Shares surge, looking for more – S&P 500 and FTSE 100 forecast

Intermediate
  • Only last week we headlined our report “Shares plunge, more to come”. What a difference a week can make in trading!
  • Despite stock markets plunging lower at the end of October, a strong recovery rally at the start of this week was extended on Wednesday as the partial results came in from the US presidential election.
  • This “risk on” theme was driven on Wednesday by:
    • An expectation now of a Biden victory
    • A likely split Congress, with the Republicans probably holding the Senate.
    • This means potential tax increases and regulatory changes from the Democrats are going to be less easy to implement than if there was a Blue Sweep.
  • However, we must remember that we still have the spectre of:
    • European COVID-19 cases and hospitalisations surging and rising numbers of deaths
    • Aggressive new lockdowns across Europe
    • Significantly rising COVID-19 cases in the USA.
  • In this report we will spotlight the US and UK benchmark stock averages, with our S&P 500 and FTSE 100 forecasts.

S&P 500 future day trade outlook: Upside threats 

A Monday-Wednesday rally above resistances as high as 3446.25 and 3469.75 to 3480.0, rejecting bear forces from the latter October sell-off to 3226.0 and the breakdown through key 3291.25 (to shift the intermediate-term outlook to a range we see as 3198.0 to 3541.0), to keep the bias higher Thursday.

Day trade setup

  • We see an upside bias for 3480.0 and 3508.5; a break here aims for 3521/24, maybe key 3541.0.
  • But below 3430/28 opens risk down to 3395.75 and possibly 3357.0, even 3319.0.

S&P 500 future intermediate-term outlook

The latter October sell-off through 3291.25 signalled an intermediate-term shift to a broader range seen as 3198.0 to 3541.0

  • Upside risks: Above 3541.0 sets an intermediate-term bull trend to target 3587.0, the 3626/30 extension target area and 3709.75.
  • Downside risks: Below 3198.0 sets an intermediate-term bear trend to target 3105.25, 30000.0/2983.25 and 2923.75.

8 Hour S&P 500 Chart

sp 500 chart

FTSE 100 day trade outlook: Upside risks 

A Monday-Tuesday rally and erratic Wednesday surge for a bullish outside daily pattern, above resistances as high as the notable 5823.5 and 5842/61 barriers to fully reject bear forces from the latter October bearish extension to a new multi-month cycle low after the plunge through key May and April supports (at 5651/45, 5614/12 and 5525.5 ), to keep the threat higher Thursday.

Day trade setup

·      We see an upside bias through 5879 for 5890.5; a break here quickly aims for 5936 and 5983, maybe key 6012.5.

·      But below 5839.5 opens risk down to 5780.5 and 5753.5, then possibly towards 5673.5.

FTSE 100 intermediate-term outlook

The early September push below key 5815.5 signalled an intermediate-term shift to a bear trend.

  • Downside risks: We see an intermediate-term bear trend to aim for 5325/16.5 and maybe towards 5000.
  • What changes this? Above 6012.5 shifts the intermediate-term bear trend straight to an intermediate-term bull trend.

Daily FTSE 100 Chart

ftse 100 chart

Editor in chief

Steve Miley is the Market Chartist and 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 Mar... Continued

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