13th February 2019
The FTSE 100 lagged behind its blue-chip rival indices in yesterday afternoon’s global rally. London’s blue-chip stocks gained just 0.2pc, weighed down by sterling’s jump versus the dollar and its airline sector sinking following TUI’s disappointing update. The short from 7169 dropped off steadily during the day, down to the 7130 support area. The long there was a lot more of a slow burner though! Meanwhile blue-chips in the eurozone have jumped 1.1pc while the S&P 500 has strengthened to a 1.1pc gain on trade war and shutdown optimism.
We have a large 20 point dividend today so likely to see an overall positive day ahead. If you’re still holding the 7130 long it will probably be worth trailing the stop, with the bulls needing to break 7172 to target 7190 and higher.
Baltic Dry index
The Baltic Dry index, a closely watched global trade barometer, has sunk to a two-and-a-half-year low as the shipping industry grapples with stalling Chinese growth and the fallout from the dam disaster in Brazil. The trade bellwether, which measures shipping costs for raw materials such as iron ore and coal, has plunged 58pc in less than two months, suffering its worst start to a year since 2014. Shipping costs have tumbled amid mounting worries over the health of the global economy. China, the most important driver of commodity and shipping markets, suffered its slowest annual growth last year since 1990.
U.S. Stocks Rally
Asian equity markets traded mostly higher with global sentiment underpinned as US government shutdown fears abated and increasing hopes for a US-China trade breakthrough and a tentative deal among American lawmakers to avert a second partial government shutdown. Treasuries and the dollar edged lower. After four sessions of losses or whisker-thin gains, the S&P 500 Index registered its biggest one-day increase this month, breaking through its 200-day moving average. The rally was broad-based: Materials stocks led the charge, but financials and the FAANG cohort of tech stocks also advanced, and energy companies gained as oil rebounded from a two-week low after Saudi Arabia pledged to deepen production cuts. U.S. lawmakers said they have reached an “agreement in principle” on border security funding that still needs Trump’s sign off. He said the preliminary agreement is “not doing the trick” but also said he has to study it and can add to it.
FTSE 100 Trading Signals, Forecast and Prediction
The climb from 7130 took its time but helped by a bullish Asia has finally moved above the 7140 level. We are now at yesterdays high and daily resistance at 7172 so may see a small pull back from this level, though it looks more likely that the bulls will want to take it towards 7200. We have the next daily resistance level of note at 7192, and also the key fib level at 7195, with R2 at 7202 – with this cluster of resistance levels here then we may well see a drop back from here. The bulls still need to break above the daily resistance at 7235 to push higher over the next few weeks.
If we do dip down from the 7192/7202 area then we could see a drop down towards the daily pivot at 7145, and we also have the 2 hour coral going green now, with support at 7139, also just above the support level we played off yesterday. The bulls will certainly be keen to defend this area.
Below the 7139 support level then yesterdays low at 7121 and then the fib level at 7101 are worth watching. Should the bears break the 6995 level then things might get more bearish, as this is the 25 ema support on the daily chart and hasn’t been tested yet since the bullish cross on 29th January. If we do see a test of this line in the next few sessions then its worth a long.
Underpinning the bulls today, and certainly late on towards the bell we have the 20 point dividend. While the divi plays are not as reliable as they used to be we may see a 20 point surge prior to the bell, maybe kicking in a few minutes before. That said, the lure of the divi will help the bulls case today and give us a slightly more bullish bias. It’s worth noting that the ASX200 was fairly bearish today, so we may struggle to break the key resistance levels. – 7192, 7202, and maybe 7235.
Generally it all still looks positive for the moment, but could turn on a sixpence. The trade talk is certainly helping the bulls at the moment. So, watch for 7140 support and 7192/7202/7235 resistance today.
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