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Bears continue | Nice drop off 7030 | 6900 6800 6760 support | 6968 7000 7040 resistance

#1 · 13th May 2021, 8:59 am

Quote from Nick on 13th May 2021, 8:59 am
FTSE 100 live outlook prediction analysis for 13th May 2021
Fears are growing that the US recovery could be derailed by surging prices after inflation jumped to its highest level since 2008. April’s consumer prices index surged by 0.8pc and pushed annual inflation to 4.2pc, its highest since September 2008. The figure, which was far higher than the 3.6pc expected, sparked a turbulent day on markets as traders bet on the Fed reining in its Covid-19 stimulus.
The S&P and Dow Jones each closed 2pc down, with the former clocking its biggest one-day percentage drop since February. The tech-heavy Nasdaq tumbled almost 3pc. Adding to inflationary pressures, US petrol prices rose to a seven-year high yesterday.

Motorists in the US have already been hit in the wallet after the cost of second-hand cars soared 10pc in a month, the biggest rise since 1953. Semiconductor shortages hampering vehicle production have forced car hire firms such as Avis and Hertz to hoover up second-hand cars to meet recovering demand.
President Joe Biden’s stimulus packages are largely funded by borrowing and have also fuelled inflation worries.
Economists said the inflation move was exaggerated by price falls a year earlier. But core prices, which strip out volatile food and energy, also rose at the fastest pace for almost 40 years. The Fed last year changed its policy to allow the US economy to run hotter as it pulls away from Covid-19.
Stocks Tumble
Asian stocks are set to extend a selloff after a U.S. inflation reading saw the S&P 500 drop the most since February and bond yields jump on concern that price pressures could stifle the economic recovery. Futures pointed lower in Japan, Australia and Hong Kong. U.S. contracts were steady after the technology sector paced a 2.6% decline in the Nasdaq 100. The S&P 500 dropped more than 2% in a third-straight day of declines, though the energy sector climbed as commodity prices continued to rally. Treasury yields rose the most since March despite strong demand for 10-year notes in a monthly auction. The dollar jumped. Oil retreated back below $66 a barrel.
44 Countries
The more-infectious Covid-19 strain driving India’s crisis has been detected in 44 countries, according to the World Health Organization. The EU is pushing for a ban on all non-essential travel to and from the country, and with healthcare facilities running short of oxygen tanks and beds, Indians are on a global hunt for oxygen concentrators to assist patients with low blood-oxygen levels. Meanwhile, China’s Sinovac has become the world’s second-most widely distributed vaccine. But the company still hasn’t published any data in an academic journal and its contradictory efficacy rates are triggering concerns among scientists.[Bloomberg]
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US & Asia Overnight from Bloomberg
Asian stocks weakened Thursday after a rise in U.S. inflation sent the S&P 500 tumbling and drove bond yields higher on concerns that price pressures could stifle the economic recovery.
A regional equities gauge erased this year’s gain, though declines from Japan to Australia so far haven’t matched the pullback in indexes overnight. U.S. futures climbed. The S&P 500 and Nasdaq 100 both shed more than 2% in a third-straight day of losses, with the energy sector among the only winners as commodity prices continued their advance.
Treasury yields steadied from a climb in U.S. hours, which shrugged off strong demand at the auction of new 10-year notes. The recent cheapening may have stoked similar appetite for the 30-year bonds in Thursday’s sale. Asia investment-grade bonds dipped, while the dollar held an advance.
Meanwhile, Bitcoin slumped as much as 15% to below $50,000 after Elon Musk tweeted that Tesla Inc. has suspended vehicle purchases using the digital currency over environmental concerns. He added that Tesla will not be selling any Bitcoin.
The latest U.S. consumer prices data showed the biggest monthly rise since 2009, adding fuel to the debate over whether inflation will be persistent enough to force the Federal Reserve to tighten policy sooner than thought. The surprise reading included broad-based price pressures, and a market gauge of inflation expectations over the next five years touched its highest level since 2005 before easing.
Fed Vice Chair Richard Clarida said he was surprised by the jump, but that it should prove largely transitory.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The bulls managed to take it to that 7030 resistance level yesterday however we then saw a drop off from there and are back below 7000. The S&P is also about to retest the bottom of the Raffs and the 10 day is at 4048 for today so it will be interesting to see if this level holds. A break of that and we will likely head to 4000 and the round number. That could drag the FTSE back down to the 6900 level again, where we have the bottom of both the daily Raff channels for today. The bulls will be keen to defend this area again.
Initially I am thinking that we get a kick up towards the pivot again, from this 6940/50 area we are at as I write this, and test 6966. We may then see a stutter here, but I am thinking that we may well see a push back above 7000 today, and possibly test the 2 hour coral line resistance at 7040. If we do, we may well see the bears re-appear here.
Inflation is the main worry but to be honest it's been running hot for a good while now (and far higher than the reported % figures), so just pinning this pullback on that as a scapegoat at the moment. The plan was always to inflate the Covid debt away anyway from the very moment they started using debt in such quantity. Bit like a leveraged buy out!
Above the 7040 level (and we also have R1 at 7038) we would be looking at 7100 for R2 and then a more bullish picture unfolding. Panic over, buying can resume across the board! The S&P will need to defend the bottom of the Raff channels though.
For the bears, below the 6923 fib level then 6900 as mentioned, and below that 6833 is S2 and probably would be seen, as we continue to slide down towards the daily support at 6760, just below today's S3 level at 6770. I am not expecting us to slide this far today though and think that the bulls will stage a comeback. Later in May we may well see a more sustained sell off though!
Good luck today.
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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.
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FTSE 100 live outlook prediction analysis for 13th May 2021

Fears are growing that the US recovery could be derailed by surging prices after inflation jumped to its highest level since 2008. April’s consumer prices index surged by 0.8pc and pushed annual inflation to 4.2pc, its highest since September 2008. The figure, which was far higher than the 3.6pc expected, sparked a turbulent day on markets as traders bet on the Fed reining in its Covid-19 stimulus.

