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Inflation rises to scupper the bulls short term | 6920 6890 6873 support | 6982 7020 resistance

#1 · 19th October 2022, 9:37 am

Quote from Nick on 19th October 2022, 9:37 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Stocks were mixed in Asia and US equity futures climbed as traders assessed prospects for earnings growth against a backdrop of rising interest rates. Asian shares were mostly higher on Wednesday, with U.S. corporate earnings aiding sentiment, while traders awaited British inflation readings later in the day for clues on how hawkish central banks need to be to fight inflation.
An Asia Pacific share gauge fluctuated, with stocks rising in Japan and Australia but falling in South Korea and Hong Kong. Heavyweight technology shares including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. declined.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2%, but further gains were capped by slight falls in Chinese shares. China’s mainland bluechips lost 0.2% while Hong Kong’s Hang Sang index fell 0.1%.
Elsewhere, stocks tracked Wall Street higher. Japan’s Nikkei advanced 0.4%, Australia’s resources-heavy shares gained 0.4%, while South Korea rebounded 0.5%.
U.S. S&P 500 futures rose 0.8% and the Nasdaq futures jumped 1.3%. Netflix Inc reversed customer losses that had hammered its stock this year and projected more growth ahead, sending shares 14% higher in after-hours trading.
Better-than-expected quarterly results from Goldman Sachs Group Inc, Johnson & Johnson and Lockheed Martin helped U.S. stocks rally. Both the Dow Jones and the S&P 500 gained 1%.
The U.S. dollar was little changed on Wednesday and hovered close to the weakest level in almost two weeks. It, however, hit another fresh 32-year high of 149.34 yen overnight, before stabilising at 149.16 amid risk of intervention from the Japanese authorities.
Sterling gained 0.14% against the greenback to trade at $1.1335 after easing slightly in the previous session.
The U.K., which has been roiled by a historic crisis in the government bond market, will report inflation readings for September later in the day, with annual inflation likely running at a double digit of 10% last month.
That would likely pressure the Bank of England to hike more aggressively. The BoE said overnight that it would start selling some of its huge stock of British government bonds from Nov. 1, but would not sell this year any longer-duration gilts.
Oil prices recovered some ground on Wednesday, after plunging more than 3% in the previous session on fears of higher U.S. supply and the economic slowdown in China. Brent crude futures rose 0.9% to $90.87 per barrel, while U.S. West Texas Intermediate (WTI) crude jumped 1.5% to $84.03 per barrel.
Netflix Beats
Netflix added 2.41 million customers in the third quarter, growing in all regions of the world and exceeding Wall Street expectations. The earnings beat fueled a rally in tech stocks, easing investor concerns about growth in one of the hardest hit sectors this year. Shares of Netflix rose as much as 16% in extended trading, though the stock remains down 60% this year through the close Tuesday.
FTSE100 live outlook prediction analysis for 18th October 2022
The bulls failed to hold above the 7000 level yesterday and we have dropped off a bit overnight as well. The 6920 level is funnily enough back in play as support, as we have the 200ema and the key fib for today just above this level, so should we drop down to that then we may well see a bounce.
Inflation figures out this morning showed a small increase to 10.1%. UK inflation has returned to double digits as the latest data from the ONS shows that consumer prices rose by 10.1pc in the year through September. This is a slight increase from August when it was 9.9pc and just above forecasts of 10pc. On a monthly basis, consumer prices rose by 0.5pc in September, which is the same as in August. Food and non-alcoholic drinks were the largest drivers of inflation, rising by 14.5pc - up from 13.1pc in August. This will pile more pressure on households at a time when bills and mortgage costs are already rising rapidly. This comes as the Government refuses to rule out scrapping the triple lock, which ensures that state pensions rise in line with inflation. Abandoning the policy could see pensions fall significantly in real terms from next April.
Initial support this morning is at the daily pivot at 6970, though with the inflation data out this may break initially/overshoot. That said, the Hull MA on the 2h chart has support at 6940 so a possible overshoot to this at the bell may well play out.
I am thinking that the bulls will try again to break above the 7000 level, though we have resistance at 7020 with the R1 and key fib level here. Once again they will be trying to close above 7000 to get things a bit more optimistic. If they can, and it also looks like the S&P500 wants to push up towards the 3780 level today, then things could start to look up for the bulls.
The daily chart on the Dax has just gone very weakly bullish as well, with 13000 being the main line in the sand that the bulls will want to recapture.
Above 7020 then 7068 is the R2 level and also the top of both the Raff channels so should we get a rise to here then I would expect to see a bearish reaction - profit taking from the recent climb and some new shorts coming in.
Below the 6925 level then the 2h coral is now green and at 6890 (and rising slowly) so should we dip here then a long here is also worth a go today.
Basically there is a lot of chop still around (could be signalling a trend change of course) but do bear that seasonality chart in mind.
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

Stocks were mixed in Asia and US equity futures climbed as traders assessed prospects for earnings growth against a backdrop of rising interest rates. Asian shares were mostly higher on Wednesday, with U.S. corporate earnings aiding sentiment, while traders awaited British inflation readings later in the day for clues on how hawkish central banks need to be to fight inflation.

