Quote from Nick on 3rd March 2020, 10:17 am

FTSE 100 live outlook prediction analysis for 3rd March 2020

After a very volatile session, London's benchmark FTSE 100 index closed 1.13pc higher at 6,654.89 while the wider FTSE 250 dipped 0.15pc to 19,301.70. In the eurozone the CAC pushed 0.44pc ahead and the DAX fell 0.27pc.

The FTSE 100 outperformed its continental peers in part due to a weakening pound. Banks and travel groups were the worst performers. We had a great drop off the 6760 resistance level in the morning, dropped down to the 6500 support then retraced the entire fall back to 6780 overnight. Volatility continues apace though, with a drop of 100 already overnight. The S&P managed to defend the 2 hour support level at 2910 and saw the bulls recapture 3000, almost managing 3100 late in the session. A push towards 3130 and the top of the 10 day Raff channel looks like it might well play out.

U.S. equity futures surrendered gains, Japanese stocks tumbled and bond yields fell Tuesday as enthusiasm about a shift by global policy makers to aid growth faded.

Another Gauge Down

Global manufacturing contracted in February by the most since 2009 as the coronavirus severely disrupted demand, trade and supply chains. The JPMorgan Global Manufacturing PMI fell 3.2 points to 47.2, snapping a three-month streak of expansionary readings, according to a report released Monday. Production plunged the most in almost two decades while the measure of new export orders also fell to the lowest since 2009. The report adds to signs that the global economy faces its biggest test since the financial crisis just as concerns about trade tensions had begun to ease. The Paris-based OECD warned Monday that economic growth will sink to decade lows as the coronavirus outbreak hammers demand and supply. How bad is it? Factory employment declined for a third straight month, with the rate of job losses the fastest since 2009. Output contracted in 15 of 31 economies, including China, Japan, Germany, France, Italy, Taiwan, South Korea and Australia. The figures reflect record weakness in Chinese manufacturing data, amid factory shutdowns from China to South Korea. Meanwhile, the virus is showing no signs of stopping its spread: Four more patients died in Washington state, a top U.S. disease expert said the coronavirus is likely becoming a pandemic as global cases reached 89,000, and the death toll rose to more than 3,000. It’s prompted several of the biggest U.S. banks to expand their travel curbs.

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

We had a pretty big range yesterday with the drop down to 6500 then climb back, and that volatility is set to continue. The media are really ramping it up and we are now seeing panic buying taking hold more and more. That said we have seen good support holds on the markets, and there is still the potential for the FTSE 100 to climb to the 6850 level today. Will the low be in at 6450 for the moment? If we were to break below that then 6200 and 6000 are the next major levels to watch. If the bulls could break above the 6850 level then the 6950 level comes into play.

For today I am initially looking at support at the daily pivot level at 6670, though we may well see a drop below this to test the key fib level at 6629. If the bulls can maintain yesterday evenings buying enthusiasm then we may well get the rise to the 6850 resistance level today. We got a decent bull Monday yesterday, so if we are calming down a bit then we may well get a bear Tuesday - and a rise and dip pattern may well play out. Prior to the 6850 level we do have the 200ema on the 30min chart at 6778 which the bulls will need to break, so we may well see some reaction here.

If the bears were to break below the 6629 level then I am looking at a drop down to the S1 level at 6568. Should we break this then yesterdays low at 6500 and the recent low at 6450 both loom into view. That said, I am thinking that we see a rise and dip play out today, as the markets take a breather from the fear. The US is certainly worth watching though and as mentioned above I am looking for the S&P500 to rise to test the 3130 level. If it break though that (top of the 10 day Raff channel here) then we may well see a rise to the 3215 area.

So, cautiously bullish again today, thinking that the pivot and 6629 support level will hold any early test.

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