Quote from Nick on 8th June 2020, 9:02 am

FTSE 100 live outlook prediction analysis for 8th June 2020

• US adds 2.5m payrolls in May, defying expectations of a 7.5m drop
• Unemployment rates falls to 13.3pc

Global markets soared Friday as a blowout US jobs report boosted a rally that shows no signs of slowing down. The rise in US employment defied all expectations, and suggested a recovery may be swifter than feared. Stocks turned green across the board. Even Apple gained 2.5pc despite an expected delay to the new iPhone. Broadcom, a US semiconductor supplier, said it anticipated its revenues from Apple’s next phone would come later in the year, between October and December. Normally it is released in September.

Meanwhile, the FTSE 100 popped 2.3pc as three quarters of London’s top companies grabbed gains to reach the top of the Raff channel at 6502. The blue-chip index is now nearly 30pc off the lows it hit during the recent market plunge, closing at levels last seen on March 6, when the UK’s Covid-19 outbreak was still in its early stages. Gains were trimmed slightly by a rise in the pound, which continued its rally, up strongly against the dollar and the euro as a squeeze on short sellers and a global shift towards risk boosted the currency.

Analysts at Bank of America said June is shaping up to be a “pivotal” month for sterling, with the June 19 EU Summit and end-of-month deadline for the UK and EU to extend talks looming on the horizon. They said the pound’s moves are “likely to become more idiosyncratic”. Writing ahead of the US job reading, Barclays said global stock markets seem to be comfortably settled into a new bull period.

Gains Ahead

Asian stocks looked set to start the week with gains after Friday’s U.S. jobs report smashed expectations and bolstered hope of a quick economic rebound. Futures pointed higher in Japan and Hong Kong. Australia has a holiday. U.S. index futures climbed in early Asia trading, while the dollar traded mixed against its Group-of-10 peers after sliding Friday. After the jobs data, the S&P 500 Index closed 2.6% higher and posted a third weekly advance, leaving the gauge up more than 40% from its March low. Benchmark Treasury yields rose to an 11-week high. Meanwhile, China’s trade surplus surged to a record in May as exports fell less than expected, helped by an increase in medical-related sales. Elsewhere, oil looks to extend gains after rising for six straight weeks, as OPEC agreed to a one-month extension of its record oil-production cuts.

Positive Signs

There’s so much positive momentum in risk assets, it’s difficult to see what could stand in the way of the emerging-market rally, at least in the coming days. The stronger-than-forecast May U.S. jobs report and weekend agreement by OPEC+ to a one-month extension of its record output cuts may add to the optimism about the prospects for a global economic recovery, underpinning risk assets. JPMorgan Chase & Co.’s measure of implied volatility for emerging-market currencies had its biggest weekly drop since 2011. Stocks enjoyed their best week since 2011, while an index of domestic bonds reached its highest point since early March. While the Federal Reserve is forecast to hold interest rates near zero when policy makers meet Wednesday, investors will be watching for clues on further stimulus in Chairman Jerome Powell’s remarks. Technical indicators suggest the prospects for developing-nation assets look promising as the dollar wobbles.[Bloomberg]

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

Asian stocks started the week with gains after Friday’s U.S. jobs report smashed expectations and bolstered hope of a quick economic rebound. The dollar extended its recent slump. Equities climbed modestly in Japan, China and Hong Kong, while Korean shares lost much of an early advance. Australia’s markets were closed for a holiday. S&P 500 contracts were largely flat after the index posted a third weekly advance last week. The dollar headed for an eighth straight day of declines, while 10-year Treasuries retained last week’s losses.

I am expecting Friday's bullishness to continue today as the 2 hour chart has (inevitably) gone bullish, with support to start with today at 6441 to start with. We also have the daily pivot at 6431 to act as initial support in this area. That said, the daily RSIs are overbought so cautiously bullish for today. Australia was closed today but the futures prices held fairly steady after Friday's gains across the board, and Asia gained also. As such, I am looking at a retest of the 6500 level, with a rise to R1 at 6528 looking quite likely. Bull Monday may well be kicking in today.  Should the bulls break above R1 then we are not that far from the 200ema on the daily which is at 6611 now, and should see a reaction if we were to get that high this week. The S&P continues to push on, with a rise towards the top of the 10 day Raff channel at 3230 looking distinctly possible.

Should the bears manage to break below the initial support at the 6430 level then the fib level at 6369, along with S1 and the 200ema at the 6357 level would be the next area of main support and worth a long in this area should it get that low.

The first country to report zero C-19 cases is New Zealand as a result of their lockdown and measures taken.

Caution
The slight spanner in the works for the bulls is that the daily RSI's are quite overbought - the S&P RSI(10) is at 79 for example, Dax is at 82 and FTSE at 72. As such, we are due a pullback to get out of that overbought before it can push on that much higher, however, the RSI can remain overbought or oversold for a while before getting a reaction. i.e. it's not an entry signal in itself but something to bear in mind. With that job data on Friday, could we be seeing the blow off top and the next leg down starts this week?

So, cautiously bullish today, looking at the 6430/6440 area as initial support today, for a retest of the 6500 level but should that break then a drop down to 6350 looks likely. 6530 level as resistance above, with 6610 as fairly key resistance higher up. Just as an aside the higher level at 6730 would be a back test of the multi year uptrend that we have been in for some years, and a trend line that broke due to C-19 driving the markets sharply down.

Good luck today.

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