It's funny how markets often ignore political uncertainty until the last minute but the penny certainly dropped yesterday as that dubious rally built on sand finally hit the buffers. The FTSE 100 just slightly surpassed the 7515 resistance level to double top with the 7533 level before the bears grabbed it by the horns and brought it down to an overnight low of 7420. The Dax short at 12830 worked really well, though the 12700 support was broken on the second test of that area to get an overnight low of 12535!
As I am sure you are aware the bearishness was caused by the "Trump turmoil" with threats of impeachment and all sorts going on. However, it was also to do with the fact that the FTSE100 was rising on not much, the news flow was pretty negative, and it has generally been overbought - the S&P failed to hold above 2400, Dow failed to hold 21000, FTSE 100 had an RSI of 77 and was nearing the top of the 10 day Raff channel at 7550, so a bit of bearishness and a decent sell off day was overdue. For today we are looking at FTSE 100 resistance at 7474 again, and 7508 above that.
FTSE 100 Outlook and Prediction
The markets finally got a dose of reality yesterday having ignored the fairly negative surroundings for a while, with the FTSE 100 rising steadily from the 7100 seen towards the end of April. The VIX rose steadily (it was making mainstream media headlines just last week so you know its about to move) yesterday from its historic recent lows. There was also news that wages in the UK are rising slower than the cost of living - something that we have spoken about a lot before in the live room and in the comments section, and finally the news seems to be painting an honest picture. Of course, the real cost of living increase it probably nearer 10% with most costs increasing sharply at the moment: insurance, gas/electricity etc.