The FTSE 100 is looking for direction as we draw near to the Fed meeting on Wednesday

The FTSE 100 spent most of the last week range-trading around the 6,400 points as volatility remained low and there were no significant developments to spark investors’ interest. The price action we saw at the beginning of the week seemed to propel the index higher but after Tuesday any momentum died down and we were left with the FTSE trading sideways.

Over the next 5 days I would expect more price action on the London benchmark index but I would think that volatility will pick up on Wednesday. This is because the FTSE has assumed a waiting stance at this time and with no important news to provide any friction until Wednesday’s Fed meeting it is likely to see this sideways pattern holding on until then.

I believe that the exit from this formation will show us the way, I notice that the momentum has been turning to the downside and if that reverses the FTSE’s previous uptrend then we should see the index making its way towards the 6,200 points’ area. On the other hand, any breakouts towards higher levels are clearing the way for the 6,550 points’ area.

As far as preferred tactics go, I would advise you to treat the current situation on the FTSE as any other breakout opportunity. Just look for the index to break out of its current range, set your targets with a stop protecting you for any sudden reversals and get out as soon as you get your desired profit. The FTSE 100 lacks any general direction at this time so any momentum following tactics would not be useful.

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alpeshAlpesh Patel uses Sharescope Pro for his investment analysis

 

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The FTSE 100 falls another 200 points on Fed’s bearish concerns – what to expect for this week

More losses for the FTSE 100 last week and my prediction for a ranged trading pattern went out of the window on Wednesday when the London index turned negative again. By Friday the FTSE was trading near the 6,300 points and today it reached this important figure. So what changed mid-week and drove the UK index – along with the rest of the global stocks markets – lower?

In my last note to you I detailed the main drivers behind the market dynamics on a global level: the good pace of growth in the UK and the US – there’s always a strong correlation there – and central banks’ intention to raise the interest rates in their respective jurisdictions. Well last Wednesday we got to hear what the Fed officials had in mind about these issues and what they expect for the future.

The Fed minutes revealed a great concern among the committee’s members regarding the pace of growth on a global scale. They discussed how a continued slowdown mainly in Europe would hurt the demand for domestic goods and services and they downplayed any rate hikes hopes for the foreseeable future.

We know that keeping interest rates low is supposed to be good for the stock markets but what scared investors and sparked this new rally lower was Fed’s concern for the slowdown in a global scale. And that was something that was bound to take its toll on the FTSE 100 as stock markets tend to take their cue from the US indices like the Dow and the S&P.

So now that we’re another 200 points lower in the FTSE what does the future hold for us? Well, I am bit reluctant to make a prediction at this time when I am looking at the schedule for economic events this week.

On the one hand, I look at the inflation figures that are expected to print lower for the UK and that should drive the stock market higher. On the other hand I am afraid that a new barrage of dovish data from Europe and the US – a bearish ZEW Survey and disappointing US Retail Sales figures -will add fuel to the stock sell-off fire.

So my advice to you this week is to be very cautious in your positioning, the technicals in the FTSE 100 show that the index is strongly oversold and a correction higher could be expected but the importance of the fundamental developments out-weighs any technical indications.

If I was to gamble a prediction I would say that the FTSE will bounce higher at the start of the week and then re-test the 6,300 points support area so keep your trades small and quick and try to make the best out of this volatile environment.

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alpesh 13th oct

 

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Why I enjoy presenting the Round-the-Clock-Trader event

Simon_pic_june_200I really enjoy hosting these 12 hour Round-the-Clock-Trader events that give people access to free expert trading education that makes a difference to their performance.  Please make some time to join us on the next event.  Simon Campbell, IX Media Ltd

 

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Round-the-Clock-Trader Returns!

RTCT_LIW400wOver 2,000 traders have joined our Round-the-Clock-Trader events in 2014 alone.  We continue to organise these events because you keep telling us how useful they are for your trading – and we´re happy to do so!

Our third event this year takes place on Thursday, 27th November, and features an expert line-up of trading educators providing insight and commentary that will leave you better equipped to take on the markets.  This online event starts at 9am and runs through to 9pm, a festival of personal trading experiences shared and discussed live.

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