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Bear Tuesday with a weak start | 6920 now resistance 6975 above | 6885 6860 support

#1 · 11th October 2022, 9:36 am

Quote from Nick on 11th October 2022, 9:36 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The cost of long-term borrowing for the Government rose to its highest level since the Bank of England launched its £65bn pension bailout, as analysts warned the jump signalled further market turmoil could be on the cards.
Yields on 30-year gilts rose above 4.5pc, bringing them to their highest since going over 5pc just before the Bank’s intervention on 28 September. 10-year gilt yields also rose by 2.5 basis points at 4.25pc.
The surge in borrowing costs came as the Bank announced it will ramp up its market intervention before it closes on Friday. It will also launch a scheme to provide liquidity to banks whose clients are struggling with sudden cash calls.
Its decision comes after eight auctions so far in which the Bank offered to buy £40bn worth of bonds but only succeeded in buying £5bn worth. The Bank has been purchasing the gilts using newly created money in a process known as quantitative easing.
Technology companies led stocks lower in Asia amid concern that rising interest rates and geopolitical threats will crimp economic growth. Some of the biggest losses were in chip-related equities in Japan, South Korea and Taiwan, where traders returned from holidays to join the global selloff in semiconductor shares.
Wall Street's Nasdaq index, which is dominated by technology stocks, fell to a two year low. The index fell as much as 1.5pc before gaining a little ground back. Computer chip makers took the brunt the decline after President Joe Biden put controls on exports of certain semiconductors to China.
Asian stockmarkets fell and the dollar rose on Tuesday with investors worried about rising interest rates and an escalation in the Ukraine war, while Treasury yields leapt as an unnerving collapse in British gilts ricocheted around global bond markets.
Futures pricing shows traders are positioned for about a 90% chance of a 75 basis point Fed hike next month and for the Fed funds rate to hit 4.5% by February and stay there most of 2023. That outlook is giving dollar bulls another run and has the greenback drifting toward the milestone highs it scaled last month.
FTSE100 live outlook prediction analysis for 11th October 2022
That was a decent bounce off the 6920 yesterday with the bulls managing to get it to 7000 before it dropped off again, and overnight we are back at 6920. Below this the next daily support is at the 6862 level and if we get a bear Tuesday we may well see this. It looks pretty weak across the board to start with today so we could see a rise and dip play out on the various indices.
I am thinking that the FTSE100 will get a rise towards the 6980 level (and thus set a lower high for the week so far) as we have the 200ema 30m here, but also more crucially it will be the first test of the now bearish Hull MA on the 2h.
If we were to slide from there then we may well break the 6920 the more it gets tested which may well see that next daily support level, and also S2 at 6885.
Above the 6980 level then the bulls would once again want 7000, and try and push past it this time. However we have key fib resistance at 7015, and also the red 2h coral at 7010 so there are a couple of strong resistance levels in play that they would need to break, to target R2 at 7042 above that. A hold above 7000 would also bode well for some further strength ahead of the US CPI figures on Thursday.
Should the bears break 6885 then 6862 as mentioned, and below that 6848 for S3. I don't think we will get that low, as cable drops back further (which will help underpin the FTSE100 for the moment) and is back at the 110 level.
S&P500
As with the FTSE it's back at yesterday's low so we may well see a double bottom bounce on this as well for a rise towards the 3635 resistance level. That could tie in with a test of the 2h Hull MA, though whilst that is currently higher than this level its dropping quite steeply. If the bears were to break below the 3590 level where we have the key fib support (and the double bottom area) then 3585 is S1, but more crucially the bottom of the 10d raff channel is at 3572 and would probably be seen.
The bulls are slightly on the back foot after the recent gains, though once again referring to the seasonality chart here, we do get a strong start in October, dip down, then the bulls come fighting back. Will we see that again this year?!
Good luck today.
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If you would like more detailed analysis for FTSE100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
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FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

The cost of long-term borrowing for the Government rose to its highest level since the Bank of England launched its £65bn pension bailout, as analysts warned the jump signalled further market turmoil could be on the cards.

Yields on 30-year gilts rose above 4.5pc, bringing them to their highest since going over 5pc just before the Bank’s intervention on 28 September. 10-year gilt yields also rose by 2.5 basis points at 4.25pc.

The surge in borrowing costs came as the Bank announced it will ramp up its market intervention before it closes on Friday. It will also launch a scheme to provide liquidity to banks whose clients are struggling with sudden cash calls.

Its decision comes after eight auctions so far in which the Bank offered to buy £40bn worth of bonds but only succeeded in buying £5bn worth. The Bank has been purchasing the gilts using newly created money in a process known as quantitative easing.

Technology companies led stocks lower in Asia amid concern that rising interest rates and geopolitical threats will crimp economic growth. Some of the biggest losses were in chip-related equities in Japan, South Korea and Taiwan, where traders returned from holidays to join the global selloff in semiconductor shares.

Wall Street's Nasdaq index, which is dominated by technology stocks, fell to a two year low. The index fell as much as 1.5pc before gaining a little ground back. Computer chip makers took the brunt the decline after President Joe Biden put controls on exports of certain semiconductors to China.

Asian stockmarkets fell and the dollar rose on Tuesday with investors worried about rising interest rates and an escalation in the Ukraine war, while Treasury yields leapt as an unnerving collapse in British gilts ricocheted around global bond markets.

Futures pricing shows traders are positioned for about a 90% chance of a 75 basis point Fed hike next month and for the Fed funds rate to hit 4.5% by February and stay there most of 2023. That outlook is giving dollar bulls another run and has the greenback drifting toward the milestone highs it scaled last month.

FTSE100 live outlook prediction analysis for 11th October 2022

That was a decent bounce off the 6920 yesterday with the bulls managing to get it to 7000 before it dropped off again, and overnight we are back at 6920. Below this the next daily support is at the 6862 level and if we get a bear Tuesday we may well see this. It looks pretty weak across the board to start with today so we could see a rise and dip play out on the various indices.

I am thinking that the FTSE100 will get a rise towards the 6980 level (and thus set a lower high for the week so far) as we have the 200ema 30m here, but also more crucially it will be the first test of the now bearish Hull MA on the 2h.

If we were to slide from there then we may well break the 6920 the more it gets tested which may well see that next daily support level, and also S2 at 6885.

Above the 6980 level then the bulls would once again want 7000, and try and push past it this time. However we have key fib resistance at 7015, and also the red 2h coral at 7010 so there are a couple of strong resistance levels in play that they would need to break, to target R2 at 7042 above that. A hold above 7000 would also bode well for some further strength ahead of the US CPI figures on Thursday.

Should the bears break 6885 then 6862 as mentioned, and below that 6848 for S3. I don't think we will get that low, as cable drops back further (which will help underpin the FTSE100 for the moment) and is back at the 110 level.

S&P500
As with the FTSE it's back at yesterday's low so we may well see a double bottom bounce on this as well for a rise towards the 3635 resistance level. That could tie in with a test of the 2h Hull MA, though whilst that is currently higher than this level its dropping quite steeply. If the bears were to break below the 3590 level where we have the key fib support (and the double bottom area) then 3585 is S1, but more crucially the bottom of the 10d raff channel is at 3572 and would probably be seen.

The bulls are slightly on the back foot after the recent gains, though once again referring to the seasonality chart here, we do get a strong start in October, dip down, then the bulls come fighting back. Will we see that again this year?!

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 FTSE100, 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 FTSE100, DAX40, Gold and S&P500.
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