The geopolitical landscape kept the divi hunters away yesterday as the FTSE 100 dipped below 7500 and never really looked like regaining ground all day. With the 40 point divi applied, prices dropped to 7450 and stayed around that area overnight, despite a bit of a feeble gap close effort in the evening. However, for today the bulls might have a bit more of a go as we still have 7520 on the cards. Meanwhile, North Korea announces that they will have a battle plan for attacking Guam by mid-August....while Japan and South Korea warn NK against doing anything. It's easy to dismiss it as bluster but the tension is still ratcheting up, though I doubt China will let anything too serious happen right on their doorstep.
FTSE 100 outlook and prediction
For today I am expecting a rise and a dip day. There is decent looking resistance at the 7420 area and that is around the fib 61% of the gap close from where we are at 7460 to the gap at 7542. With the backdrop such that it is the bulls might be a bit hard pushed to really push on in the very short term - stocks have been overvalued against fundamentals for a while and it would make sense to see some profit being taken off the table till things calm down. We had a good bull run of several consecutive record closes on the US indices.
If the bulls were able to push past the 7520 level then 7550, 7580 and 7600 are the next levels of note. I would be very surprised if we push much past 7600 though at the moment. Certainly while its kicking off in Asia.
The ASX 200 had a rise and dip day as well during their Thursday session, and with safe haven assets such as gold and silver rising off the back off the NK tensions, we could see some more money flowing into commodities - which helps the FTSE 100. Cable also dropped down to break back below 130 - another thing that will help stabilise the FTSE 100.
Support wise, we have 7450 which is the overnight low since the close yesterday, but I am watching the fib level at 7424 as a better line in the sand. Below this then 7405 must be defended by the bulls otherwise a break of 7400 leads to 7380, 7300 and possibly as low as 7200 on a leg down.
So, really watching 7424, 7405 for support and 7525 area for resistance
