Quote from Nick on 5th October 2022, 10:14 am

FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

Asian stocks played catch-up to a sharp rally in US and European equities that began to fade as fledgling hope that central banks would temper the pace of interest rate increases slipped further from view. Asian stocks rose on Wednesday as investors grew hopeful future global interest rate rises might become less aggressive amid early signs previous policy tightening was working to temper price pressures in some major world economies.

US and European equity futures fell on Wednesday, taking the shine off the best two-day run for the S&P 500 since March 2020 and the strongest session for European stocks in six months. Equities gained ground across Asia. Shares in Australia and Japan traded higher and Hong Kong stocks headed for their best session since March after a one-day break.

On Wall Street, the Dow Jones and S&P 500 indexes staged their biggest two-day rallies in two years as fears of aggressive rate hikes eased.

The positive sentiment was fuelled after U.S. job openings fell by the most in nearly 2-1/2 years in August in a sign the Federal Reserve’s mission to tame demand by hiking rates was working.

However, in a sign some central banks are still anxious about inflation, New Zealand raised its rates 50 basis points on Wednesday, as expected, but said it had considered a 75-basis point increase.

The Dow Jones Industrial Average rose 2.8%, the S&P 500 gained 3.06% and the Nasdaq Composite added 3.34%. The S&P 500 has recorded its third-best start to an October since 1930, according to Macquarie analysts.

U.S. crude dipped 0.15% to $86.39 a barrel. Brent crude fell flight $91.80 per barrel.

Worldwide Woes
New Zealand house prices suffered one of their biggest quarterly drops on record in the three months through September, and the worst may not be over, according to CoreLogic. The 4.1% quarterly decline is second only to a 4.4% drop in the wake of the global financial crisis 14 years ago. The news comes after Australia posted an eighth straight month of declines in bellwether Sydney. In the US, home prices are now posting the biggest monthly declines since 2009, as skyrocketing mortgage rates drive affordability to the lowest level since the 1980s. And prices in the UK have stagnated, with lenders withdrawing mortgage products and Credit Suisse predicting falls of up to 15%.

FTSE100 live outlook prediction analysis for 5th October 2022

A strong rally again yesterday  after bull Monday with some definite pumping along the way as you can tell when a resistance level doesn't get much reaction - it only dipped 15 points off the 7025 level then took off to see a daily high of 7090.

For today I think we may see a bit of consolidation. I still think we are past peak inflation now, and am sticking my neck out and remaining bullish till year end now. Various cost bases are dropping that will lead to deflation, without interest rates needing to be aggressively raised - commodity costs, retail inventory increased, shipping costs vastly reduced and so on. I have already just started to see some retail offers appearing which have been non-existent the past 6 months. 20% off, BOGOFs and so on. Again, suggesting retail stock is high and not shifting - price reductions leading to lower inflation. It's almost like its been an engineered squeeze to set a new normal....

Initially we have resistance from the key fib at 7077, and we could see an initial drop down from this area to the daily pivot at the 7015 level. The bulls will of course be desperate to keep the price above 7000 having brought it up from 6800, and likewise the S&P bulls will be wanting to push for (and past) 3800.

I am still in buy the dip mode for the start of October, but will still short the resistance levels as they get tested.

Above the 7077 level then 7100 is the next key round number resistance (and 20d Raff channel top), with 7129 R1 above that. We could see a rise to that if the daily pivot is tested and holds, as that would likely see more bulls come into the market.

For the bears they will be looking to break it back below 7000 though I think that we will see a decent defence from the bulls today for a consolidation day. That fits in with the ASX200 having a pretty flat day as well.

Oil production cuts are being mooted by Russia and Saudi Arabia as they are of course worried about the price falling too far. The chart analysis I did a while back flagged $40 per barrel in the future and that remains the case for the moment, just hard to say when exactly but still looks bearish.

Below the 7000 level then we would likely see a slide to S1 at 6941, and we also have the 2h Hull MA support here - as such it could be a decent swing long area so look to go long here if seen. 6970 is also the 200ema 30m and the key fib for support in-between those other levels.

So, looking at consolidation - 7015, 6970, 6945 as support, 7077, 7129 as resistance.

Good luck today.

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