- Summary:
- The FTSE 100 index is set to open lower today as traders look ahead for the big reshuffle of the blue-chip index. Here's what to expect.
The FTSE 100 index is set to open 0.30% lower today as investors take profit following the strong 1.90% rally yesterday. The index’s decline is part of the overall reversal of western stocks, with the Dow Jones, DAX index, and S&P 500 falling in the futures market.
The biggest news in London will be about the reshuffle of the blue-chip FTSE 100 set for later today. This periodic exercise, which leads to some companies being added and others booted from the index.
As I noted on Monday, odds are that Homeserve will be booted from the index today. The firm, which provides home repairs and renovations, has recently lost appeal as hopes of a Covid vaccine have risen.
On the other hand, Weir Group has higher chances of joining the index. Weir is an engineering firm that works with companies in sectors like mining, aggregates, and oil & gas. Recently, the FTSE 250 firm has been on an uptrend after the management to exit the oil & gas industry.
Another company that could enter the index is Pershing Square Holdings, the company run by veteran investor, Bill Ackman. The firm has had excellent returns in the past 2 years, rising by 58% in 2019 and 66% year-to-date. Bill has also launched a SPAC that is expected to acquire a minority stake soon.
The FTSE 100 is falling because of the stronger sterling and the dimming hopes that Mitch McConnel will allow the $900 billion stimulus package proposed by a group of bipartisan senators.
FTSE 100 technical outlook
Turning to the daily chart, we see several things about the FTSE 100 index. First, we note that it has managed to move above the descending channel that is shown in yellow. Also, the index is between the 50% and 61.8% Fibonacci retracement level. This retracement connects the highest and lowest levels this year)
Notably, in the past few days, it has been consolidating, in what seems like a bullish flag pattern. Therefore, while the index will possibly continue consolidating today, there is a possibility that it will ultimately break-out higher in the near term.
FTSE index technical chart
