FTSE 100 Outlook and Analysis for 23rd October 2019
The FTSE 100 closed 0.68pc higher to 7,212.49, boosted by a weaker pound, while the domestically-focused FTSE 250 ended 0.53pc lower. Stocks in Europe also pushed higher, with the CAC 40 and the DAX ending 0.17pc and 0.05pc up, respectively.
Gold traded mostly flat, yesterday so getting a few points from the 1488 short was a result. The metal, seen as a safe-haven, has been in a small trading range recently. It hit a six year high at the beginning of September, but has been pushing lower since then. Meanwhile, oil has rebounded from the yesterday’s decline amid US-China trade optimism. The remarks from China vice foreign minister have lifted sentiment in the oil market.
Brexit Bombed
Boris Johnson’s mission to take the U.K. out of the European Union in nine days’ time was derailed as members of Parliament dramatically blockedhis plan to rush the Brexit deal into law. European Council President Donald Tusk responded by saying he’d recommend the EU accept the U.K.’s request for an extension. While he didn’t set a date, his suggestion that this could be agreed without a summit pointed to accepting the British Parliament’s request for a new exit date of Jan. 31. The pound, which has been whipsawed by Brexit developments for weeks now, fell on the vote. Whether Johnson decides to use the time offered by the EU to pass his deal, or to go for an election, is now the question at hand. In any event, the chances of a no-deal Brexit are diminishing.
Markets Mixed
Stocks in Asia headed for a mixed start Wednesday after developments on Brexit dragged U.S. shares lower with Treasury yields. The pound sank. Away from politics, it’s a huge week for earnings, with about 20% of S&P 500 Index members slated to report results. So far, the numbers have generally surprised positively, reassuring investors that companies are weathering slowing growth and the trade war. All the same, analysts are cutting estimates for next year as the dispute between the world’s biggest economies continues to take a toll. Elsewhere, oil jumped after a report that OPEC and allied crude producers will discuss deepening supply cuts next month.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
One step forward two steps back with the Brexit process last night really, which saw a further retreat on the pound from the 13000 level. That did help the FTSE 100 to stay above the 7200 level though, and while our 7220 resistance had a reaction yesterday the bears were not able to fully take control with just a max of 30 points on offer. For today, they will be keen to break above the 7220 level as that opens up a test of the 7245 area as resistance, and a level that we may well see a reaction this morning.
The 2 hour chart remains bullish and the coral trend one is now green with support at 7169 so should we drop down that low then a long around here looks worth trying.
I am also watching the outer edges of the 10 day channel as we have resistance at 7267 and support at 7101, so we may see a test of this channel edge at some point soon. The bulls are certainly keen to build on the recent FTSE rises, and a push towards that area and possibly 7300 does look possible.
The S&P dropped off from the 3014 daily resistance level eventually, though the bulls managed to catch the fall at 2990 and have held that overnight. The daily support is at 2969 and still looks a decent long area on this leg down, before a further push to new highs, I am thinking.
For the FTSE, we have initial support at the 7184 200ema level and if we get an opening drop the bulls may well step in here for another attempt at breaking the 7220 level. Just below the coral we also have the fib and S1 at the 7150 area, but a break of this and we are looking at that 7101 area. If the US can rise to test the 3006 S&P level then we may well see a rise towards the 7250 on the FTSE though.
So, still tricky with news and cable, but the levels have been working well this week so far for reactions, every though we aren’t getting really long runners. As such I am watching the 7150 and 7170 support levels, and the 7240, 7267 and 7280 resistance levels.
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