3rd January 2019
What a lovely rise off 6600 to start with yesterday, for a decent gain. It looked a bit like it was going to e risk off all day but did eventually get going upwards after all. I ended up pulling the short orders as it looked like it would go higher than the 6720 resistance level (likewise Dax and S&P) and sure enough it did. That has been short lived though as overnight has seen the bears and risk off returning to the fore.
Global stocks clawed back from deep losses on their return to trading as the volatile end to 2018 on markets spilt over into the new year. Stuttering growth in China and the eurozone’s manufacturing sectors stoked global growth worries on markets, dealing the latest blow to fragile investor sentiment.
Growth in Chinese factories unexpectedly contracted in December, Caixin’s PMI survey indicated, as the trade war weighs heavily on its stuttering economy. After the worst year for stock markets since the financial crisis, Asian and European markets lurched another notch lower on 2019’s first day of trading following more weaker-than-expected economics data.
Markets started to stage a comeback after Wall Street reversed heavy early losses to touch into positive territory. The FTSE 100 pulled back from a 1.9pc plunge to close 6.1 points higher at 6,734.23 while US markets continued to fluctuate.
Crude prices swung from a 2.4pc loss to a 5.1pc surge, tracking the recovery on equity markets. Sentiment on the oil market was also bolstered by data indicating that Saudi Arabia is following through on its promise to cut exports to stem the recent decline in prices. BP rallied 11.4p to 507.3p.
U.S. Stocks Start New Year in the Green
U.S. stocks started the new year with a modest rebound from the worst December rout since the Depression. Oil rallied as Saudi Arabia cut exports. The S&P 500 Index ended an up-and-down session higher by three points, while the Dow Jones Industrial Average eked out a gain and the Nasdaq climbed. Banks rallied, and energy producers surged on the Saudi news. Stocks with high dividend yields fell the most as the 10-year Treasury yield tumbled. Equities started the day lower on poor sentiment sparked by a weak reading on Chinese manufacturing, which added to concern that global growth is slowing. President Donald Trump said Wednesday that the U.S. stock market suffered “a little glitch” in December and that it would go up once he negotiates trade deals with China and others.
FTSE 100 Trading Signals, Forecast and Prediction
With the US futures dropping sharply, especially the Nasdaq, after the Apple news that sales of iPhone’s are likely to decline (not much of a surprise really as we have seen peak iPhone and people are holding onto older models longer), the FTSE has so far held up pretty well. It didn’t quite manage the 6770 level after hours last night, which would have been a test of the top of the holiday range, but did manage 6760 in the end. Dropping off from there it has now got support at the daily pivot level at 6682, and we may well see this level hold initially this morning for a rise towards 6720. This level then looks key – we have 2 hour resistance here and also the fib level. A short here looks worth a go this morning.
If the bulls were able to break above the 6720 level then a test of the 6770 level still looks viable. Generally we were bullish yesterday and bear in mind that the first week or so of trading in the New Year can set the tone for the year, so it will be interesting to see if the markets try and keep some strength in them. 6766 is also R1 for today so tallies with the top of that holiday range, and a level that the bulls will be keen to break as that open up a trip to 6845 and possibly even 6908. Bear this in mind for the next few sessions as I think that we may well see some further upside.
If we do dip down then the 6650 level looks to be initial support. Below this then 6602 again looks viable as we also have S1 here. It held very well yesterday and may well hold again for a double bottom bounce.
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