24th September 2019
Confidence among German businesses is the weakest since 2012, private sector job creation is stalling after six years of growth and companies are eating into backlogs as new orders begin to dry up, the figures showed. Germany’s economy shrank an overall 0.1pc between April and June. Monday’s dire survey data comes after recent official figures showed a sharp 0.6pc drop in industrial production in July.
A sharp daily drop in the value of sterling offered some support to theFTSE 100, which closed down 18.84 points, or 0.26pc, at 7,326.08. Germany’s DAX and France’s CAC both had a poor day, with each shedding more than 1pc after eurozone manufacturing activity data showed its weakest reading in six years. The 7290 level held yet again on the FTSE 100 and the futures have risen further overnight, to keep the bulls hope for 7400 alive for the moment. UK PM Johnson has reportedly not ruled out proroguing parliament again if he loses the Supreme Court vote.
Market Open
Asian equity markets traded indecisively following a similar close on Wall St where the major indices spent the day steadily recouping the opening losses. Treasuries were steady. U.S. data bolstered confidence that recession signals emanating from the bond market are overdone, while gloomy data from France and Germany — the heart of the euro area — was a stark reminder to investors of the fragility of the global economy. While markets remain on edge ahead of next month’s planned high-level trade talks between the U.S. and China, they’re also fixated on any action or messaging from the world’s major central banks that could support growth. Federal Reserve Bank of St. Louis President James Bullard said the central bank may need to ease monetary policy further to offset downside risks from trade conflicts and too-low inflation.
On the news front we have US consumer confidence at 3pm. Forecast is a for a slight drop from last month, 133 versus 135.1.
FTSE 100 Trading Signals, Forecast and Prediction
With 7290 holding as support still then the bulls are still in with a shout for a rise towards the 7411 resistance area. That said, there is still the 7385 daily resistance level first, and for today we also have the key fib and R1 at this level. As such I would expect the first touch of this level to get a reaction and were may well see a drop from here to test the 7350 level, possibly a bit lower. Above this 7385 level then as mentioned we have 7411, with 7450 above that. We have the top of the 10 day Raff channel here and its also just below todays R3 at 7461.
On the support side of things we have the 7335 area to start with where we have the daily pivot and the 30min coral which has gone green now (shows a positive uptrend) so I am thinking that if we get an initial dip to this level then a long here is worth a go. Of course still keep an eye on Sterling and the Brexit news flow as thats still having a major effect on the FTSE 100. Should this break then the 7230 area is highly likely to be tested, where we have the bottom of the 10 day Raff channel. A drop to there may well coincide with the S&P testing the daily support at 2971.
With the climb off 7281 yesterday the 2 hour chart has gone bullish again, and that has support also at 7338 for today. We finally managed to test the 25ema support on the daily chart yesterday, which tallied with that 7290 level in the end and a move off that is usually good for 100 points or more, so we could well see that 7411 area pretty soon.
The S&P is back above the 3000 level on the futures, but despite the drop yesterday it failed to reach its daily support at 2971 before bouncing, from 2981 instead. Should it drop to 2971 there is still good support here, along with the bottom of both the Raff channels. It looks to be on a path towards 3019 which is recent resistance, and then a possible breakout higher towards 3050.
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