Quote from Nick on 26th February 2021, 9:49 am

FTSE 100 live outlook prediction analysis for 26th February 2021

The Nasdaq fell sharply on Thursday as fears resurfaced of a bursting bubble in technology stocks. New York’s tech-heavy index lost 3.3pc to close at 13,143.13, wiping out February’s gains as traders dumped digital companies that have done well out of the pandemic, and switched to stocks poised to benefit from easing restrictions. The Nasdaq 100 - made up of the 100 top domestic and international non-financial firms based on market capitalisation - shed 3.6pc, the most since October.

Adding to pressure was a rise in US bond yields. The yield on benchmark 10-year treasuries hit a one-year high, adding as much as 23 basis points to 1.6pc, in a warning sign for riskier assets. Analysts said the rise in yields had prompted investors to sweep profits on some of the stocks that had rocketed over the past year, amid concerns over heightened valuations.

The five tech FAANG stocks each dipped more than 3pc into the red, with the exception of Netflix which fell 1.2pc. Among other drags was Microsoft, Nvidia and Elon Musk’s Tesla. Still, the losses do little to dent share prices for these firms that have reaped in rewards since the pandemic struck. Tesla has surged over 400pc in the past year.

Bond Rout

Asian stocks looked set for losses Friday after a selloff in global bonds deepened, wreaking havoc across markets. The dollar jumped. Futures pointed over 1% lower in Australia, Japan and Hong Kong. A poorly received Treasury auction saw the 10-year benchmark surge as much as 23 basis points to 1.6%. The selloff accelerated as holders of mortgage securities were forced to offload government bonds. Australian bonds slumped in early Asian trading. Tech shares led losses in U.S. stocks, which saw the S&P close down 2.5%. The Nasdaq 100 tumbled 3.6%, the most since October, as investors rotated away from pandemic-era winnerstoward companies poised to benefit from an end to lockdowns. Still, stocks popular with the day-trader crowd surged once again, with GameStop doubling at one point before ending 19% higher.

Keep Your Promises

President Joe Biden’s nominee for trade chief called on China to live up to the commitments in its trade pact with the U.S. — the strongest signal yet that the new administration plans to build on the accord brokered by its predecessor rather than scrap it. During her confirmation hearing, Katherine Tai, the pick for U.S. trade representative, said the Biden administration needs to be “exploring all our options" and that China “needs to deliver” on its trade promises. Tai is widely expected to be easily confirmed.[Bloomberg]

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US & Asia Overnight from Bloomberg

Global bonds attempted to recover from an aggressive selloff that drove steep losses in Treasuries and U.S. stocks Thursday. Asian stocks slumped and U.S. and European futures pointed lower.

Benchmark Treasury yields fell back below 1.5% and their Australian equivalents swung amid an unscheduled purchase operation from the country’s central bank. The U.S. 10-year yield traded as high as 1.6% Thursday, when a poorly received government auction led to forced selling by holders of mortgage securities. Japan’s benchmark hovered near its highest level since early 2016. The dollar extended overnight gains.

Stocks dropped more than 2% in Japan, South Korea and Hong Kong, and were weaker across the region. S&P 500 futures slipped after the benchmark closed down 2.5% with tech shares leading losses. The Nasdaq 100 tumbled 3.6%, the most since October, as investors rotated into companies poised to benefit from an end to lockdowns. Still, stocks popular with the day-trader crowd surged once again, with GameStop Corp. doubling at one point before ending 19% higher.

Investors are betting on a sharper-than-expected rebound for the global economy, with some growing increasingly worried that accelerating inflation could trigger a pullback in monetary policy support. Federal Reserve officials so far say surging Treasury yields reflect optimism and have stressed that the central bank has no plans to tighten policy prematurely.

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

Bears literally grabbed the bull by the horns yesterday and took control and bond yields continued to rise having started to do so on Wednesday,. We are of course on the last day of the month as well today so we could well see a rise and dip play out - bargain hunters come in, then we see profit taking later for month end. The charts have gone bearish as you would expect with the 2h ones showing various resistance levels that look good - FTSE at 6628, S&P at 3875, Dax at 13899. As such, a rally to these sort of levels is worth a short. February has held up pretty well all thing considered though shorting the rallies has still worked out well. We may well see some more declines in March though as we start to unwind restrictions and what the outcomes are.

For support initially we are looking at the 6562 level which has held overnight, and then the key fib at 6550 below that. With S1 then sitting at 6536 the bulls will need to be quick out the blocks really today and try and aim for the daily pivot at 6620.If they do so that will bring those 2 hour resistance levels into play - the coral is 6621 and the Hull Moving average is at 6628. Below S1, we have the bottom of the 20d Raff channel at 6500 which I would like to see a bounce off, otherwise we then have 6486 is S2 and 6463 even lower down. Might not get that low today I don't think - possibly a bit of consolidation after yesterday's sell off.

For the bears they will be looking to break above the 6630 level as we have the 200ema and 30min coral lines here, just above that 2h resistance. Should they manage then 6650, 6670 for R1 and 6700 are the next levels of note to keep an eye out for.

The S&P bulls will be keen to keep the price above the 3800 level, and in fact the double bottom with Tuesdays low at 3810 has held overnight. They will really need to break above the daily pivot at 3858 though as we also have the red 30m coral lien here. If they managed that then the 2h resistance levels are in play - 3877 and 3883.

So, watching the 6550 level as initial support with 6500 below that and thinking a rise towards the 6620/6630 area may well happen. Markets are spooked a bit after yesterday though and worried that the tech driven rises are unwinding. Bear in mind its Friday and month end so be a bit more cautious today. Have a good weekend.

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