The S&P and Dow Jones each closed 2pc down, with the former clocking its biggest one-day percentage drop since February. The tech-heavy Nasdaq tumbled almost 3pc. Adding to inflationary pressures, US petrol prices rose to a seven-year high yesterday.

Motorists in the US have already been hit in the wallet after the cost of second-hand cars soared 10pc in a month, the biggest rise since 1953. Semiconductor shortages hampering vehicle production have forced car hire firms such as Avis and Hertz to hoover up second-hand cars to meet recovering demand.

President Joe Biden’s stimulus packages are largely funded by borrowing and have also fuelled inflation worries.

Economists said the inflation move was exaggerated by price falls a year earlier. But core prices, which strip out volatile food and energy, also rose at the fastest pace for almost 40 years. The Fed last year changed its policy to allow the US economy to run hotter as it pulls away from Covid-19.

Stocks Tumble

Asian stocks are set to extend a selloff after a U.S. inflation reading saw the S&P 500 drop the most since February and bond yields jump on concern that price pressures could stifle the economic recovery. Futures pointed lower in Japan, Australia and Hong Kong. U.S. contracts were steady after the technology sector paced a 2.6% decline in the Nasdaq 100. The S&P 500 dropped more than 2% in a third-straight day of declines, though the energy sector climbed as commodity prices continued to rally. Treasury yields rose the most since March despite strong demand for 10-year notes in a monthly auction. The dollar jumped. Oil retreated back below $66 a barrel.

44 Countries

The more-infectious Covid-19 strain driving India’s crisis has been detected in 44 countries, according to the World Health Organization. The EU is pushing for a ban on all non-essential travel to and from the country, and with healthcare facilities running short of oxygen tanks and beds, Indians are on a global hunt for oxygen concentrators to assist patients with low blood-oxygen levels. Meanwhile, China’s Sinovac has become the world’s second-most widely distributed vaccine. But the company still hasn’t published any data in an academic journal and its contradictory efficacy rates are triggering concerns among scientists.[Bloomberg]

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US & Asia Overnight from Bloomberg

Asian stocks weakened Thursday after a rise in U.S. inflation sent the S&P 500 tumbling and drove bond yields higher on concerns that price pressures could stifle the economic recovery.

A regional equities gauge erased this year’s gain, though declines from Japan to Australia so far haven’t matched the pullback in indexes overnight. U.S. futures climbed. The S&P 500 and Nasdaq 100 both shed more than 2% in a third-straight day of losses, with the energy sector among the only winners as commodity prices continued their advance.

Treasury yields steadied from a climb in U.S. hours, which shrugged off strong demand at the auction of new 10-year notes. The recent cheapening may have stoked similar appetite for the 30-year bonds in Thursday’s sale. Asia investment-grade bonds dipped, while the dollar held an advance.

Meanwhile, Bitcoin slumped as much as 15% to below $50,000 after Elon Musk tweeted that Tesla Inc. has suspended vehicle purchases using the digital currency over environmental concerns. He added that Tesla will not be selling any Bitcoin.

The latest U.S. consumer prices data showed the biggest monthly rise since 2009, adding fuel to the debate over whether inflation will be persistent enough to force the Federal Reserve to tighten policy sooner than thought. The surprise reading included broad-based price pressures, and a market gauge of inflation expectations over the next five years touched its highest level since 2005 before easing.

Fed Vice Chair Richard Clarida said he was surprised by the jump, but that it should prove largely transitory.

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

The bulls managed to take it to that 7030 resistance level yesterday however we then saw a drop off from there and are back below 7000. The S&P is also about to retest the bottom of the Raffs and the 10 day is at 4048 for today so it will be interesting to see if this level holds. A break of that and we will likely head to 4000 and the round number. That could drag the FTSE back down to the 6900 level again, where we have the bottom of both the daily Raff channels for today. The bulls will be keen to defend this area again.

Initially I am thinking that we get a kick up towards the pivot again, from this 6940/50 area we are at as I write this, and test 6966. We may then see a stutter here, but I am thinking that we may well see a push back above 7000 today, and possibly test the 2 hour coral line resistance at 7040. If we do, we may well see the bears re-appear here.

Inflation is the main worry but to be honest it's been running hot for a good while now (and far higher than the reported % figures), so just pinning this pullback on that as a scapegoat at the moment. The plan was always to inflate the Covid debt away anyway from the very moment they started using debt in such quantity. Bit like a leveraged buy out!

Above the 7040 level (and we also have R1 at 7038) we would be looking at 7100 for R2 and then a more bullish picture unfolding. Panic over, buying can resume across the board! The S&P will need to defend the bottom of the Raff channels though.

For the bears, below the 6923 fib level then 6900 as mentioned, and below that 6833 is S2 and probably would be seen, as we continue to slide down towards the daily support at 6760, just below today's S3 level at 6770. I am not expecting us to slide this far today though and think that the bulls will stage a comeback. Later in May we may well see a more sustained sell off though!

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

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