Morning all. Some good trades yesterday, I hope you managed to hop on the short. I was loathe to take the long at 5620 as the news was due out and as it happened it was much better than expected. Manufacturing and Industrial Production both coming in much better than expected, hence the rally. Those gains were all given back, mainly on the second touch of that 5688 level, so well done if you went for the second short from that area. Still, did alright with the first touch. All fairly flat overnight but I am expecting a bit more of a rise for the moment. It’s not time to get uber bearish just yet I don’t think. I was a bit more bearish yesterday but have swung back to bullish for a bit longer.
Asia Overnight from Bloomberg
Asian stocks swung between gains and losses amid concern a global slowdown will hit earnings at companies from Advantest Corp. (6857) to BHP Billiton Ltd (BHP), while Chinese Premier Wen Jiabao called for investment in railways.
The MSCI Asia Pacific Index (MXAP) was little changed at 116.64 as of 3:02 p.m. in Tokyo, with about five stocks falling for every four that rose. The measure has lost about 2.2 percent since July 4 as the U.S. unemployment rate failed to improve and imports to China’s economy grew at about half the pace forecast by economists.
Today’s pivot is 5658 so I would expect that to act as slight resistance to start with, as looking at the EMA’s we could have a cross brewing on the 30 minute. The blue lines are what I think will happen, the pink ones are possibles. 2 scenarios – we carry on up or “turn and burn” and drop from that channel trend line. We are also at the top of a channel line on the 4 hour – so though I am not uber bearish just yet, there isn’t an awful lot of gain to be had unless we break some pretty strong resistance levels. However, that said there are a few head and shoulder patterns on the 30 minute and4 hour time frames which can be a bearish signal and if we do start declining then 5514 is the obvious target to start with, being that 38% fib line on the daily. So in a nutshell, I see a bit more upside yet before the larger declines, but as you saw yesterday the market is swayed strongly by news at the moment, with 5688 again strong resistance.