Quote from Nick on 28th January 2021, 9:55 am

FTSE 100 live outlook prediction analysis for 28th January 2021

The FTSE 100 and FTSE 250 both tumbled on a poor day for European stocks, which fell ahead of the evening’s Federal Reserve meeting despite some standout individual performances – including by some companies swept up in a short-squeezing frenzy led by investors coordinating on website Reddit.

The pound briefly touched a new nearly three-year high during the morning, before falling back again as markets turned nervous and the dollar strengthened.

Stockbrokers have buckled under the weight of thousands of customers placing bets on surging shares driven by day traders on Reddit, as the battle against short-sellers spreads to Britain. British investors have joined in the frenzied trading in the soaring shares of GameStop, Nokia and Blackberry, pushed higher by users of Reddit, an internet forum, who are fighting back against hedge funds "shorting", or betting against, the stocks.

What's Next?

Amid the coordinated short-squeeze being deployed by Reddit’s army of day traders, Wall Street is scanning for which of the market’s most-hated shares could be targeted next. GameStop — which entered the week with 139% of its available shares borrowed and sold short, according to data from S3 Partners — served as a proof of concept. The video-game retailer has soared nearly 700% in five days, sending its market value above $23 billion, prompting even Michael Burry to call its rally "insane." Now, analysts are casting an eye toward others.

Markets Slide

Asian stocks looked set to slide Thursday as their U.S. peers extended losses in after-hours trading on disappointing earnings from tech giants and concerns about valuations. The dollar jumped the most since September and Treasuries climbed. Futures pointed lower in Japan, Hong Kong and Australia. Earlier, the U.S. benchmark fell 2.6% — the most since October — after Federal Reserve officials left their main interest rate unchanged. Ten-year Treasury yields fell to just over 1%.

Unwavering Support

Federal Reserve Chair Jerome Powell made clear the U.S. central bank was nowhere near exiting massive support for the economy during the ongoing coronavirus pandemic, as officials left their benchmark interest rate unchanged near zero and flagged a moderating U.S. recovery. The central bank’s policy-making body repeated it would maintain its bond-buying program at the current pace of $120 billion of purchases per month until “substantial further progress” toward its employment and inflation goals has been made. Separately, Secretary Janet Yellen and the Biden administration’s economic team announced they are watching stock-market activity around heavily shorted companies.[Bloomberg]

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US & Asia Overnight from Bloomberg

Global stocks fell back further from last week’s record amid disappointment over technology earnings and concern about valuations and the impact of frenzied retail trading in parts of the U.S. market. The dollar rose.

Nasdaq 100 futures underperformed as results from the likes of Apple Inc. and Tesla Inc. sent shares sliding after market, while stocks in Hong Kong and Australia saw the bulk of Asian losses.

Earlier, the S&P 500 slumped 2.6% -- the most since October -- after Federal Reserve officials left their main interest rate unchanged and made clear the central bank was nowhere near exiting massive support for the economy. Treasuries steadied, with 10-year yields at just over 1%.

Turmoil continued in parts of the market where retail traders are becoming a major force. Shares of GameStop Corp. and AMC Entertainment Holdings Inc. tumbled post-market, paring Wednesday’s surge. The WallStreetBets Reddit forum, which fueled the retail frenzy, was briefly made private by moderators.

A push higher for stocks has reversed this week as investors looked to a spate of earnings releases for clues about corporate health. Fed Chairman Jerome Powell said at a press conference that the U.S. economy was a long way from full recovery and still short of policy makers’ inflation and job goals.

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

After such a strong down move yesterday (I am still bearish for the next few weeks following the inauguration) we may well see a bit of a relief bounce today and the S&P trying to recapture the daily pivot level at 3760. If the bulls can break above that then we should see a rise back towards the 3810 area where we have R1 for today. A break of the overnight lows at 3710 though and it starts getting pretty bearish. 3710 is the bottom of both the Raff channels.

The FTSE is also just above the 20d Raff channel as I write this with 6435 support from that, coupled with the key fib here as well. As such, if we get an initial dip we may well get a subsequent rise from there. With the slide we have seen most charts are bearish, and to be honest we may well remain fairly bearish for the next few weeks as the Trump driven rally cools off. Still thinking end of February will start to see the bulls come back into the game. Daily RSI's etc have obviously cooled off a bit now as well.

So initial support on the FTSE is at 6435, but below that then S1 is at 6380 - another 100 point drop from where we are at 7am. It may well get that low, and as one of the members mentioned in the chat room, it may well be the institutions driving it down in retaliation to the "attack" from the WallStreetBets mob. That said, 6410 is the bottom of the 10d Raff channel as well and may well offer some support  on any slide. 6354 is the 200ema on the daily and would likely see a reaction if tested - maybe tomorrow for a test of that line though.

For the bulls they will be looking to break above the daily pivot a 6521. That then opens up a possible rise to the 6630 level where we have a test of the 200ema on the 30m chart, and just above R1 at 6599. 6585 is also the Hull moving average on the 2h chart though would be the second test of this as we dropped off it yesterday at the 6660 level. 6640 is also the red coral though again, wouldn't be the first test. First test of a key level is usually the best, subsequent ones are usually weaker.

Could be another interesting day today - looking for a bit of a relief rally, especially if the S&P can defend that 3715 level. 6430 for support and 6520 for resistance are the main levels I am watching. Good luck today.

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