Quote from Nick on 29th October 2018, 11:02 am

29th October 2018

Friday saw US stocks have plunge into correction territory after the recovery on markets was derailed by tech titans Amazon and Google reigniting fears of corporate earnings reaching their peak. Global stocks ended a rollercoaster week sliding deep into the red after the Silicon Valley giants missed Wall Street expectations in their third quarter updates. The S&P 500 finished on Friday just short of a 10 percent decline from its record September high and remains on pace for the worst month since 2009. Treasuries were well bid last week, dragging the 10-year yield back down to 3.08 percent after setting a seven-year high of 3.26 percent earlier this month.

Investors have been rattled this month by fears of rising borrowing costs and early signs of stellar corporate earnings in the US deteriorating.

The S&P 500 tumbled as much as 2.8pc in the tech-led rout to slip into the feared territory. A correction is when an index falls more than 10pc from its 52-week high. The sell-off in Europe accelerated following sharp losses at the opening bell on Wall Street. The FTSE 100 is now on course for its worst month since the financial crisis but pulled away from  a 22-month low after a late rally, closing 1.4pc lower.

The latest China purchasing managers' index figures are out midweek and will give us the first real litmus test of Beijing's sentiment-lifting efforts. And because the numbers aim to reflect changes in perception about whether things have improved, October's PMIs will be super helpful.  China's most recent GDP report showed an improvement in both primary (raw materials etc.) and tertiary (services) industries, but a significant drop in growth in the secondary (manufacturing) industry.

News highlights today include UK mortgage lending, US Core PCE and UK Chancellor Hammond to deliver the Autumn budget statement. Note: UK clocks moved back an hour on Sunday 28th October.

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FTSE 100 Trading Signals, Forecast and Prediction

For today I think we might see the support area at 6920/6930 hold this morning for a bit of a bull Monday and a bounce up towards the resistance at 7005. The bulls will be keen to push above the overnight high and fib level at 6985 and get the FTSE 100 back above 7000. If they were able to break 7005 resistance then a rise towards the 7055 level looks viable, and we are also then nearing the daily resistance at 7114 and the 25ema on the daily at 7135. These levels all look fairly key, should the latter break then short term we are not looking quite so bearish.

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