FTSE 100 top heavy with Dow and S&P 500 also under pressure
Outlook on FTSE 100, Dow and S&P 500 ahead of US PCE index data.
FTSE 100 mixed despite UK Consumer Sentiment rising to 10-month peak
This week’s slide in the FTSE 100 has been interrupted by Thursday’s bounce but may well continue in the days ahead despite the UK GfK Consumer Confidence indicator hitting a 10-month high.
It increased to -38 in February from -45 in January and came in better than the -43 expected with the seven-point rise being the biggest monthly improvement in close to two years.
Since the FTSE 100 continues to display triple negative divergence on the daily Relative Strength Index (RSI) and a drop out of a rising wedge has taken place, the odds favour the January-to-February uptrend line at 7,876 soon being reached.
If it and the 10 February low at 7,850 were to be slipped through on a daily chart closing basis, a medium-term top would likely be formed with the late January low at 7,708 then being targeted.
Minor resistance above Thursday’s 7,946 high comes in at last Friday’s low at 7,953 and at Wednesday’s 7,973 high. Provided the latter isn’t bettered, further downside is likely to be in store.
Dow remains in negative territory year-to-date
The Dow Jones Industrial Average has been underperforming its peers since the beginning of the year and is the first major index to trade back in negative territory year-to-date with Tuesday’s over 2% drop due to further Fed rate hike fears wiping out all of its 2023 gains.
A fall through Thursday’s low at 32,795 would push the December low at 32,474 back to the fore. If this level were to be slipped through, a medium-term top formation would be confirmed with the June 2022 low at 29,649 being eyed.
Thursday’s high at 33,270 represents immediate resistance above which stronger resistance can be found along the early to mid-February lows and the 55-day simple moving average (SMA) at 33,512 to 33,602.
S&P 500
The S&P 500’s recent sell-off ahead of Friday’s US Personal Consumption Expenditure (PCE) Price Index data, to be closely watched by the Fed, has taken it back to the breached 2022-to-2023 downtrend line.
Because of inverse polarity, it now acts as a support line, together with the 55-day SMA and the October-to-February uptrend line at 3,979. Having said that, the fall and daily chart close below the 10 February low at 4,051 has probable negative implications for the index as it confirms at least an interim top formation.
A further slide through Thursday’s low at 3,970 would engage the 200-day SMA at 3,940 and would confirm a medium-term top which could lead to a slide back towards the October trough at 3,491 being seen over the coming months.
Minor resistance can be spotted at 4,047 to 4,051, the 10 and 17 February lows.
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