US Payroll data beats | Bull Monday | Buy the dips | 7350 7380 7430 resistance | 7304 support | Trading analysis

US Payroll data beats | Bull Monday | Buy the dips | 7350 7380 7430 resistance | 7304 support | Trading analysis

FTSE 100 Outlook and analysis for 4th November 2019

Better-than-expected US payroll data helped stocks rebound after Thursday’s losses. The FTSE 100 rose 54.04 points to 7,302.42 amid widespread gains for European indices. The blue-chip gauge grabbed gains from the get-go, pulling back some of the damage done on Thursday, when it shed more than 1pc on its worst day in almost a month.

  • US added 128,000 jobs in October, smashing expectations of a slowdown
  • Economy shrugged off major drag from 46,000 striking General Motors workers who counted among unemployed
  • But factory slowdown continues as key activity gauge misses estimates

A flat day for the pound also left internationally focused companies unencumbered by currency concerns. Billions of pounds in notional bets on sterling expired on Friday, as traders’ wagers on a Brexit result proved ill-advised following the latest delay.

With a general election on Dec 12, the pound is expected to be fairly steady over the coming weeks, moving within a range in reaction to polling shifts, but not breaking much ground in either direction.

Tariff Optimism

Plenty of encouraging noises on the trade front. U.S. Commerce Secretary Wilbur Ross says the talks being held with car companies in Europe and Japan have been positive and may mean tariffs can be avoided on autos being imported into America. That follows on from top negotiators from the U.S. and China saying they are getting closer to reaching an agreement on the first phase of a trade deal between the two, though President Donald Trump wants to make sure the signing takes place in the U.S. Signing location aside, all that optimism should give cyclical stocks, particularly autos, a lift as we head into a new week.

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

We got a decent lift from the daily support at the 7250 level last week and the bulls have managed to bring the price back above 7300 for now. 7340 is the recent high and the level that they will be keen to break today if possible. Will we get a bull Monday and a rise higher than that? The S&P was boosted by the data on Friday and continues to steadily rise, with the daily support still untested and now at 3005. After the FTSE 100’s bullish session on Friday the 2 hour chart has locked in some bull and the moving average support is at 7288, so should we dip down to the cluster of supports at the 7300 level, and then possibly this 7288 area a long here looks viable.

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

Below the 7288 level then it starts to look more bearish with a test of S3 at 7223 and the bottom of the 20 Raff channel looking likely which is at 7233. However, were have a green 30min coral for a positive trend at the moment, plus that 2 hour support so I am expecting the bulls to at least test the 7340 level today. Above this then 7380 and R3 looks possible.

Both the daily Raff channels are rising strongly, and the top of them both are now around the 7440 level so should the FTSE 100 breath a sign of relief and rally this week we could start to push towards that. Especially if cable drops as Brexit has been delayed.

Generally speaking it looks positive from a chart perspective while the daily support at 7240 holds, however the sentiment on the fear/greed scale is running a bit hot now, and as you know, be fearful when others are greedy.  It is now on 80/100.

Coming Up…
Extra optimism about the trade picture gave Asian shares a lift, while both European and U.S. futures are also pointing to positive opens. Purchasing managers’ indexes that track manufacturing in the euro area will be closely watched given concerns about the health of the global economy, as will manufacturing data from the U.S. later. Christine Lagarde will make her first speech as president of the European Central Bank this evening.

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