pivot level is 6731 so a test of that would be good, then fall back to the 6723 area that acted as resistance yesterday (and scuppered my long as those of you in the live room will know!) before pushing on towards 6780. I am watching the S&P for a possible climb towards 1665ish. If we drop back to 6770 early on and thus test the 20 day Raff channel a second time then a long here could be fruitful, but keep the stop tight. As its Friday it could really do anything!!! Despite these declines this week, the daily chart isn’t bearish, with the EMAs and trends still up, however, I think we might have seen the short term top at 6880, and the highest we might possibly get on the next leg up being 6830. If so that would set a lower high and we can then start the declines into the summer. With the recent volatility, support and resistance zones have widened considerably (as expected as the channel lines were narrowing like mad on Wednesday, prior to the large drops) and S1 today stands at 6623 (also the bottom of the 10 day Raff). R1 is 6805 which I would be very surprised to see today.

I am going to be a bit optimistic today and think that we may see 6780. This is dependent on 2 things – 6770 holding as support (if tested, don’t think we will get that low), and the US S&P pushing on to 1665ish (currently 1652 at time of writing). So a risky bias for the long side for today, but stay nimble as its Friday (and before a bank holiday weekend). I might venture a small long at 6695, but if it doesn’t bounce there, then cut quickly and look to try another long at 6675. If we do get 6780 then shorts there. Do the UK traders have enough oomph to get the FTSE to that level before the US opens?!

Asia Overnight from Bloomberg

Asian stocks declined, with the regional benchmark index heading for its biggest drop in five weeks, after China’s manufacturing output unexpectedly contracted and amid speculation the Federal Reserve may soon wind back stimulus.

The MSCI Asia Pacific Index declined 1.1 percent to 141.87 as of 11:56 a.m. in Tokyo, heading for its biggest drop since April 18. Almost four shares fell for each that rose on the gauge. The measure surged 11 percent this year through yesterday as Japanese shares rallied and the U.S. economy improved. Fed Chairman Ben S. Bernanke said yesterday that prematurely withdrawing quantitative easing would put the U.S. economic recovery at risk.

“The market is negatively reacting to Bernanke’s comments and disappointing manufacturing data from China,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “Investors should use this as an opportunity to accumulate stocks. China’s economy will probably grow a bit faster in the second half as the economies of the U.S. and Japan improve.”

Ben Bernanke

Federal Reserve Chairman Ben S. Bernanke and his fellow policy makers, expressing concern that federal budget cuts are blunting the recovery, signalled little appetite for reducing record stimulus without what he called “real and sustainable” progress in reducing unemployment.

“What we are looking for is increased confidence that the labour market is improving and that that improvement is sustainable,” Bernanke told lawmakers yesterday. “And as we see that, we will in steps respond to that by reducing the amount of accommodation in a way that’s appropriate.”

Outlook

possible ftse scenario

Normally I would say that the daily pivot should act as support but its at 6832 for today – 100 points higher than were we are looking at opening after a lot of selling overnight since the market close. Most support have been blown, with just S3 at 6695 remaining for today. I mentioned the 50 day Bianca channel a few times in recent emails and said that we don’t usually stay above that level for more than a few sessions – this price action has now brought us back within it and also below the other channels – now at the other end of the scale. Prices will probably stabilise and get back within them over the next few sessions. For today, its going to be messy. The bulls have a big job to go for the gap close but may well try. However my stance is now “short the rallies” – I have felt that the rally was running out of steam for a while, though 6880 was a little higher than I was expecting, though you could consider the rise to that level a spike/blow off top/last hurrah. We have decent support according to the ProTrend line at 6725 – bulls will see this as a buying opportunity.

For the moment, after such a decline, all my indicators are on “sell” – EMAs etc – however, with an opening gap of -100 as at 7am I expect a little bounce initially. Will it turn into a full on bull run and recoup the decline? Probably not but the price will need to get back within the various channels and calm down a bit now – I expect that we have seen the short term high now – we might possibly get back to the 6800 area but the market does need a correction.

The market was looking for a reason to sell off and QE was always going to be it really (some unexpected disaster not withstanding) – as we saw last week with the release of the “joke” news story about QE reduction and now Ben’s testimony yesterday’s being the catalyst. I expect that the bulls will take solace in the fact that he said it will continue so until we have confirmed action to stop/reduce it the party might continue a little longer.

