FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 ended 0.5pc lower Monday as housebuilders were hit by £5bn in costs to remove cladding from buildings, while the weaker pound lifted large dollar earners such as Diageo, Unilever, British American Tobacco and Reckitt Benckiser.
US technology stocks tumbled into correction territory on Monday amid growing fears that the Federal Reserve will significantly increase interest rates. The tech-heavy Nasdaq index dropped by 4.8pc on Monday before recovering some losses to trade down 3.6pc.
It leaves the index down more than 12pc from November’s peaks, reversing all of the gains of the past six months, as enthusiasm for some of the big financial winners of the pandemic ebbs with the prospect of higher borrowing costs. Anything bigger than a 10pc drop is considered a correction.
Shares in success stories of recent years including Netflix, Amazon and Google-owner Alphabet have all tumbled as the world eyes the end of Covid, and of the ultra-cheap money which supported economies through the pandemic.
The biggest losers in Monday’s trading included the microchip maker ASML, fitness bike maker Peloton and gymwear brand Lululemon.
The International Monetary Fund (IMF) warned of the risk that higher inflation in the US could force the Fed to raise interest rates more rapidly than currently expected.
It said: “Broad-based US wage inflation or sustained supply bottlenecks could boost prices more than anticipated and fuel expectations for more rapid inflation. “Faster Fed rate increases in response could rattle financial markets and tighten financial conditions globally.”
Meanwhile, Asian stocks and U.S. futures fluctuated Tuesday ahead of a key inflation print stateside that’s expected to strengthen the case for tighter monetary policy.
Shares slipped in Japan, edged up in Hong Kong and were little changed in China. S&P 500 contracts swung between gains and losses after the benchmark posted its longest losing streak since September, though dip buyers emerged late in the session to wipe out almost all intraday losses.
Treasuries were steady, while Australian and Japanese bonds gained after recent losses. On Monday, the U.S. yield curve flattened as market-implied odds of a March rate hike edged higher. The dollar slipped.
A key measure of U.S. inflation — set to be released Wednesday — is anticipated to have increased further in December, putting additional pressure on the central bank to tighten policy.
Four Hikes
The drumbeat for the Federal Reserve to implement four quarter-point interest-rate hikes this year is growing — and with the pace that markets have been moving, there’s a possibility that traders soon look to protect themselves against the risk of even faster policy tightening. Momentum is building for the first increase to take place as soon as March. Meanwhile Federal Reserve Chair Jerome Powell said the central bank will take steps to prevent higher inflation from becoming entrenched.
FTSE 100 live outlook prediction analysis for 11th January 2022
Well we got the dip and rise play out yesterday but the FTSE bulls fought hard in the face of a larger drop on the US markets. The S&P managed to get below 4600 to test 4581 before the bulls came charging back to drive it up to 4680. The FTSE100 dipped to the 7420 area before climbing suggesting that the bulls remain in control for the moment. I am looking for dips to continue to get bought for the moment in a similar pattern to yesterday. Bullish till mid month!
Initial support for the FTSE100 is at the daily pivot and 30m 200ema at 7468 and then the bottom of the fib cloud at 7456. I have put the long order just below this to allow for any overshoot as the market opens if we get an initial kick down for a bit of stop hunting on those long from yesterday. Generally today I am looking for a rise to test that 7515 level again, and also today we may well see the 7535 level tested again. This is the key level for the moment being the recent high and the bulls will need to break this to target the 7600 level next.
If the US bulls can break the 4700 level with a bit of conviction either today or tomorrow then that should help pull the FTSE up higher as well. With the S&P bounce the 2h chart has gone bullish again with 4650 now showing as Hull moving average support. They need to get their skates on as unless we get a decent break higher above 4700 the daily chart is going to get more bearish as the 10 day Raff is firmly heading down at the moment. A move above the 4700 needs to hold to get things bullish properly.
The FTSE100 bears will be looking to break 7450 as that then keep them in the game to target the 7395 level. They were rebuffed yesterday and the bulls defended that 7420 level so initial support is here once again. Below the 7395 level they will be looking to drive it down to 7315 daily support. However 7410 is also the bottom of the 10 day Raff as well as the key fib here so I am thinking that we will see this hold – worth a long here should it get that low today.
So, after a bit of a damp squib for the bull Monday yesterday we could see a delayed bullishness kick in a bit today. No bear Tuesday this week…. possibly! Buying the dips still feels the right play so watch the 7450 7410 7395 levels as the key supports. 7515 7535 and 7555 as the main resistance levels.
Good luck today.
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 and Live Trading
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
Keep up to date with new content, free sign up below with just your email address