Global sell off Monday but maybe a dead cat bounce today | Bulls fighting back | 6000 support | 6350 resistance

FTSE 100 live outlook prediction analysis for 10th March 2020

The London stock market suffered its biggest crash since the financial crisis yesterday as the coronavirus continues to wreak havoc across the globe. The blue-chip FTSE 100 index closed down 7.69pc, wiping more than £124bn off the value of London’s biggest listed companies in a day of brutal trading labelled a “new Black Monday” by analysts.

This drop is the worst since October 2008 and means the FTSE 100 has entered a “bear market” – where prices fall 20pc or more from a recent high. The index has dropped more than 21pc since mid-January, hitting millions of savers who are building up a pension pot. A collapse in the price of oil – which tumbled by almost a third in its sharpest fall since the 1991 Gulf War – ravaged drilling firms and sent investors fleeing for safety.

US markets plunged 7pc at the open, with the Dow Jones Industrial Average dropping a record 2,000 points. The falls triggered a “circuit-breaker” measure aimed at preventing severe sell-offs that meant trading was paused for 15 minutes – the first time this has happened since 2008. Wall Street recovered slightly after normal service resumed, and the Dow was down around 5.6pc at the close on trading in London.

Wednesday Budget

The government is due to unveil its budget on Wednesday, a major fiscal set piece that’s now likely to unleash some short-term stimulus to combat the coronavirus. With the Treasury and central bank stressing they are working together to craft a response, the stage is set for the coordinated policy action investors have been crying out for after the biggest market rout in more than a decade. Traders are already pricing in a Bank of England interest-rate cut of as much as a half point this month, and the turmoil has led to increasing speculation among analysts and investors that move could come alongside the budget.

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

We had a decent hold of the 5850 level yesterday for an initial run up but the volatility was quite something. Overnight we have seen 5700 tested and then a strong rebound back up and as I write this we are back above 6100! We look like we might well be on for a back test of that support level that was showing at 6242, and that is just above the R1 level for today, which sits at 6228. As I write this we are just hitting the tibial 2 hour resistance at 6171 so the bulls will be keen to try and push past this initially.

So far it looks like the bounce (dead cat or otherwise) may well gain some traction at least initially. There is now support at the 6055 level to start with from the moving average on the 30min chart, and should we get an initial dip to this area we may see some more opportunist buying here. Below this we also have the daily pivot at 5961, and the 30min coral line has gone green for the first time in a while with support lower down at 5870. Will we drop that low again? The ASX200 (Australia) had a bullish Tuesday and we may well follow suit as the markets retrace some of yesterday’s declines. Its hitting some resistance now though at 6025. Far from out of the woods yet though across the board, and the virus fears are still at the fore, coupled with oil’s slide now.

The markets are also going to start thinking about concerted efforts from central banks to stave off financial armageddon, and we may well see some things announced in the Budget tomorrow, including a possible rate cut again. Good job they put them up a bit eh!

Should the bulls break above the 6242 level then 6362 is my next resistance level where we have the 200ema on the 30min chart. The will be a pretty decent bounce from the 5700 level so we may well see some profit taking here and a subsequent pull back so worth a tentative short here too.

Once again, just to stress, do stay nimble and protect capital. If a trade starts to fail then be ruthless and cut it – don’t hold on hoping it comes back!

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