The key level for today is if the 6725 area holds were the ProTrend line is. Its pretty rare for the FTSE to have a day with a -100 or more (though does happen), so I have gone, for the slightly risky option of suspecting that it will hold and the bulls might try and close the gap. With S3 at 6695, that is the last lien for the bulls. However my overriding sentiment is that this is the start of larger declines for the summer and I am preferring to short the rallies. Bigger picture I am expecting 6000ish in the summer, before a year end area of 7000. The bears have been sitting waiting (and getting burnt) since November so are not really going to miss an opportunity like this. Either way, its going to be choppy and messy!

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Asia Overnight from Bloomberg

Asian stocks held gains, with the regional benchmark index headed for its highest close since June 2008, after the Bank of Japan maintained its plan to expand the monetary base. The MSCI Asia Pacific Index advanced 0.3 percent to 144.47 as of 12:48 p.m. in Tokyo. Nine of 10 industry groups on the gauge climbed. The measure surged 11 percent this year through yesterday as U.S. economic data improved and the Japanese central bank took steps to counter deflation.

“The BOJ policy is maintained and the momentum rally will continue,” said Masahiko Ejiri, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about $45 billion. “Even some of the conservative pension funds are afraid that they will underperform their peers, so they are shifting back into domestic Japanese equities. We still have a long way to go with this rally.”

The BOJ affirmed a plan to double the monetary base over two years after a jump in bond yields highlighted risks associated with Prime Minister Shinzo Abe’s campaign to revive the economy. Japan’s economy grew at the fastest pace in a year last quarter as stock-market gains buoyed consumer spending.

U.S. Futures

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge climbed 0.2 percent yesterday, to a record, after Federal Reserve Bank of St. Louis President James Bullard said the central bank should continue its bond buying to boost economic growth.

Outlook

ftse 100 prediction

Today’s pivot is 6783 which should provide support on any initial drop, however I have resistance at 6810. Looking at Bianca there are a cluster of channel tops quite close, 6811,6821 and 6831. I think a short around 6810, with a stop above the furthest away so 6835 say could work ok today. We did actually see nearly the 6810 last night but after hours, hitting a high around 6805. That said I wouldn’t go so far as to say that is “the” top, but merely a slight pausing area, as the rally still seems quite strong. We are within a  channel on the 30minute that I feel will play out quite well today. Overnight hasn’t been particularly weak, and there wasn’t much bearishness off the round number 6800 – however, it will be interesting to see what happens at 6810/20 if we get there today. Initially the trends are still up so I am expecting to see that level before a test of the pivot area at 6783. With the channel bottom in that area too I expect that will hold as support as the market will try and push on for 6850. However, it does feel like the markets are struggling a little at these lofty heights so don’t fall in love with the upside just yet! The 10minute chart is flicking between bull and bear as I write this at 07:15 so its not massively clear at the moment which way it will break, but I do think a test of the top of the channel is likely.  The 30minute EMAs are bullish and the 25 EMA could provide some initial support. If the bottom of the channel breaks later on though then I am expecting a dip down to 6700 – and if that breaks then some larger downside. However, with the weak bearish action so far I think it will take some sort of unexpected news to provide the catalyst for a drop. To me it looks like the S&P is actually the one that is weakening the most at the moment, and a failure to hold above 1668 might mean another test of the 1663 area.

PS) I don’t think we will see 6850

Asia Overnight from Bloomberg

Asia’s benchmark stock index swung between gains and losses as Australian banks fell and Goldman Sachs Group Inc. sold a $1.1 billion stake in Industrial & Commercial Bank of China Ltd., offsetting a surge in Japanese utilities.  The MSCI Asia Pacific Index slid 0.2 percent to 144.09 as of 1:10 p.m. in Hong Kong after gaining as much as 0.1 percent. The equity gauge surged about 12 percent this year, yesterday closing at the highest level since June 2008, as U.S. data signalled improvement in the world’s No. 1 economy and Japanese Prime Minister Shinzo Abe took steps to counter deflation. The Bank of Japan is starting a two-day policy meeting today.

“Earnings, frankly, are still pretty lacklustre,” Hugh Young, a money manager at Aberdeen Asset Management Asia Ltd., which oversees $322 billion. “The economic climate is not great. Abenomics for us at the moment is a bit illusory and we are a bit sceptical of it.” Young was speaking on Bloomberg Television with Rishaad Salamat.

