FTSE 100 Analysis | Signals | Forecast | Prediction | FTSE 100 Outlook | Trading help
Well that was a wild day yesterday! A complete drop and recovery (4% down then back up) is historically extremely rare, happening only twice since the mid-1970s. The Cboe Volatility Index, a gauge of implied equity swings for the S&P 500, at one point Monday spiked to the highest level in over a year before receding.
Markets went into retreat on multiple fronts on Monday, as the rising drumbeat of war in Europe gave pace to a rout in US technology stocks and compounded fears that the longest bull run in history is finally ending.
European shares had their worst day since June 2020, with the FTSE 100 falling 2.6pc and knocking around £53bn off Britain’s biggest companies. It was the worst day for London’s blue chips since November.
The US benchmark S&P 500 swung wildly with a drop of more than 4pc shortly after the open in New York before recovering to close 0.3pc in the green.
Despite the sharp rebound amid volatile trading on Wall Street, the Nasdaq remains on the precipice of a bear market. Earlier in the day the S&P was dragged close to 10pc off the record highs it hit at the start of the year.
It marked another chaotic 24 hours for global stocks amid a severe sell-off since the start of the month, as Russian troops marshalling at the border with Ukraine push Europe to the brink of war.
In Paris, the CAC 40 index of France’s top companies plunged 4pc, while Germany’s DAX dropped 3.8pc.
British stocks also took heavy losses, despite London coming out of the sell-off less bruised than its continental rivals.
Overnight
Overnight we have seen Asian stocks and U.S. equity futures slide Tuesday amid concerns about tightening monetary policy, geopolitical tension and breathtaking volatility on Wall Street.
S&P 500 and Nasdaq 100 contracts fell over 1%, while an Asia-Pacific share gauge hit the lowest since November 2020. European futures pushed higher.
U.S. stocks erased a 4% drop to close up Monday on high volumes. The wild swings highlighted investor nerves over the prospect of Federal Reserve interest-rate hikes and balance-sheet reduction to tackle inflation. U.S.-Russia tension over Ukraine is also buffeting sentiment. The dollar and yen ticked up.
Treasuries were mixed, with the benchmark 10-year yield inching lower. Oil stabilized after getting swept up in the bout of risk aversion.
In Australia, bonds slid after stronger-than-expected inflation data as traders boosted bets on rate increases. Singapore’s dollar strengthened on surprise monetary-policy tightening to damp price pressures.
Rollercoaster Ride
A U.S. stock selloff of up to 4% was wiped out as dip buyers emerged by the end of a session marked by explosive trading volume and wild market swings. Retail traders bailed out before the rebound, in a bout of panicked selling. Markets have been rattled by geopolitical tensions and the Federal Reserve’s campaign against inflation. Asian stocks looked set for a choppy start, with Australian shares down and futures for Japan and Hong Kong pointing lower. Bitcoin snapped its five-day slide, Treasuries were mixed and the yield curve steepened.
Troops Ready
U.S. President Joe Biden held an 80-minute call with European leaders as western nations work to strike a unified position on Russia. The North Atlantic Treaty Organization said it would boost deployments in eastern Europe in a bid to deter a new Russian invasion in Ukraine with the Pentagon announcing it has put 8,500 troops on heightened alert. Meanwhile, Germany is refusing to supply weapons to Ukraine, sticking with a long-standing policy not to export them to conflict zones.
FTSE 100 live outlook prediction analysis for 25th January 2022
Well what a day that was. This week was always going to be volatile with the Fed and war brewing but lots were not expecting it to the extent we saw yesterday. The remainder of this week may well be just as choppy though that drop yesterday will have flushed out a lot of retail so the city boys can now start building back up. Was certainly a decent recovery yesterday evening and those in the chat room will know that we spotted the HFT buy programs start to outnumber the sells as the dark pools started buying – so buying the dip worked out well.
For today we have a possible initial dip down to the 7290 area where we have the key fib support to start with though a break below this will likely lead to S1 at 7234 and we also have the 20d Raff channel here. We may well see the bulls want to defend any drop down to here just to defend a bit of that rise from yesterday. I am still thinking that this week will be the weak start, strong end pattern though, despite that capitulation yesterday.
A possible NI rise delay in the UK, and some help from the Fed and it will be crisis averted financially, then its just the war bit to die down.
Initial resistance is at the daily pivot at the 7364 and then the key fib above that at 7410. That is just below the 7420 crucial support level that we had for yesterday so a back test of that and then a leg down would fit well. 7419 is also the first test of the Hull Moving Average since it went bearish last week so should see a reaction as well. A short here is worth a go.
Above the 7420 level then the bulls will be looking to 7464 where we have the 200ema on the 30m, and them 7503 for R1. 7500 is the red 2h coral and also would be the first test of that so I do think that should we get this high then a stutter here looks likely.
The S&P500 has decent support to start with at 4339 with the green 30m coral here and in an ideal world I would like to see that hold for a potential 100 point rise towards the 4470 200ema level. A break of 4330 though and then we will likely slide down towards the key fib at 4294 again. We may not see such a wild swing today on the markets (famous last words!).
So, once again, stay nimble and keep an eye on the key levels. We may well see some bullishness again today. Watch that 4439 S&P500 level for support. 7290 and 7234 for the FTSE100 support, 7420 and 7500 for resistance. Good luck today.
Recommended Broker
IC Markets – offers market leading pricing and trading conditions by providing clients with True ECN Connectivity; this allows you to trade on institutional grade liquidity from the world’s leading investment banks, hedge funds and dark pool liquidity execution venues. Highly recommended!
Membership and Live Trading
If you would like more detailed analysis for FTSE 100, DAX, Gold and S&P, including the trades that I am looking to take myself, then please join my active members community.
What you get
- Daily Analysis pre market open (sent around 7am each day) for FTSE, DAX, Gold and S&P.
- Daily email pre market includes my trading plan for the day including ORDER levels, with stops and targets/limits
- Telegram live trading room and webinar group membership for discussion and realtime trade updates
Keep up to date with new content, free sign up below with just your email address