FTSE 100 live outlook prediction analysis for 21st September 2020
Pessimistic news over the weekend about he “second wave” and further restrictions that may well be here sooner rather than later as the virus spread once again gathers pace. As if that’s a surprise as we now get into flu season. Cases may well be rising but the death rate still remains pretty low which is some consolation.
The FTSE 100 fell slightly on Friday and is now back below the 6000 level. These were Fridays main highlights:
- Retail recovery loses pace, with sales up just 0.8pc in August – The recovery in UK retail sales slowed during August, with total sales up just 0.8pc compared to July. Online sales continue to boom, but demand in other sectors remains fairly depressed.
- Bricks-and-mortar shops struggle to make up lost ground
- Tiktok and WeChat to be banned in US app stores from Sunday
- The FTSE 350 Banks index, a capitalisation-weighted gauge of lenders’ stock prices, touched its lowest level since 1992
$2 Trillion
A new investigation by the International Consortium of Investigative Journalists alleges that global banks made more than $2 trillion in transactions between 1999 and 2017 that were flagged by financial institutions’ internal compliance officers as possible money laundering or other criminal activity. Banks “kept profiting from powerful and dangerous players” in the past two decades even after the U.S. imposed penalties on these financial institutions, according to the report, which was based on leaked documents obtained by BuzzFeed News and shared with the consortium. The top two banks were Deutsche Bank, which disclosed $1.3 trillion of suspicious money in the files, and JPMorgan, which disclosed $514 billion, the analysis found.
Market Open
Equities in Asia were set for a softer start after a dip on Wall Street on Friday, while U.S. stock futures slipped as trading began for the week. The offshore yuan edged higher. Currencies elsewhere saw small moves, with the dollar largely steady against its main G-10 peers. Japan’s equity market is shut for a holiday and cash Treasuries won’t trade until the London open. Stock futures signaled modest declines in Australia and Hong Kong. Crude oil retreated. Investors remain watchful for any signs of progress on a U.S. fiscal stimulus package, while Federal Reserve Chair Jerome Powell will testify before Congress from Tuesday to Thursday to discuss pandemic relief efforts. Covid-19 cases in the U.S. steadied as deaths approached 200,000 and over in the U.K., the Health Secretary said the country is at a “tipping point.”
Dark Dollar Days
The dollar’s weakest quarter in a decade may get even worse as investors respond to the effects that massive American equity-market gains have had on the composition of their portfolios. The Bloomberg dollar index has plunged close to 5% this quarter and is on track for its biggest slide since 2010 as America’s economy shows signs of recovering from its pandemic-induced slump. That more upbeat narrative has helped to underpin a 7% rally in the S&P 500 Index that puts to shame to gains in stocks from Japan to the euro area and Canada — not to mention losses for U.K. and Australian equities. In the days ahead, that could lead to investors selling dollars and buying currencies linked to underperforming share markets, such as the British pound and Australian dollar.[Bloomberg]
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
The dollar began Monday on the back foot after weakening last week, while U.S. stock futures fluctuated and Asian equities slipped amid subdued trading volumes impacted by a holiday in Japan. The offshore yuan edged higher.
Hong Kong shares underperformed as HSBC Holdings Plc’s shares fell to the lowest since 1995, dragging the Hang Seng Index about 1% lower. Equities in China and Australia also slipped, while trade data showing a continuing recovery for South Korea’s economy lent some support in Seoul
The drop that started on Friday has continued as more weakness comes in with a pretty pessimistic news flow at the moment. Further lock down measures as the virus continues to ramp up (funnily enough as we head towards flu season) and the associated knock economic effects spooking things. That said, we are on the 5950 daily support level as I write this so we may well see a bit of an initial climb, back towards the 6000 level, and the daily pivot at the 6016 level. We also have the 30min coral at 6009 and untested since it change red (shows a downtrend). The 2 hour chart remain bearish also, and therefore the bulls have a big job on their hands though any hold above 6000 will help their battle. Can’t see it getting much above this though.
The S&P is trying hard to remain above 3300 after Fridays brief foray below, though 3288 is S1 today so a test of that (or just below to get some stops) might well see a bounce. A drop prior to some ramping in October still looks to be following the playbook for the moment, though below 3280 and the bottom of the 10 day Raff at 3255 would be seen.
If the FTSE bears break below the 5950 level then 5923 is S2, but more crucially thats a pretty strong break of the 10 day channel and we may well then be on for a test of the bottom of the 20 day – and thats at 5775 for the moment – though that does set up a double bottom with 4th September. October bull? Again, a low RSI, double bottom and then a rising US (and maybe a low death rate still?) and we may well then see some year end optimism. All depends on the virus and the economic impact with job losses etc. Before that though and a break of S2 would lead to S3 at 5870, with 5810 below that.
If the bulls were to break above 6020 then the 6050 area would be the next level I would be looking for a short – with R1, fib and 2hr resistance around this level. This drop will certainly be shaking out a few of the longs that have piled in recently. Which of course is what the market wants!
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