27th September 2019
The FTSE hit an eight-week high closing price yesterday as the 7280 sport level held and steadily rose towards the 7400 level. It climbed 0.9pc during the day in a sharp reversal from days in the doldrums. Keeping the FTSE climbing was its commodity sector, helped by Trump’s trade deal rumours, and alongside the continued slide of sterling.
The FTSE 100 touched eight-week highs but failed to hold them, on a day marked by a striking spree of profit warnings that didn’t stop the blue-chip index from shining. London’s top bourse outperformed its peers on the Continent, closing up just over 0.8pc, after China’s ministry of commerce said it was communicating closely with Washington ahead of the fast-approaching trade talks.
All sectors gained, with energy sector heavyweights providing the most upwards pull. Healthcare and financial firms also performed well, leaving only a handful of shares from across the index in the red at several points during the day. Gains were aided by a listless pound, which spent more of the London session flat or down against the dollar.
A four-pack of profit warnings produced a rogue’s gallery at the bottom of the index, in a day where poor sentiment developed more from individual stories than wider trends.
Mixed-Up Markets
Asian equity markets were mostly subdued following the weak lead from Wall St and gains in Treasuries. Impeachment and trade headlines continued to hit markets already on edge over signs of slowing global economic growth. The S&P 500 ended modestly lower after the release of a whistle-blower complaint central to the latest political drama and reports the U.S. is unlikely to extend a waiver allowing American firms to supply China’s Huawei Technologies. Defensive shares rose as Treasury yields fell. Meantime, in a surprise move, FTSE Russell opted not to add Chinese bonds into its flagship World Government Bond Index.
FTSE 100 Trading Signals, Forecast and Prediction
What a strange week this has been on the FTSE, driven by cable and the Westminster shenanigans. Despite the rise yesterday the bulls still need to break above the 7400 level and in fact we have daily resistance to start with at 7395 today. The ASX200 had a strong day today, at least initially, and we may well follow suit with a rise towards the fib at 7403. Initial support is at the daily pivot at 7347 and if the bears were to break this then a drop down towards the 7300 support level is likely.
The 2 hour chart remains bullish for the moment and after the rise yesterday we now have a green coral trend line with support at 7299. Should we see a down day today as we head towards the end of the quarter then this area is looking like the likely target for the bears. Of course, once again a lot of the movement will depend on cable and the Brexit saga.
The daily Raff channels are heading up still, and while the top of the 10 day yesterday at 7380 stopped the rise, and saw a small pull back to the 7350 area, the top of that for today is now at 7435 so should the bulls break above the 7403 level then this level looks likely to be tested.
Todays main news is US durable goods orders at 13:30, with the forecast at -1.2% versus 2% previously. This shows the value of orders placed for relatively long lasting goods. Durable Goods are expected to last more than three years. Such products often require large investments and usually reflect optimism on the part of the buyer that their expenditure will be worthwhile.Because orders for goods have large sway over the actual production, this figure serves as an excellent forecast of U.S. output to come.
If we break above the 7403 it will be worth flipping long to target the 7440 or higher areas. Having now crossed the 200ema on the 30min chart, we may see a backtest of that today at the 7325 level. The S&P bulls still need to break the 3000 level – 2993 was the high yesterday but the 25ema on the daily remains as support for now 2970 and despite the moves below the bulls have bought it back up. The daily coral is support at 2945 still so a test of that still looks possible, if they can break 2960. We also have the bottom of the 10d Raff channel there for today.
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