FTSE 100 live outlook prediction analysis for 12th January 2021
Sterling lost out as the dollar rose to a two-week high amid a general pullback on global shares, spurred by surging virus cases and tensions in the US following the mob attack on the Capitol building in Washington DC last week. Oil and commodity prices slipped, taking off some of the gains brought on last week by recovery hopes and a planned supply cut led by Saudi Arabia. Losses among blue-chips were broad-based: pandemic losers such as Land Securities and British Land both suffered while mining stocks tumbled as investors eased out of the value rotation that drove strong gains last week.
Trump Impeachment
The Democratic-controlled House introduced a resolution to impeach President Donald Trump for a second time on Monday, setting up a vote this week unless Vice President Mike Pence uses his constitutional authority to remove the president. Meanwhile, several major U.S. corporations are punishing Republicans in Congress who voted last week against certifying President-elect Joe Biden’s victory, by cutting off campaign contributions to them after a violent pro-Trump mob stormed the Capitol. A larger number of companies — from Wall Street to Silicon Valley — are enacting broader steps by suspending all political contributions at the federal or state level.
American Dream
U.S. stocks are the most expensive since the dot-com bubble, but strategists at Goldman Sachs’s $575 billion wealth management division have cast aside valuation worries as the S&P 500 soars to records. It’s all justified in a world of rock-bottom interest rates, and where U.S. profit growth is faster than just about anywhere. They expect the S&P 500 to post a return of about 8% this year on earnings growth of about 26%, which is slightly above consensus. Meanwhile in China, stocks fell the most in three weeks, led by consumer shares and commodity producers, amid concern valuations were stretched and as metal prices slumped.[Bloomberg]
US & Asia Overnight from Bloomberg
Asian equities traded mixed Tuesday after U.S. stocks fell for the first time in five sessions with prices near all-time highs. The dollar extended its climb as Treasury yields reached the highest level since March.
Shares were steady in Japan but slid in South Korea after a sharp rally this year. S&P 500 and European futures were little changed. Malaysia’s stocks and currency fell after it declared a state of emergency to help fight a jump in coronavirus cases. Bitcoin steadied after dropping as much as 20% on Monday. Gold halted a losing run, and West Texas Intermediate oil held near $52 a barrel.
With 10-year Treasury yields at about 1.15%, investors are assessing potential risks to the current environment of easy financial conditions and how that could reset expectations for a range of asset classes. Yields have risen on bets that Democratic lawmakers will enact big spending packages to drive the economic recovery out the pandemic.
Worries that equities are running too hot when major parts of the world are grappling with the worst of the Covid-19 outbreak are also weighing on the minds of investors.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
Was a bit of consolidation yesterday on the S&P as we paused for breath. I am still thinking that we may well see a turn down soon, though possibly one more push up is left in the tank. A drop down into late Feb/early March and then a rise again for the rest of the year (basically a bit of a repeat of 2020) would all fit quite well. The FTSE also trod water for most of the day yesterday, and the slight dip below the 6800 support was bought up.
For the FTSE I am thinking that a rise and dip may well play out today and the first resistance level is the fib at 6845. Above this we have R1 at 6872 which could be tested if the bulls come out fighting first thing. That R1 level is also just below the 2 hour coral line resistance at 6885 so I would expect to see a stutter here if we did get that high. Daily resistance remains at the 6905 level, with the Hull moving average just above that at 6925. Don’t think we will get that high today, but the bulls may struggle to push past that if we do get that high today/tomorrow. There is a chance that the bulls can pull this back up and the next daily resistance level above 6905 is at 6960 – that could tally with a push on the S&P towards the 3900 level of course, so something to bear in mind. It does feel like we are getting a bit top heavy though and a larger pullback before more upside in Q2 onwards would fit quite well.
For the bears, they will need to break 6795 initially as we have the 200ema 30min here. Below this then the 6760 level is the key fib, with S1 just below that at 6752. We may well see this area hold, though a test of this would be a lower low compared to yesterday and shows that the bears are getting a bit stronger. The daily trends are still heading upwards though with the bottom of the 10d Raff at 6710 and 6524 for the 20 day. We still haven’t tested the green daily coral though at 6480 currently, so thats another support to look for on the bigger picture. For today, I don’t think we will get down to S2 at 6700 and the 6750 level will put up a good fight. We didn’t have much of a bull Monday yesterday so a bearish Tuesday pattern may not play out today – possibly more consolidation today as investors plot their next move. The economic woe in the UK is likely to get worse before it gets better, and the Chancellor alluded to it yesterday as well. The FSB reckons 250,000 small businesses will go bust in the next few months.
Anyway, on that jolly note, I am watching 6795 and 6752 as the main supports for today, and 6845 and 6885 as the main resistance levels. Good luck today.
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