23rd May 2017
The UK is waking up to news of the worst terrorist attack in the UK since 2005 after a suicide bombing at Manchester Arena during a music concert. Nineteen dead so far with many more injured. Initially the pound weakened on the news, however the FTSE 100 futures prices have remained at the 7500 level.
In EU news, and what dragged the Dax down yesterday, Eurozone finance ministers failed to agree on a deal which would have released vital funds for Athens on Monday night, after Greece’s creditors rejected calls for an upfront commitment to reduce the country’s debt burden.
The FTSE was fairly flat yesterday, with just a 20 point range. The S&P long from 2381 did much better with a nice rise over the course of the day. There wasn’t too much bull Monday about the FTSE 100 though, with low volume going through. May’s U turn on old age social care costs didn’t really have much effect either, now saying that the costs will be capped, following a poor reception to their proposal and a slip in the polls.
FTSE 100 Outlook and Prediction
If the pivot area and overnight low holds initially at 7498 then I am thinking that we will get a rise towards 7535. Usually after there has been any sort of terrorist attack the stock market in that country rises – partly to show that the terrorist don’t spook us. However, with bull Monday being decidedly weak yesterday then its possible that we break lower today, and bear Tuesday kicks in instead. There is support on the 2 hour chart at the 7487 level with both a green coral trend line here, and also a key Hull moving average. If the bulls hold this support level then a rise to 7535 looks likely.
At 7535 we have 2 key resistance levels, namely R2 and also a daily resistance area. As such a short here is worth a go in case we do get a bearish day. The daily Raff channel trends are both firmly up at the moment, so the general “safer’ play is to buy the dips, however, we have risen quite far quite fast on not a lot really, as it was only 4 weeks ago we were at 7100.
There are still a fair few short on IG (85%) so it might want to stop a few more of them out first. Gold is also now hitting the top of the 20 day Raff channel at 1263 (also recent high) so may see a bit of a dip again – which might boost indices. GBP/USD (cable) has dipped back below 13000 again, after the attack in Manchester, which may give the FTSE a boost also. I still think shorting the rallies for the moment is a a decent play, however, the bears seem quite weak off the resistance levels at the moment – hence thinking it just needs to squeeze a bit more.
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