SVB carnage drives the bears | 7700 7600 7550 7519 support | 7740 7786 7830 resistance

SVB carnage drives the bears | 7700 7600 7550 7519 support | 7740 7786 7830 resistance

FTSE100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help

FTSE100 live outlook prediction analysis for 13th March 2023

U.S. stock futures rallied in tense Asian trade on Monday as authorities announced plans to limit the fallout from the collapse of Silicon Valley Bank (SVB), while investors wagered a rate hike this month was no longer a certainty.

The dollar slid as Goldman Sachs predicted the U.S. Federal Reserve would no longer lift interest rates next week, capping the biggest rally for short-dated Treasuries since 1987. The wild sea change in markets came after the Fed and U.S. Treasury announced a range of measures to stabilise the banking system and said depositors at SVB (SIVB.O) would have access to their deposits on Monday.

The Fed said it would make additional funding available through a new Bank Term Funding Program, which would offer loans up to one year to depository institutions, backed by Treasuries and other assets these institutions hold.

The fallout from the SVB collapse continues this morning, though it does look like the positive outcome that traders are latching on to is that it may delay (or even cancel) further rate rises. That sentiment is helping to see a bit of a bounce initially. The FTSE100 has risen to back test the 7740 level that was initial support on Friday, and saw a bit of an overshoot overnight. Having got here we may well see an initial drop down to retest the 7700 level, and there we have the key fib and 30m coral as initial support.

Below the 7700 level then the bears will be looking at 7680 again, which is Fridays low, and just above the Raff channels for today. We may well see these hold on the first test of this 7665 area, though just below these we have the S1 level at 7653.

Ultimately the bears will still be aiming for that 7600 daily support level that flagged up on Friday, and the slide from 8050 that we are currently in may well get that low before any significant reversal.

For the bulls, they will be looking to break 7787 where we have R1, and then above that we have very decent looking resistance at the 7829 with both the key fib and 200ema 30m here. If we were to get that high then a short here is worth a go. The 2h coral is red and dropping, and may well coincide with the price at this level later today.

We should see some volatility today so do stay nimble. As with the back end of last week, shorting the rallies is probably still the preferred bias.

We will more than likely see more news come out today about SVB and any sort of rescue/purchase/guarantee from the Fed and that will drive the markets around a bit.

The S&P has left a gap down at the 3880 level and with the key fib at 3876 and the 30m coral here we should see a reaction here, at least on the first test. 3929 is R1 and we have held around here on the futures so far, so a dip and rise (and maybe then a bigger dip for Bear Tuesday tomorrow…) may well play out.

US Inflation data out tomorrow, against this back drop of bank failures, and will have a bearing on what the markets think the FED will do next with interest rate rises – keep hammering the nail in or have a pause. The recent rises are slowly having an effect in terms of taming inflation but at the same time are causing other problems….. SVB being one of them.

Could well be an interesting day and will be watching closely to see how the dust settles and it all pans out, and if we get a dip and rise (and then a bigger dip).

Good luck today.

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