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Wild Thursday | 6962 7035 resistance | 6890 6830 6815 support | US rebound

#1 · 14th October 2022, 10:02 am

Quote from Nick on 14th October 2022, 10:02 am
FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
The FTSE 100 plunged Thursday after new data revealed the US inflation rate surpassed market expectations in August. It dropped to a low of 6,708 in early afternoon, beating the most recent low in March, around the time that Russia invaded Ukraine. A late rally on Thursday saw the city's top index close 24.12 points higher, or 0.35pc, at 6,850.27.
Germany's Dax was up 1.51pc on the day and the French Cac was 1.14pc higher.
Asian equities and US stock futures advanced in the wake of a shock rebound in US stocks that roared back from losses sparked by a hot inflation reading. That triggered a broader risk rally that also saw currencies gain against the greenback.
An index of the region’s equities extended gains and was poised to snap a five-day losing streak. The S&P 500 defied expectations to rally 2.6% after consumer price data cemented bets for the Federal Reserve to deliver another jumbo rate hike in November.
The S&P 500 wiped out a 2.4% loss, marking the first time since July that it reversed a decline of 2%, and closed a whopping 2.6% higher. The initial rush to sell, followed by a dash to buy, was best illustrated by the second-to-second readings on share moves. The so-called Tick index, which compares the number of equities rising versus those falling in any moment, hit minus 1,900 before surging past 1,900.
Asian shares tracked Wall Street higher on Friday, although gains could quickly unwind as investors grapple with the reality that surging U.S. inflation will likely lead to higher interest rates for longer, hastening a global recession.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6% in early Asia trade. Australia’s resources-heavy share index gained 1.6%, South Korea advanced 2.1%, while Japan’s Nikkei jumped 2.8%.
Chinese bluechips also opened 0.8% higher, as the central bank chief promised stronger support to the real economy as COVID lockdowns spread ahead of the all-important Communist Party Congress.
Investors had sold off shares earlier in the week in anticipation of a strong U.S. inflation print, with the Asian index now paring weekly losses to 3.4% for the week, helped by the bounce on Friday.
Offshore, risk appetite is already softening, with U.S. S&P 500 futures sliding 0.1% while the Nasdaq futures falling 0.2%.
U.S. data overnight showed core inflation - which excludes food and fuel prices - came in above forecasts at 6.6%, the biggest annual increase in 40 years, driven by large price gains in the services sector.
Wall Street had a volatile session, after initial sell-off on the data proved short-lived with technical support and short-position covering helping stocks stage a strong rebound.
The Dow Jones Industrial Average rose 2.83%, the S&P 500 gained 2.60% and the Nasdaq Composite added 2.23%.
Short-term movements aside, the surprisingly strong U.S. inflation data have led the markets to fully price in a 75 basis point hike from the Fed at its November meeting and even another jumbo rate hike of 75 bp in December, with a 71.5% probability. Futures have also suggested that rates would now peak at 5%, bringing them to levels not seen since 2007.
BoE
Investors are also nervously awaiting an impending deadline for the end of the Bank of England’s emergency bond-buying programme on Friday. British government bonds have outperformed lately, with prices rising strongly on Thursday after reports that the government was considering a U-turn on some of the measures in its late-September “mini-budget” that triggered a historic gilts slump and concerns about financial stability. Sources familiar with the matter told Reuters that finance minister Kwasi Kwarteng is cutting short a trip to Washington to return to London so he can continue work on the fiscal plan.
Dizzying Day
Inflation is spreading deeper into the US economy, slamming the door on hopes the Federal Reserve will dial back interest-rate hikes that threaten to tip the country into recession. Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year ago, triggering a slide in US bond markets as investors bet the Fed will be forced into two more 75 basis-point increases this year. Stocks plunged and then rallied, making for a dizzying day on Wall Street, while the yen hit a 30-year low before it too rebounded. A key measure of US mortgage rates soared to a 20-year high just shy of 7% — and some are warning they could go much higher
FTSE100 live outlook prediction analysis for 14th October 2022
Bit of a wild one yesterday as the CPI news, along with the slightly chaotic UK finances(!) saw the market drop then recover as they got pumped back up again.
Initially today we should get a rise towards the 6960 R1 level and then a drop off from there. With the pump yesterday the charts look a bit more bullish to start with so once again, buying the dip is in play. If we do drop down then the first key support is at the 6875 level where we have the green 30m coral, and just below the 30m 200ema and key fib which are both at the 6890 level. Ergo this area looks like it will be good for some longs.
The 2h chart has also gone bullish and the Hull MA has support on that at the 6815 level - if it were to drop that low, and it doesn't look like it will, then a long here is also worth a go. 6834 is also the daily pivot for today which could act as a magnet if the bears start to get their way.
The bulls will of course be looking to hold above the 6920 level which was previous support, became strong resistance this week, so has cemented itself as a fairly key level now. Ultimately I am thinking that today they would like to push it up towards the R2 level at 7035 with 6995 daily resistance just below that.
The big question of course is whether this is a dead cat bounce, a bear market rally, or the start of the seasonal climb that starts about mid-October. Decisions decisions! Ideally the FTSE100 needs to surpass 7100 to start looking more positive but with the pension company and gilt market reaching the "deadline" today it remains to be seen if we are not on the cusp of more financial woes!
As it's a Friday and after yesterday's roller coater ride, we may see a bit of a pause of breath so could see a slow drift up if the bulls can defend the supports. The S&P500 will certainly be keen to push on today and any drop down to the 3585 level looks like it may see decent support there. The 2h coral and Hull MA are both here and with the coral now turning green in theory that is decent support.
Good luck today and have a great weekend.
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

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

The FTSE 100 plunged Thursday after new data revealed the US inflation rate surpassed market expectations in August. It dropped to a low of 6,708 in early afternoon, beating the most recent low in March, around the time that Russia invaded Ukraine. A late rally on Thursday saw the city's top index close 24.12 points higher, or 0.35pc, at 6,850.27.

