29th January 2019
The FTSE 100 suffered its joint-longest losing streak in a year as global markets tumbled at the start of a crucial week for US-China trade talks, Brexit and growth data yesterday.
Global growth worries were stoked by industrial bellwether Caterpillar and chipmaking giant Nvidia blaming an economic slowdown in China for their disappointing updates. A sharp slide in oil prices and more weak industrial data out of China ramped up the pressure on stocks.
The FTSE 100 declined for a fifth straight day, shedding 0.9pc, while the Dow Jones tumbled 1.4pc as Caterpillar’s 9.7pc share price plunge weighed heavily.
Stocks across Europe slipped as investors braced for the latest round of high-level trade talks amid fears that negotiations between Beijing and the Trump administration have stalled. Chinese Vice Premier Liu He will arrive in the US on Wednesday for the talks as the world’s two largest economies rush to beat a deadline in early March when tariffs on Chinese goods are automatically hiked.
US commerce secretary Wilbur Ross admitted last week that the US and China are still “miles and miles” away from a deal and reports have suggested that major sticking points remain between the two sides. Attention also turned to today’s Brexit vote and key growth data from the eurozone and US. The first estimates of fourth quarter GDP growth data this week are likely to confirm that global growth is stuttering
Brexit Backtrack
Theresa May is backing a plan to ditch the most contentious part of her Brexit deal as she scrambles for a compromise all sides can support, with time running out before the U.K. leaves the European Union. In a dramatic meeting on Monday, May effectively abandoned the agreement she’s spent the past 18 months negotiating with the EU and threw the weight of her government behind a move to re-write the deal. May urged hundreds of Conservative politicians crammed into a meeting room inside Parliament to support the proposal, which would strip out the so-called backstop plan for the Irish border, wrecking a compromise she’s agreed to with the EU in the hope of securing one with her own party.
FTSE 100 Trading Signals, Forecast and Prediction
We had disappointing results from Caterpillar yesterday which dragged the markets down, however focus now turns to the tech giants on Wednesday. Microsoft shares are slowly ticking up after a little flush down ahead of their results so we might see something good from them tomorrow evening. The FTSE 100 climbed a bit from its lows yesterday and has crossed the 2 hour resistance level, however the S&P needs to break above 2650 for the FTSE to really push on.
With yesterday’s drop the daily resistance has locked in at 6835 where we have a decent moving average so if we see a rise to this area today then a short entry here is confirmed and we may well see a run down towards the 6650 or lower level.
There is initial support at the 6753 level to start with today, but it’s only a tentative long. If it were to hold then I can see a rise towards the cluster of resistance levels at there 6810 area, with, as mentioned, the 6835 above that. If the bulls were to really go for it and push above this then 6900 is back in play. They would though need to break above 6910 to have a hope of pushing higher so bear that I mind. Might be a bit optimistic for today, but if the earnings tomorrow are good then it’s not beyond the realms of possibility later this week.
If the bears were to break 6750 today then the low at 6730 is next up, with 6715 looking more likely – we have S1 and a fib level here and though not in the plan it could be worth a long at this level. However, below 6715 then I am watching for 6660 as the next major support and my calculations are also still showing that 6536 level – so we may well still go lower.
So slightly mixed bag for today (as it always is with earnings season) but looking for a rise and dip pattern today.
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