South Korea’s Kospi Index (KOSPI) slid 0.1 percent. Singapore’s Straits Times Index fell 0.6 percent, and Taiwan’s Taiex Index was little changed.

RBA Minutes

Australia’s S&P/ASX 200 Index lost 0.6 percent as the Reserve Bank of Australia released minutes of a May 7 meeting in which the central bank described this month’s interest-rate cut to a record low as “appropriate to encourage sustainable growth,” following the slowest core consumer price growth in 14 years in the first quarter, while business confidence remains weak.

US Futures

Futures on the S&P 500 lost 0.1 percent today after the U.S. equity gauge yesterday retreated 0.1 percent from a record high. Shares erased gains after Federal Reserve Bank of Chicago President Charles Evans said the economy has improved “quite a lot.” The question now is whether “improvements that have been made will continue and be sustained.”

Outlook

ftse 100 prediction

The trends are still up and today’s pivot is 6740 – pretty much were we are looking at opening. With the first test of the 10 day channel bottom (Bianca) yesterday and quite likely another test shortly as its only at 6738 I think we might be seeing some weakness coming in, if only on profit taking. The economic picture still isn’t that amazing, earnings have been supported by cost cutting and stimulus will be withdrawn at some point. The more often the bottom of the channel is tested the more likely its going to break. The Raff channel bottoms have also got a bit nearer to the price level now, 10 day at 6720ish for today, and the 20 day at 6695 – also where the 10 ema is on daily (EMAs on daily are still bullish as you would expect while the trend is up).

The 30 minute chart is fairly flat at the moment, with the EMAs not giving too much away, if the pivot at 6740 breaks then we could see 6707. We are in a  great channel on the 30 minute chart but at the midpoint – which makes it harder for me to say which way its going to go first! That’s said, I think initially we will see a rise, and if the bulls can break 6755 then we should see 6774. However, the top of the 10 day channel is then in play and we dropped off that yesterday so a second test and failure to break says to me that there is some weakness there. My preferred play today is therefore a short at around the 6770 area, utilising the 30 minute channel and also the Bianca 10 day to get that level. The 10 minute chart while I write this is bullish but needs to break 6745.

Of some hope for the bears is that we are testing the top of the ProTrend channel on the Daily chart below, (though still remaining at the midpoint of the Raff channels), last time this channel was tested the market did drop 300 points. Our flux signal on this time frame is also rather high.

News over the weekend was all pretty calm; North Korea fired 3 missiles but nothing much seemed to come of that, and in the UK some rumblings starting about the effect of QE and what the repercussions might be. BoE Governor Sir Mervyn King has done various sound bites recently and has been talking things up.

Asia Overnight from Bloomberg

Asian stocks rose the first time in three days, with a regional gauge set for the highest close since June 2008, after U.S. consumer sentiment beat estimates and Tokyo Electric Power Co. led Japanese utilities higher.  The MSCI Asia Pacific Index gained 1.3 percent to 144.48 as of 1:06 p.m. in Hong Kong. The measure surged more than 11 percent this year, led by Japanese shares, as U.S. data signalled improvement in the world’s No. 1 economy and the Bank of Japan and Prime Minister Shinzo Abe took steps to counter deflation.

“The numbers continue to confirm a recovery,” Mark Matthews, head of Asia research at Bank Julius Baer & Co., said in a Bloomberg TV interview in Hong Kong. His firm has $282 billion under management. This year’s advance in equities “will continue. It’s a steady improvement in the data and the next step is to see stronger evidence of a consumer recovery. Stocks are not too expensive.”

Gains in 2013 left the regional benchmark gauge trading at 14.5 times estimated earnings on May 17, compared with 15.1 for the Standard & Poor’s 500 Index and 13.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Outlook

ftse 100 prediction

Today’s pivot is 6706, so a little below Fridays close. I expect the gap traders will be swooping in initially so we will certainly see 6720 (Fridays close level). With the bottom of the 10 day Bianca channel at 6715 (this channel has held well recently) we could well get a bounce here, and as everyone knows, the trend is your friend, and that trend is very firmly up at the moment, so lots are now in the buy the dips mindset. We have the 2 Bianca channel tops at 6761 and 6794 which give the bulls initial target areas. I have a feeling that we will dip initially and could actually get as far as that pivot. I say that as we are hitting that ProTrend resistance on the daily (6753) which is a likely profit taking area, and the rise at the end of Friday was, in my opinion, stops being hit on shorts from 6700 (stops would be around the 6725 area I reckon).  We are still pushing the top of the 50 day Bianca channel and as mentioned previously, this tends to only remain so for a few sessions (started Thursday last week) before a move back to further away from that particular level.