An Asia Pacific share gauge fluctuated, with stocks rising in Japan and Australia but falling in South Korea and Hong Kong. Heavyweight technology shares including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. declined.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2%, but further gains were capped by slight falls in Chinese shares. China’s mainland bluechips lost 0.2% while Hong Kong’s Hang Sang index fell 0.1%.

Elsewhere, stocks tracked Wall Street higher. Japan’s Nikkei advanced 0.4%, Australia’s resources-heavy shares gained 0.4%, while South Korea rebounded 0.5%.

U.S. S&P 500 futures rose 0.8% and the Nasdaq futures jumped 1.3%. Netflix Inc reversed customer losses that had hammered its stock this year and projected more growth ahead, sending shares 14% higher in after-hours trading.

Better-than-expected quarterly results from Goldman Sachs Group Inc, Johnson & Johnson and Lockheed Martin helped U.S. stocks rally. Both the Dow Jones and the S&P 500 gained 1%.

The U.S. dollar was little changed on Wednesday and hovered close to the weakest level in almost two weeks. It, however, hit another fresh 32-year high of 149.34 yen overnight, before stabilising at 149.16 amid risk of intervention from the Japanese authorities.

Sterling gained 0.14% against the greenback to trade at $1.1335 after easing slightly in the previous session.

The U.K., which has been roiled by a historic crisis in the government bond market, will report inflation readings for September later in the day, with annual inflation likely running at a double digit of 10% last month.

That would likely pressure the Bank of England to hike more aggressively. The BoE said overnight that it would start selling some of its huge stock of British government bonds from Nov. 1, but would not sell this year any longer-duration gilts.

Oil prices recovered some ground on Wednesday, after plunging more than 3% in the previous session on fears of higher U.S. supply and the economic slowdown in China. Brent crude futures rose 0.9% to $90.87 per barrel, while U.S. West Texas Intermediate (WTI) crude jumped 1.5% to $84.03 per barrel.

Netflix Beats
Netflix added 2.41 million customers in the third quarter, growing in all regions of the world and exceeding Wall Street expectations. The earnings beat fueled a rally in tech stocks, easing investor concerns about growth in one of the hardest hit sectors this year. Shares of Netflix rose as much as 16% in extended trading, though the stock remains down 60% this year through the close Tuesday.

FTSE100 live outlook prediction analysis for 18th October 2022

The bulls failed to hold above the 7000 level yesterday and we have dropped off a bit overnight as well. The 6920 level is funnily enough back in play as support, as we have the 200ema and the key fib for today just above this level, so should we drop down to that then we may well see a bounce.

Inflation figures out this morning showed a small increase to 10.1%. UK inflation has returned to double digits as the latest data from the ONS shows that consumer prices rose by 10.1pc in the year through September. This is a slight increase from August when it was 9.9pc and just above forecasts of 10pc. On a monthly basis, consumer prices rose by 0.5pc in September, which is the same as in August. Food and non-alcoholic drinks were the largest drivers of inflation, rising by 14.5pc - up from 13.1pc in August. This will pile more pressure on households at a time when bills and mortgage costs are already rising rapidly. This comes as the Government refuses to rule out scrapping the triple lock, which ensures that state pensions rise in line with inflation. Abandoning the policy could see pensions fall significantly in real terms from next April.

Initial support this morning is at the daily pivot at 6970, though with the inflation data out this may break initially/overshoot. That said, the Hull MA on the 2h chart has support at 6940 so a possible overshoot to this at the bell may well play out.

I am thinking that the bulls will try again to break above the 7000 level, though we have resistance at 7020 with the R1 and key fib level here. Once again they will be trying to close above 7000 to get things a bit more optimistic. If they can, and it also looks like the S&P500 wants to push up towards the 3780 level today, then things could start to look up for the bulls.

The daily chart on the Dax has just gone very weakly bullish as well, with 13000 being the main line in the sand that the bulls will want to recapture.

Above 7020 then 7068 is the R2 level and also the top of both the Raff channels so should we get a rise to here then I would expect to see a bearish reaction - profit taking from the recent climb and some new shorts coming in.

Below the 6925 level then the 2h coral is now green and at 6890 (and rising slowly) so should we dip here then a long here is also worth a go today.

Basically there is a lot of chop still around (could be signalling a trend change of course) but do bear that seasonality chart in mind.

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