Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - Mid Cap Index FTSE 250 is taking some heavy beating whereas FTSE 100 is holding on – for now
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Mid Cap stocks in UK is taking a heavy beating. The FTSE 250 Index has lost 30% since its peak but there could be more to come. FTSE 100 is doing better but is testing key support
FTSE 250 has lost 20% of Market value in about a week! It is trading around the support area 16,700-17,045 and the 0.618 retracement of the 2020-2021 bull market. It is also 1.618 projection of the Q3 correction. 2.0 projection (or 200% of the correction is at 16,110.
RSI has broken below its rising trend line indicating lower levels are likely. There is some divergence however, but if RSI closes below previous low – indicated by the dashed line – it has been traded out and much lower levels are in the cards.
Next key support, if FTSE 250 closes below 16,700, is around 15K.
FTSE 100 is doing better than the FTSE 250. However, it has broken below the key support at 7.000 and is likely to test the support at 6,823. If taking out the trough from March this year at 6,787 the selling pressure could accelerate pushing the Index down to support area at 6,484-6,397 and the 0.618 retracement at 6,351.
RSI is back below 40 and if closing the week below it supports bearish outlook.
FTSE 100 has over the past 1-1½ formed a double/triple top like pattern (not the most perfect one!) However, as a rule of thumb when a double/triple top pattern unfolds and is confirmed by a close below the deepest valley in the pattern price can move the same distance at the high to low distance of the pattern. The deepest valley of this pattern is 6,787 and if FTTSE 100 closes below there is a potential target of 6K indicated by the two vertical arrows.
However, since this is not the most perfect pattern the target price might be closer i.e., the support area around 6,484-6,397.
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