While I have been typing this the 30 minute chart has given a weak flux sell signal, though the EMAs are still in bull mode, but the 10 minute chart is a bit more bearish (but weak bear). I do think, looking at the 30 minute chart that we may see a test of the 200ema soon – 6690ish – but for today the bottom of that 10 day channel should hold if seen. If we rise initially to the top of the 10 day channel, around the 6760 area then a short there is worth a go I feel, it depends if any gap traders come in early or if Fridays rise can carry on as to the opening move – Mondays can always be a bit tricky first thing as various things are digested and planned. If the bulls do go for it today and break the top of the 10 day channel then the 20 day (I am talking Bianca channels here) then we could well see the 20 day before too long – 6794.

So, if there is a climb initially I am looking to short at 6760, if no bounce then long around 6710. Stop on both around 15/20 away, stops to breakeven and trail asap. Target for the short would be 6710, target for the long would be 6760.

Asia Overnight from Bloomberg

Asia’s benchmark stock index is poised for a second weekly advance after Japan’s Topix Index rebounded near a 2008 high as leasing companies rallied on a report Prime Minister Shinzo Abe will encourage the practice to revive capital spending.  The MSCI Asia Pacific Index was little changed at 142.99 as of 1:44 p.m. Tokyo time, with four shares rising for every three that fell. The gauge increased 11 percent this year through yesterday as the Bank of Japan took steps to counter deflation and policy makers in the U.S. and Europe remained on standby to buoy growth. The measure is heading for a 0.8 percent advance this week, extending gains from last week.

“The market is trading in a tight range as profit-taking takes place while investors buy on dips,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees the equivalent of $33 billion.

Shares on the MSCI Asia Pacific Index traded at 14.3 times estimated earnings yesterday, compared with 21 for the Nikkei 225, 15 for the Standard & Poor’s 500 Index and 13.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Asia RSI

The 14-day relative strength index, a measure of trading momentum, has held above 70 for both the Nikkei 225 (NKY)Stock and the Topix for the past six days. That’s a level some traders say signals a sell-off.  “In the short-term, the Japanese market looks overbought, but in the long-term it’s not.” Robert Aspin, Singapore-based head of equity investment strategy for wealth management at Standard Chartered Plc., said in an interview. “We’re looking for the market to come off a little bit and go through a period of consolidation.”

US Futures

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The index fell 0.5 percent in New York yesterday after jobless claims jumped by 32,000 to 360,000 last week, the most since the end of March. Housing starts slumped 16.5 percent in April, the most since February 2011, the Commerce Department reported.

Outlook

ftse 100 prediction

Today’s pivot is 6693, and I have resistance at 6695. I feel that a short at 6695 with a stop above 6710 (say 6712) should pay off today though watch option expiry at 10:15ish. If the FTSE does drop and break S1 at 6670 then we could well see 6657 as the bears get their teeth into it. If however we break 6700 to the upside then its possible that we will exceed yesterday’s high. However, I’m inclined to think that we see a little dip currently with possibly some profit taking ahead of the weekend. Therefore I have a short bias for today, with a possible short entry around 6695, however, the 30min and 10min charts are both flashing sell signals as I write this with the price at 6687. Bears will want to break 6682 ASAP to continue some downward pressure. The 4 hour chart appears to be levelling off a bit with a  drop in the flux signal that we have. Also on the daily charts, the price has dipped below the middle of the Raff channels now, whilst on Bianca, we are back below the top of the 50 day at 6715, but as we are near the top of that channel still, I think we may see a bit of a dip.

So overall today I am feeling more bearish, with a possible entry at 6695, however I think the short term trend is down so am looking at shorting any rallies today. With a declining coral  at 6688, its possible that we might not get 6695, but the bears need to break 6682 to gain some downward pressure. If we do dip, then the bottom of the 30min channel at 6667 will offer support and it will be interesting to see if this is breached and we dip to 6650.

