Equities plunge, BUT looking for a rebound today

Intermediate
  • An extremely aggressive selloff across the global stock markets on Monday in reaction to an escalating trade war between the US and China.
  • The major US equity averages suffered their worst day of 2019, reinforcing intermediate-term bear trends established after the selloff last week that began August.
  • HOWEVER, further losses and then rebound overnight into Tuesday sets markets up for a recovery bias into today.
  • Here we focus on the EURO STOXX 50, the pan-European benchmark average and the UK stick market yardstick, the FTSE 100.

EURO STOXX 50 (Sep ’19 contract) hinting at a rebound

A plunge Monday through multiple supports to reinforce the significant selloff Friday and the intermediate-term bear theme, BUT a further overnight plunge and rebound has hinted at a possible base and shifts immediate risks back higher for Tuesday.

We see an intermediate-term bear trend.

For Today:

  • We see an upside bias for 3324; break here aims for 3350 and maybe 3377.
  • But below 3275 opens risk down to 3246 and 3230.

Intermediate-term Outlook – Downside Risks: We see a downside risk for 3296.

  • Lower targets would be 3258 and 3230.
  • What Changes This? Above 3490 shifts the intermediate-term outlook back to neutral; above 3534 is needed for an intermediate-term bull theme.

4 Hour EURO STOXX 50 Future Chart

4 hour euro stoxx 50 future 2019-08-06

FTSE 100 (Sep’ ‘19 contract) rebound threat

A Monday plunge through numerous support has reinforced Friday’s significant selloff and the medium-term shift to a bear trend, BUT a further selloff overnight and then a bounce has suggested a possible very short-term bottom and flips the immediate bias back higher Tuesday.

We see an intermediate-term bear trend with the surrender of 7245.5.

For Today:

  • We see an upside bias for 7160.5; break here aims for 7244/45 and maybe 7311.
  • But below 7087 opens risk down to 7045/43, maybe 6999/98.

Intermediate-term Outlook – Downside Risks: We see a downside risk for 6998.

  • Lower targets would be 6872.5, 6516.5 and 6320.5.
  • What Changes This? Above 7442 shifts the intermediate-term outlook back to neutral; above 7666 is needed for an intermediate-term bull theme.

Daily FTSE 100 Future Chart

FTSE 100 Future 2019-08-06

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