Germany's Dax was up 1.51pc on the day and the French Cac was 1.14pc higher.

Asian equities and US stock futures advanced in the wake of a shock rebound in US stocks that roared back from losses sparked by a hot inflation reading. That triggered a broader risk rally that also saw currencies gain against the greenback.

An index of the region’s equities extended gains and was poised to snap a five-day losing streak. The S&P 500 defied expectations to rally 2.6% after consumer price data cemented bets for the Federal Reserve to deliver another jumbo rate hike in November.

The S&P 500 wiped out a 2.4% loss, marking the first time since July that it reversed a decline of 2%, and closed a whopping 2.6% higher. The initial rush to sell, followed by a dash to buy, was best illustrated by the second-to-second readings on share moves. The so-called Tick index, which compares the number of equities rising versus those falling in any moment, hit minus 1,900 before surging past 1,900.

Asian shares tracked Wall Street higher on Friday, although gains could quickly unwind as investors grapple with the reality that surging U.S. inflation will likely lead to higher interest rates for longer, hastening a global recession.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6% in early Asia trade. Australia’s resources-heavy share index gained 1.6%, South Korea advanced 2.1%, while Japan’s Nikkei jumped 2.8%.

Chinese bluechips also opened 0.8% higher, as the central bank chief promised stronger support to the real economy as COVID lockdowns spread ahead of the all-important Communist Party Congress.

Investors had sold off shares earlier in the week in anticipation of a strong U.S. inflation print, with the Asian index now paring weekly losses to 3.4% for the week, helped by the bounce on Friday.

Offshore, risk appetite is already softening, with U.S. S&P 500 futures sliding 0.1% while the Nasdaq futures falling 0.2%.

U.S. data overnight showed core inflation - which excludes food and fuel prices - came in above forecasts at 6.6%, the biggest annual increase in 40 years, driven by large price gains in the services sector.

Wall Street had a volatile session, after initial sell-off on the data proved short-lived with technical support and short-position covering helping stocks stage a strong rebound.

The Dow Jones Industrial Average rose 2.83%, the S&P 500 gained 2.60% and the Nasdaq Composite added 2.23%.

Short-term movements aside, the surprisingly strong U.S. inflation data have led the markets to fully price in a 75 basis point hike from the Fed at its November meeting and even another jumbo rate hike of 75 bp in December, with a 71.5% probability. Futures have also suggested that rates would now peak at 5%, bringing them to levels not seen since 2007.

BoE
Investors are also nervously awaiting an impending deadline for the end of the Bank of England’s emergency bond-buying programme on Friday. British government bonds have outperformed lately, with prices rising strongly on Thursday after reports that the government was considering a U-turn on some of the measures in its late-September “mini-budget” that triggered a historic gilts slump and concerns about financial stability. Sources familiar with the matter told Reuters that finance minister Kwasi Kwarteng is cutting short a trip to Washington to return to London so he can continue work on the fiscal plan.

Dizzying Day
Inflation is spreading deeper into the US economy, slamming the door on hopes the Federal Reserve will dial back interest-rate hikes that threaten to tip the country into recession. Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year ago, triggering a slide in US bond markets as investors bet the Fed will be forced into two more 75 basis-point increases this year. Stocks plunged and then rallied, making for a dizzying day on Wall Street, while the yen hit a 30-year low before it too rebounded. A key measure of US mortgage rates soared to a 20-year high just shy of 7% — and some are warning they could go much higher

FTSE100 live outlook prediction analysis for 14th October 2022

Bit of a wild one yesterday as the CPI news, along with the slightly chaotic UK finances(!) saw the market drop then recover as they got pumped back up again.

Initially today we should get a rise towards the 6960 R1 level and then a drop off from there. With the pump yesterday the charts look a bit more bullish to start with so once again, buying the dip is in play. If we do drop down then the first key support is at the 6875 level where we have the green 30m coral, and just below the 30m 200ema and key fib which are both at the 6890 level. Ergo this area looks like it will be good for some longs.

The 2h chart has also gone bullish and the Hull MA has support on that at the 6815 level - if it were to drop that low, and it doesn't look like it will, then a long here is also worth a go. 6834 is also the daily pivot for today which could act as a magnet if the bears start to get their way.

The bulls will of course be looking to hold above the 6920 level which was previous support, became strong resistance this week, so has cemented itself as a fairly key level now. Ultimately I am thinking that today they would like to push it up towards the R2 level at 7035 with 6995 daily resistance just below that.

The big question of course is whether this is a dead cat bounce, a bear market rally, or the start of the seasonal climb that starts about mid-October. Decisions decisions! Ideally the FTSE100 needs to surpass 7100 to start looking more positive but with the pension company and gilt market reaching the "deadline" today it remains to be seen if we are not on the cusp of more financial woes!

As it's a Friday and after yesterday's roller coater ride, we may see a bit of a pause of breath so could see a slow drift up if the bulls can defend the supports. The S&P500 will certainly be keen to push on today and any drop down to the 3585 level looks like it may see decent support there. The 2h coral and Hull MA are both here and with the coral now turning green in theory that is decent support.

Good luck today and have a great weekend.

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