Asia Overnight from Bloomberg

Most Asian stocks fell as a decline in Japanese banks after forecasting lower earnings offset a report that Japan’s economy expanded faster than analysts estimated in the first quarter. The MSCI Asia Pacific Index slid 0.3 percent to 142.78 as of 12:22 p.m. Tokyo time, erasing gains of as much as 0.5 percent. About four shares fell for every three that rose on the measure. The gauge increased 11 percent this year through yesterday as the Bank of Japan took steps to counter deflation and policy makers in the U.S. and Europe remained on standby to buoy growth.

“The market, particularly in Japan, looks overbought and needs a pullback,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion, said by phone. “We’re not going to see a full reversal at this stage. The effects of aggressive monetary stimulus in Japan is just starting to gain traction.”

Selling Signal

Japan’s Nikkei 255 Stock Average dropped 1.1 percent, retreating from the highest close since January 2008. The broader Topix Index fell 1.5 percent, after earlier rising as much as 0.5 percent. The 14-day relative strength index, a measure of trading momentum, has held above 70 for both gauges, a level some traders say signals a sell-off.

The Nikkei 225 and the Topix both climbed about 45 percent this year through yesterday as the Bank of Japan introduced unprecedented monetary easing and the U.S. economy showed recovery signs.

US Futures

Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.5 percent to a fresh record in New York yesterday after data showing weakness in manufacturing fuelled bets the Federal Reserve will be in no hurry to scale back stimulus. Industrial production declined in April by the most in eight months.

Outlook

ftse 100 prediction

Today’s pivot is 6688, pretty much where we are as I type this, the pattern this week has been drop to the pivot, bounce then hold steady at the highs. However, as you can see above Japan RSI is over 70, as is the FTSE – not a signal in itself but a sign that things are a bit overbought. I think we may see a bit of a pull back from these levels and am looking for 1640 on the S&P today, which will obviously take the FTSE down a bit with it. I have plotted today’s arrows assuming that the pivot at 6688 holds pre market, but it must be said that the graph does look bearish with negative EMAs on the 30 min and the 10 min is also tracking down, though is at a point where is could turn bullish for a bit if the pivot holds. If the pivot does hold we have R1 at 6707 and R2 at 6720, and also that major ProTrend line has been plotted at 6724 so there would be a few hurdles to jump. If 6724 is seen then that’s a definite shorting area for me. We are still pushing the top of the Bianca 50 day channel at 6692 for today, whilst remaining mid channel on the daily Raffs, again just tracking upwards.

If we do head up to 6720 then the shorting areas at 6707 and 6720/24 should come good with a dip later this afternoon once the US comes online, I will probably short at 6720 area rather than try and pick an exact figure.

Asia Overnight from Bloomberg

Asian stocks rose as Japan’s Nikkei 225 Stock Average climbed above 15,000 for the first time since January 2008 after the yen touched a 4 1/2-year low against the dollar, boosting the earnings outlook for exporters.  The MSCI Asia Pacific Index gained 0.8 percent to 143.16 as of 12:22 p.m. in Tokyo, with almost two shares rising for each that fell. The gauge increased 9.8 percent this year through yesterday as the Bank of Japan took steps to counter deflation and policy makers in the U.S. and Europe remained on standby to buoy growth.

“Every time the yen falls below a key level, the Nikkei passes another milestone because it boosts corporate profits, especially for manufacturers,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees the equivalent of $100 billion. “Stocks should rise further as investors acknowledge the impact of government policy. Given that, I don’t think stocks are that expensive.”

Australian Budget

Australia’s S&P/ASX 200 Index dropped 0.9 percent after Treasurer Wayne Swan announced yesterday the government will record a A$19.4 billion ($19.2 billion) deficit this fiscal year and the budget will only return to balance in the 12 months through June 2016. The Australian dollar dropped to an 11-month low after the release. New Zealand’s NZX 50 Index swung between gains and losses.

US Futures

Futures on the S&P 500 Index slid 0.1 percent today. The index rose 1 percent yesterday in New York to its eighth record high in the past nine sessions. Germany’s DAX Index advanced 0.7 percent to 8,339.11, a record high.

