Stocks setting up for a plunge – S&P 500 and FTSE 100 forecast

Intermediate
  • A significant move lower for global stock averages over the past 24-36 hours, as markets are moving even more towards a “risk off” theme.
  • This is being driven by:
    • Spiking COVID-19 cases in Europe, alongside more severe lockdowns.
    • Rising levels of COVID-19 in the US.
    • Fading hopes of a US economic relief package ahead of the US election.
  • In this report we will review the technical analysis outlook for both the US and UK benchmark indices, the S&P 500 and FTSE 100.

S&P 500 future day trade outlook: Growing downside risks

Again a low-level consolidation Wednesday (as also seen Tuesday) and then a sell-off overnight below 3410.75 and 3403.5 supports, after Monday’s setback from below 3521/24 resistances (from 3508.5), to surrender recent solid supports at 3431.5/30.0, to leave the threat to the downside Thursday.

Day trade setup

  • We see a downside bias through 3402.5 for 3384/82; a break here aims for 3365.25 and maybe 3330.5.
  • But above 3469.75 opens risk up to 3508.5 and possibly 3521/24.

S&P 500 future intermediate-term outlook

The early October push above 3421.75/24.25 saw an intermediate-term shift to bullish.

  • Upside risks: We see an intermediate-term bull trend to target 3587.0, the 3626/30 extension target area and 3709.75.
  • What changes this? Below 3291.25 shifts the intermediate-term outlook to neutral and through 3198.0 to bearish.

8 Hour S&P 500 Chart

sp 500 chart

FTSE 100 day trade outlook: Plunge sees bigger downside threat increasing 

An aggressive plunge lower Wednesday through multiple supports as low as the September cycle low at 5739.5 and lower again this morning to just hold above our 5704/00 support area, at 5705.5, to reinforce Monday’s bearish outside daily pattern rebound failure from just below our flagged 5940/50 resistance area from 5936.5, to leave the threat lower for Thursday.

Day trade setup

  • We see a downside bias for 5705.5/00 and 5671/70; a break here aims for key supports from May at 5651/45, maybe even to 5614/12 April supports.
  • But above 5758 aims for 5807.5 and then aims for 5838/40 possibly opening risk up to 5891.5.

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 5651/45, 5325/16.5 and maybe towards 5000.
  • What changes this? Above 6267.5 shifts the intermediate-term bear trend to neutral; through 6512.5 to an intermediate-term bull trend.

Daily FTSE 100 Chart

ftse 100 chart

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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