Well, that’s the Olympics done. What a great success it was in terms of organisation, facilities and the medal haul. That should buoy up the UK and London in the eye of tourists. What will the economic effect be? Well there is certainly a ground swelling of people getting into sport, both young and old. Bike sales have shot up so a long on Halfords will probably be good! However, overnight we have had slightly worse than expected Japanese 2Q GDP – 1.4% vs 2.3% expected. The recent rally is all built on the expectation of stimulus to ride to the rescue on any issues. However, if the issues are bigger than the stimulus can cover? Asia are expected to be the engine room to the recovery – if Japan, China, Singapore etc are all slowing down (as recent news would suggest they are) then something more fundamental than bailout and asset purchases are needed.
Asia Overnight from Bloomberg
European and U.S. stock futures declined and most Asian shares fell after Japan’s gross domestic product expanded less than estimated, underscoring concern that the global economy is slowing. Corn retreated after climbing to a record last week.
The Euro Stoxx 50 Index futures lost 0.3 percent, while the Standard & Poor’s 500 Index slipped 0.4 percent at 7:13 a.m. in London. The MSCI Asia Pacific Index declined 0.3 percent. Australia and New Zealand’s currencies weakened 0.3 percent. Corn dropped 0.4 percent in Chicago.
Japan’s second-quarter economic data comes as Bank of America Corp. cuts its growth outlook for China. Bank of England Governor Mervyn King said Europe’s crisis has “no obvious end in sight” before a report tomorrow that may show the euro- area’s economy contracted in the three months through June 30. Federal Reserve Bank of San Francisco President John Williams said it’s time to move ahead with a third round of asset purchases, according to the San Francisco Chronicle.
The Bianca trends are still up, however I still believe that we are at or nearing an important level around 5880 to 5910. I have 5850 pencilled in from ages ago as you know as a likely top. I am not (no one is!) good enough to pick exact tops or bottoms but anywhere around these figures has got me feeling more bearish. Today’s Pivot is 5844 and we are looking at opening at that or just below. That won’t be a target for today in that case. Fridays close was 5847 so also pretty much where we are due to open. With the Olympics finishing will the hangover kick in now. They have been great from the UK point of view, and I get the feeling the rest of the world has been pretty captivated by them. Will that optimism and good will carry on? This rally has also been built on low’ish volumes and the hope of decent stimulus – if that’s not forthcoming in the size required then the markets might not like that! it’s a tug of war between stimulus hopes and bad economic data at the moment.
We are dipping below the 10ema on the 4 hour still – if they cross on that time frame then we should be on the way to the summer low towards the end of August/early September that I have mentioned before. On the daily chart we are still below that first resistance line at 5860. On the hourly we are right at the bottom of the trend channel that has held since 6th August. The top of that channel is around the 5910ish area.
I have put the 30 minute chart below and as you can see I am still feeling bearish. However, I am not ruling out the possibility for a bit of a rise to 5910. I can’t get too bullish at these levels, especially as the S&P and Dow have stayed at around their current levels for a few sessions now.