FTSE 100 outlook prediction analysis for 26th November 2019
The FTSE 100 closed the day up 69.48 points, or 0.95pc, at 7,396.29, advancing despite a strong showing for the pound. It was the second strong session in a row for the blue-chip index, which recorded its best performance since July on Friday amid widespread hopes for a breakthrough in trade relations between the US and China. Positivity was nearly uniform: at several points during the session, only three shares were not in the green. Information technology was the best performing sector, followed closely by the consumer discretionary sector, which contains companies such as housebuilders and fashion retailers.
World trade is stuck in its longest slump since the financial crisis after another setback in September suggested the global economy is yet to turn the corner. Volumes slipped back sharply in September compared with August, falling 1.3pc to cut short a two-month rebound, according to CPB’s World Trade Monitor.
The monthly fall was the second-sharpest this year, while a fourth consecutive year-on-year drop in trade volumes marks the worst run since 2009.
Retail Sales
The battered high street has been given a glimmer of hope in the crucial run-up to Christmas as a six-month slide in sales eased. Shoppers dispelled pre-election worries to take the CBI’s retail sector gauge to its highest level for seven months with sales broadly flat year-on-year. The balance of reported sales recovered for a third consecutive month, rising to a stronger-than-expected score of minus 3, up from minus 10.
Retailers are gearing up for a merrier festive period, fuelled by bumper real pay growth boosting spending power. Expectations for sales climbed to a seven-month high and retailers are hiring part-time workers at the strongest pace for five years. After the CBI’s sales gauge crashed to a 10-year low in August, the stabilisation will provide retailers “a bit of hope” ahead of Black Friday and Christmas, said Anna Leach, CBI economist.
Markets Optimistic
Asian stocks were mixed Tuesday amid optimism over China trade relations, and a fresh wave of merger and acquisition activity. The yen weakened and the dollar edged higher. Futures in Japan, Australia and Hong Kong were higher in early trading. The S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Indexes reached all-time highs with tech shares leading gains. On the M&A front, Charles Schwab agreed to buy TD Ameritrade, while LVMH purchased U.S. jeweler Tiffany & Co. Meanwhile, yields on 10-year treasuries retreated, West Texas-grade oil drifted higher and Bitcoin dropped as much as 11% before paring the decline.
US China Trade
China and the U.S. “reached consensus on properly resolving relevant issues” and agreed to stay in contact on the remaining points for a “phase one” trade deal during a phone call Tuesday morning Beijing time, the Ministry of Commerce said in a statement. China’s Global Times tweeted that topics in the call may have included tariff removal, agricultural purchase and a possible face-to-face meeting.
FTSE 100 Outlook | Trading Signals | Forecast | Prediction | Analysis
On that trade news overnight regarding the phone call we saw a spike higher across the board with the S&P testing the 3145 level, and the FTSE futures hitting 7430, however the US has dropped back, while the FTSE has fallen to the 7410 level it was at prior to the news. It is Thanksgiving week in the US this week and that is usually positive, however I am still liking the idea of a dip and rise this week on the S&P.
The longer times frames are all still showing decent support areas that if we did get a dip down to, look decent entries for longs. The FTSE has risen well from the 7200 area and as such that may be it for the low for the moment as it still has the potential to rise significantly before the year end. 7340 2 hour support, along with the 25ema on the daily at 7318 looks a decent support range.
For today I am thinking that if we retest the overnight high we may well see a drop back from here as that is the top of the Raff channels at the 7430 to 7445 area and may well act as initial resistance. The bulls of course will now be keen to keep the price above the 7400 level, but with the daily pivot at 7381 as initial support and then the 2 hour support at 7337 currently a dip down to here before a bounce would fit well. If we did get a dip and rise on the US markets, then it would make sense that we do the same.
We got a decent bull Monday yesterday so may well see a weak bear Tuesday (but the bears keep getting beaten down!) and pull backs have been bought up, as we saw with the S&P dip on Friday to 3100.
If the bulls break above the 7440 level today then we are getting into Raff channel breakout territory and 7478 would be the next level of note where we have R3. We are also then well on the path to a December move towards the 7700+ area. A strong end to the year as well.
For the moment I am still favouring buying the dip, and if we do get drops down to the longer time frame supports then longs are favourable. Of course the trade news can change with the wind as you know, and todays positivity can easily be negative a few hours later. China big up the phone call, US downplay it!?
So slightly tricky today but watching the 7440 level for resistance, 7340 for support. 100 point range seems a bit ambitious though, so also looking at 7381 support.
We also have an 8 point dividend this week.
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