Markets Drift Higher as Sentiment Improves; FTSE 100 Focused on 5760

The Euro made some modest gains overnight on news that Greece is close to reaching a deal with respect to the amount of losses that will be incurred by holders of the country’s treasury bonds.  Today’s price activity is likely to be governed by the results of the next bond auction in Portugal and Germany, which will be seen later in the European session.

This will be followed in North America by the US Homebuilder Confidence survey, Industrial Production data, and the Producer Price Index (PPI).  The market has positive expectations for these releases and this is helping bring some support to equity futures.  Corporate earnings will be coming from eBay, Goldman Sachs, Charles Schwab, and Bank of New York Mellon.

Macro data out of the UK is mostly second tier, with employment data coming with the Claimant Count and the ILO Unemployment rate.  Corporate earnings from Barrick Gold are also scheduled for release.  Asian markets are higher for the most part, as positive stories relative to energy stocks in Japan are supporting the Nikkei 225.  Some of the biggest gainers were Tokyo Electric Power, Japan Petroleum Exploration, and Inpex Corp.  Rises in oil prices are bringing buyers into these stocks and the Nikkei 225 gained 1.1 percent in the session.

The S&P 500 made modest gains yesterday (closing with gains of 0.4 percent) on a positive Empire State Manufacturing report (showing the largest gains in nearly a year). Sears Corp. was one of the biggest gainers (closing 9.5 percent higher) on rumors that the company is considering privatizing its stock shares.  Energy companies were also pushed higher along with the recent rises in crude oil.

Additional headlines were made by the World Bank, which released a report lowering its global growth forecasts for 2012 to 2.5 percent and 3.1 percent for 2013.  Previously, the World Bank was expecting a rise of 3.6 percent for both years.  There were also some China-related headlines, as the government reported that Foreign Direct Investment into the country dropped sharply by 12.7 percent on a yearly basis (to $12.2 billion for the month of December).  House prices in China also continue their well-documented drop, as prices of new homes in 52 of China’s 70 largest cities showed declines for the month of December.  There is some continued weakness in this report, as only 49 cities showed declines for the month of November.

Technical Analysis:

Epoch Times Photo

The USD/CAD is pressuring the lower end of its daily symmetrical triangle, currently trading at hourly support in the 1.0110 region.  A clear break here will be a bearish signal, as the MACD readings are showing negative momentum and the previous hourly high is showing a lower top.  Resistance up above is relatively thin until the 1.0280 area, so if prices can manage to bounce out of current levels, there is plenty of room to extend to the upside.

Epoch Times Photo

The FTSE 100 is closing in on the resistance created by the longer term ascending triangle and the next level to watch is seen at 5760.  Short term bears can establish positions in this area but stops should be kept tight, given that a break and daily close above here will suggest a test of psychological resistance at 6000.  Longer term, buying dips is the preferred strategy.  Support is now seen at 5540.

RECOMMENDED