16th May 2019
We got the dip and rise yesterday helped by the large dividend and also another Trumps tweet regarding delaying auto tariffs, it hit 7310.1. As you know 7310 was the resistance level we had pencilled in. I was expecting a bit of an overshoot to the 7323 resistance though but it stopped dead on 7310 instead! That level remains resistance for the time being.
Global markets extended their recovery after trade war nerves were soothed by hopes of Donald Trump delaying car tariffs for up to six months. A decision on whether to put tariffs on cars arriving in the States was due before Saturday and reports have claimed that he will delay the decision to aid upcoming trade talks with the EU and Japan.
Stocks had drifted into the red earlier amid disappointing economic indicators from China and the US. There were fresh signs of a slowdown in American factories as the global industrial downturn spreads. US industrial production slipped 0.5pc month-on-month in April, the third month in 2019 that output has contracted.
The FTSE 100 reversed its losses to climb 0.8pc to 7,296.95 points following the reports as the pound’s slide to a three-month low boosted the index’s overseas earners.
Sterling slipped below $1.29 against the dollar amid fears that Theresa May will come under growing calls to quit if her deal fails to win the support of MPs for a fourth time.
Huawei
Trump signed an executive order to declare a national emergency relating to threats against information and communications technology and services. The move, which was expected, could restrict Chinese firms Huawei and ZTE from selling their equipment in the U.S. Shortly afterward, the Department of Commerce said it had put Huawei on a blacklist that could forbid it from doing business with American companies. The pair of actions risk aggravating Beijing as the president seeks to pressure China’s leaders into agreeing to a wide-ranging trade deal.
Auto tariffs
Donald Trump may de-escalate trade friction with the EU and Japan by delaying on auto tariffs by up to six months, people familiar said. He may change his mind, however, as aides including Wilbur Ross and Peter Navarro are in favor of the new import duties. Meanwhile, U.S. Treasury Secretary Steve Mnuchin expressed caution about China, saying he has “no plans yet” to go to Beijing and that while he’s “hopeful” for a deal, “I wouldn’t say I’m confident.”
Bullish
U.S. stocks rose on optimism trade tensions may wane, with the S&P 500 posting its biggest two-day gain in more than six weeks. The index remains 3% lower than before the trade-war escalation. Treasuries climbed, with 10-year yields down more than three basis points. Hang Seng and Nikkei futures are mixed.
FTSE 100 Trading Signals, Forecast and Prediction
I still have the 7310 level as resistance and we also have a few key level around this area and slightly above as you can see from the list above. As such, I am still thinking that a rise to this level is worth a short, and have gone for 7319 today which is around the top of the Raff channels and also a fib and R1. If we do get a rise to this level then I would expect a stutter in this region. Should the bulls break above the 7325 level then the cam break out at 7343 with 7432 showing as the next level of note higher up. Volatility continues though, and weak US and Chinese data on Wednesday will weigh on markets still. The global market continues to slow.
Support wise, 7244 is initial support where we have the 200ema on the 30 min chart, but the fib and S1 at 7225/7231 looks like a decent bounce point, this is also just above yesterday slow price where we bounced from. After yesterdays strength from the lows, the 2 hour chart is bullish again, with decent looking support at 7228. The ASX200 had a dip and rise day today and I am thinking that we may well see something similar. The FTSE 100 has been pretty resilient really, compared to the sell off in the US, and is still in the 7150 to 7300(ish) range for the moment. The dividend of 24 points yesterday helped to underpin the strength as well, though mostly it was helped by the auto tariff delay tweet.
UK politics are coming back into the news ahead of the European elections, with Farage stealing a march on the Conservatives, and Theresa May’s sudden decision to push the withdrawal agreement bill through parliament before the summer recess.
So, looking at a dip and rise today, expecting to see a retest of the 7310 and higher level. Sudden news or tweets notwithstanding!
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