Stock indices trying to base, but still vulnerable

Intermediate
  • An erratic tone for global stock averages this week, as markets continue to attempt a shift away from the late February “risk off” panic, with rebound and basing attempts to start March.
  • This reflected the multilateral intervention by Central Banks in reaction to the threat to the global economy from the spread of the coronavirus, with the Reserve Bank of Australian cutting interest rates by 0.25%, the US Federal Reserve an intermeeting rate cut of 50bps on Tuesday and on Wednesday also a 50bps cut from the Banal of Canada.
  • Although major global averages have tried to rebound, we are yet yon be convinced and for today see risks for a roll back lower into the recent basing ranges.
  • Here we focus on future on the UK benchmark equity index, the FTSE 100.

FTSE 100 future day trade outlook: Recovery yet to switch risks higher

A Wednesday recovery extension above resistance at 6824, after an erratic Monday-Tuesday basing attempt, BUT whilst capped at the recent peak at 6871.5 we see risks back lower Thursday.

  • We see a downside bias for 6798; a break below aims for 6745/43 and 6708/03 maybe 6653, even 6605/00.
  • But above 6856/58 targets 6871.5, which we would look to try to cap; above opens risk up towards 6930.5 and 6975/80 and 7000.5.

FTSE 100 future intermediate-term outlook

A late February plunge below 7164 set an intermediate-term bear trend.

  • ·Downside risks: We see an intermediate-term bear trend to aim for and 6310/00 and 6000.
  • What changes this? Above 7158.5 shifts the intermediate-term outlook to neutral and through the bear gap at 7295-7327 to bullish.

Daily FTSE 100 future Chart

FTSE Chart 2020-03-05

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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