Outlook

ftse 100 prediction

Interesting out of hours action last night, on the Dow close, the FTSE jumped 30 in fairly short order, while the Dow remained fairly static. Stop hunt maybe to close out some bears?  Germany data just out while writing, their economy grew only 0.1% in Q1 versus 0.3% expected. Yesterday’s rise has largely been attributed to the re-grade of Greece – good news, at least till Spain is next on the ropes being pummelled anyway! Still, seemed a bit of a bullish over reaction to it if you ask me, especially as the issues are far from solved throughout Europe. Today’s pivot is 6663, and we have the bottom of the 10 day Bianca channel at 6669, so if anyone shorted off the round number 6700 then that would be a good profit taking place. We are still tracking the mid points on the daily Raff channels so not reaching the edges of those channels yet. There is a longer term chance of 6770 on the FTSE looking at the daily chart (I don’t think we will see that today though).

We have dipped off the back of that German data, but I think the bulls will be desperate to regain 6700 in hours, however, we might see some bears come in at the double top with the out of hours high for the dip to the pivot area. There is a more major ProTrend resistance at 6725 which I think we will see today, and that level coincides with the top of the 10 day Bianca channel. Looking at the S&P for today, there is strong resistance at 1658 – only 10 points above where it currently is. Back to the FTSE and the 30min EMAs are still bullish and we broke through the channel that had been in play Monday and Tuesday, and using the ProTrend lines, its more the horizontal lines that are in play today – 6710 and 6724. The 10 minute chart has just flashed a weak bear signal at 6690, however, I think an initial rise to 6710 is more likely early doors.

Asia Overnight from Bloomberg

Asian shares rose for a second day as gains in Japanese utilities countered a slide in Chinese stocks. Gold climbed after a three-day loss lured buyers while Japan’s yen rallied from the lowest level in more than four years.

The MSCI Asia Pacific Index added 0.2 percent at 12:54 p.m. in Tokyo, while South Korea’s Kospi Index increased 0.8 percent. Standard & Poor’s 500 Index futures were up 0.1 percent. The Shanghai Composite Index fell 1.6 percent. The yen gained 0.2 percent versus the dollar while Australia’s currency snapped a six-day drop. The Dollar Index, a gauge of the U.S. currency against six major peers, slid 0.3 percent.

Australia will focus on jobs and growth, Treasurer Wayne Swan said today before his government delivers its budget. Bank Indonesia will probably keep its benchmark interest rate at a record-low for a 15th meeting today, while data is forecast to show German investor confidence rose this month. JPMorgan Chase & Co. cut its growth outlook for China’s economy.

“The rally, particularly in Japan, may continue as earnings recover,” said Daphne Roth, the Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “Central banks are still pursuing quantitative easing and that’s going to support further gains.”

About 52 percent of the companies in the MSCI Asia Pacific Index have reported earnings that beat analyst estimates in the most recent quarter, according to data compiled by Bloomberg.

Outlook

ftse 100 prediction

Today’s pivot is 6622 which will act as a support area should the market start to drop. We have bullish Tuesday but also some significant resistance at 6660 and 6670, indeed even R3 is only 6672 and S3 at 6581 so we are getting quite bunched up at this level. There is a bigger picture target of potentially 6770 though, though I am watching the S&P to see if it can break 1642ish – I think it might struggle there and as mentioned above it does feel like we are pausing a bit around these levels. I think the article published last Friday after hours on the Wall Street Journal about QE being phased out – quickly passed off as a “joke” – spooked a few bulls.

The 30 minute EMAs are bullish still, but while I have been writing this the 10 minute has gone a bit bearish, so I think 6660 and possibly 6670 might be decent short areas today initially, but the US will drag things up later. That said, the lack of buying enthusiasm yesterday, especially with the better than expected retail news, could be suggesting a pause in the bull run….

As mentioned Tuesdays are usually bullish, and it will be interesting to see what the FTSE does, if it does get bullish, at the 6660 and 6670 areas. There is resistance on the S&P at 1636 as well, which could tally with that 6670 area, hence I have put a down arrow from that area, despite it being bullish Tuesday. We are still within the 30 minute channel that we had yesterday with the top looking like it will be in play today. I have also put a 4 hour chart below which also has a channel top at….. 6670. Definitely going to be worth a short at that area if seen.