The FTSE 100 opened flat today after chancellor Rishi Sunak’s £30bn of extra financial firepower to assist the United Kingdom economy recover from coronavirus.
The UK index barely moved after yesterday’s 0.55 per cent drop, that left it at 6,156 points.
By 8.30am the FTSE 100 had turned red, falling 0.08 per cent when cases in the United States and Brazil spiked overnight.
Housebuilder and retail stocks proved the main beneficiaries yesterday when Sunak pledged to slash stamp duty to zero on properties below £500,000 and cut VAT to five per cent on certain hospitality services.
But the FTSE 100 was weighed down by escalating cases around the world yesterday.
“Traders in this part of the world continue to monitor the situation in the United States, where the majority of states still see the number of new Covid-19 cases increase,” Shayne Heffernan, CEO and Founder of HEFFX said.
“As of yesterday, the amount of confirmed cases in the United States exceeded 3m. On Tuesday, the WHO cautioned there may well be a rise in the fatality rate as there has been an increase in infections, however the death rate so far has lagged.”
Sunak’s Summer Statement made huge political headlines yesterday as he vowed to pay employers up to £9.4bn to bring back furloughed workers, amid a £30bn pledge to bolster the United Kingdom economy.
A temporary cut to VAT for tourism and hospitality to simply five per cent, and a promise to pay part of diners’ bills at restaurants throughout August, is hoped to boost some of the worst hit sectors of the economy.
But traders appeared more concerned with the spikes in cases in the United States and Brazil, where President Bolsonaro has contracted Covid-19.
Overnight three USA states saw a large rise in coronavirus infections as the country posted a record 60,000 cases in a single day.
There were 10,000 new cases in Florida, while Texas reported over 9,500 cases and California reported over 8,500 new infections.
Analysts said the numbers have spooked the FTSE 100 as the United Kingdom reopens.
“Providing help to the battered hospitality sector is a smart move, however people in the United Kingdom could be cautious about socializing given what is going on in places like Melbourne and also the U.S.A. in relation to a rise in new cases,” Shayne Heffernan said.
Meanwhile, the huge cut to stamp duty, active until 31 March 2021, might not be as effective as hoped given “the immense economic uncertainty”, he added.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 6,459.93.
The projected lower bound is: 5,841.04.
The projected closing price is: 6,150.48.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 24.4792. This is not an overbought or oversold reading. The last signal was a sell 11 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 48.28. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 73 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -83. This is not a topping or bottoming area. The last signal was a buy 17 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 20 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -9.440 at 6,146.720. Volume was 91% below average (consolidating) and Bollinger Bands were 74% narrower than normal.
Open High Low Close Volume 6,156.160 6,176.840 6,135.140 6,146.720 105,579,064
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 6,188.92 6,118.05 6,726.46 Volatility: 21 32 37 Volume: 631,029,248 1,003,524,736 937,741,184
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE 100 INDEX is currently 8.6% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future.
Our volume indicators reflect volume flowing into and out of .FTSE at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .FTSE and have had this outlook for the last 7 periods.