15th July 2019
The FTSE 100 closed flat Friday after being in positive territory for most of the day, with house builders gains being offset by mining stocks drifting lower. The Dow Jones Industrial Average and Nasdaq Composite also remained close to record levels. Wall Street stocks pushed higher towards new record highs after Federal Reserve chairman Jerome Powell’s dovish comments last week raised optimism of an interest-rate cut this month. After big losses at the start of the week, investors remained upbeat and pushed the S&P 500 to a new high for the third time this week, trading above the 3,000 point level.
Oil was slightly higher due to lower US oil stocks, disruption caused in the Gulf of Mexico due to tropical storm Barry and political tensions surrounding Iran this week. Armed Iranian boats threatened a BP tanker on Wednesday in apparent retaliation for Britain’s recent seizure of an Iranian tanker off Gibraltar.
The pound notched up a record 10 consecutive weeks of losses against the euro yesterday amid political uncertainty and rising expectations of a no-deal Brexit. Investors and economists seem to also have taken little notice of statements from the Bank of England that it could raise rates in the coming months. The pound traded 0.30pc higher against the dollar at $1.2564 and added 0.25pc versus the euro at €1.1157.
Chinese GDP
Chinese GDP growth moderated to 6.2% last quarter, the weakest since the data series began in 1992, though monthly indicators for June showed an acceleration.
Markets Cautious
Asian stocks were set to start the week with a cautious tone as investors turned their attention to upcoming data on Chinese economic growth amid expectations for further policy support. Futures in Hong Kong and Australia were lower late Friday despite the S&P 500 Index climbing to a fresh all-time high. Japan is closed for a holiday so equities won’t trade and Treasuries will be shut until the London open. The yield on 10-year Treasuries ended last week at 2.12%, near to a one-month high.
Earning Season Begins
The big U.S. banks get the quarterly reporting season going this week. With an interest rate cut looking likely this month, some banks may preemptively trim their outlook for net interest income, Bloomberg Intelligence said. Citigroup is up first on Monday, then JPMorgan and Goldman Sachs follow on Tuesday. Bank of America, which should see support from solid credit growth and controlled costs, reports Wednesday. Morgan Stanley is Thursday. And for non-financial firms, any effects of the trade war will be closely watched at Taiwan Semiconductor, which reports second-quarter results Thursday. Other tech companies on deck include Netflix, IBM and Microsoft. Finnair and United Airlines may provide color around the impact of the ongoing Boeing 737 Max shutdown.
FTSE 100 Trading Signals, Forecast and Prediction
I am still running half of Fridays S&P long from 3003, I have just taken a bit more profit at 3014 and the stop is now at 3006 on the rest. As a result of the signs that China’s economy is stabilising, most markets have risen, including the FTSE futures, which are just back above 7500. We have 2 hour resistance to start with at 7513 this morning though so we may well see an initial dip from there. If we do then the daily support is at 7473 where we have the 25ema and the bottom the 20 day Raff channel and a level that I would expect to see a bounce from.
If the bears were to break below the 7470 level then next up would be the fib level at 7455 but there is then a stronger chance of 7425 also being tested and a level that looks like it may well hold for a bounce.
I am sort of expecting a bull Monday today though, though of course we go into earnings season this week which will dominate most of the tone and action. Few financial companies kick things off today and will be closely watched. If the 7475 area is tested and holds and the bulls can hold a bounce above 7500 then a rise towards the initial resistance at 7558 looks the most likely path. Above this then we have resistance at 7580 still, which we haven’t really tested as yet. Then 7622 above that with 7685 showing on the weekly time frame.
The longer term S&P resistance level is showing as 3115 but I think that we may see a stutter at 3030ish near term. Cable’s climb has so far managed 12570, and has slowed down a bit, though still looks like we might see 12613 to 12650 tested. If it then dropped off a bit from there that would also help drive the FTSE100 upwards.
Recommended Broker
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates