Bulls back in charge with 7260 7285 resistance looming | 7161 support | NFP smashed estimates

Bulls back in charge with 7260 7285 resistance looming | 7161 support | NFP smashed estimates

FTSE 100 outlook prediction analysis for 9th December 2019

Stock markets ended the week on a high, as hopes of relief from tariffs and a knockout US jobs report buoyed sentiment. Investors were upbeat throughout the session, with the FTSE 100 finally getting the monkey off its back as the price of sterling softened slightly. Trading was solid from the get-go on Friday, after China’s finance ministry said it would waive tariffs on US pork and soya bean exports, providing relief for American farmers.

The pound pulled back slightly, holding above $1.31 but giving some of London’s dollar earners room to breathe after back-to-back sterling gains dragged on the blue-chip index. Traders have kept the currency at the top end of estimates, on hopes that general election polling will prove correct and carry Boris Johnson’s Conservatives back into government with a new majority.

It wasn’t until the afternoon, however, that the biggest headline dropped: US non-farm payroll data smashed expectations, with 266,000 jobs added in November against estimates of around 180,000.

Election

Heading into election week, polls over the weekend have shown the Conservatives holding onto their lead over Labour with polls ranging from a lead of 15-8 points

Export Drop

An unexpected drop in China’s exports in November highlights just one reason why Beijing wants to agree on a phase one trade deal — U.S. tariffs are hurting exports when global demand is already weak. Total exports in November dropped 1.1% from a year ago, while to the U.S. they were down 23%, China’s customs administration said Sunday — the 12th straight monthly decline. Overall shipments had been expected to rise 0.8%, as retailers and companies stock up for Christmas. About 18 months of tit-for-tat tariffs have damaged both economies, with Chinese companies and American farmers selling less to the other side. Even if some of the tariffs are removed, both sides will be economically worse off than they would have been without the conflict.

Markets Lift

Asian stocks were poised to kick off the week with gains after U.S. equities rallied Friday on better-than-expected jobs data. Currencies were steady early Monday. Futures in Japan, Australia and Hong Kong pointed higher. Gains may be kept in check as the Dec. 15 U.S.-China tariff deadline looms with both sides yet to agree to a trade deal and after that unexpected drop in Chinese exports for November. On Friday, the S&P 500 Index rose for a third day after reports showed payrolls jumped the most since January, wages beat estimates and consumer sentiment increased. Treasury yields climbed above 1.80%. Elsewhere, oil climbed after Saudi Arabia surprised the market by promising significant additional production cuts beyond what was agreed with fellow OPEC+ members.



FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

The bulls recovered well on Friday helped by the jobs news and we broke above 7200 and have stayed there over the weekend. Cable continues to rise though which suppresses too much FTSE 100 exuberance, and as such we may well see a mild rally towards the 7261 area while the S&P continues to push on having tested that 3070 support level. Talking of the S&P, we may well double top on that today around the 3160 level, and if it starts to drop from there we may see a move down towards the 2 hour support at 3110. A break of that and 3070 or lower beckons. In turn that will drag the FTSE down too.

FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis

For today we may well see a bit of bull Monday continuation on Fridays rise towards the 7260 resistance level. With the fib here, and also R1 at 7272, I am thinking that we may see some bears appear here, especially if cable continues to rise, and this level may also tally with the double top on the S&P. Above this level there is also the daily resistance fairly close at 7285 where we have the 25ema and also the 200ema and coral lines.

To start with the 30min chart is bullish, with support at the daily pivot and coral line at 7205 and 7219 respectively. As such, we may well see the bulls being the first ones out the blocks this morning. The ASX200 had a fairly decent day, though largely flat to weakly bullish, and we may well do the same.  That said, the ASX is just hitting the daily resistance at 6732, so we may well start to see a pull back on that, and if so may well set us up for a more bearish session tomorrow.

If the bulls were to break above the 7285 level on the FTSE 100 then I would expect us to climb to the top of the 10 day channel with resistance at the 7340 level, and then the top of the 20 day channel at 7400 above that. Seems a bit of a big ask today, but as you know we are heading into election week so we might see even more chop than usual, as polls, pundits, and then the actual result take their toll.

On the support side of things, should the bears break the 7205 level, then 7161 is the first major support I am watching, with 7133 below that. This level held well last week on a few tests, so the bears would be keen to break below that. If they did then a drop down towards 7090 for the bottom fo the 20 day Raff channel, with 7050 and then 7000 below that.

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