The previous week's FTSE 100 chart pattern evoked the following comment:-
'Since Apr '09, the index has bounced up every time it has touched or dropped near its short-term average. So another bounce up may not be surprising.'
The FTSE 100 index moved sideways during the week, bouncing up and down between the support of the 20 day EMA and the resistance from the 200 day EMA.
The index seemed torn between the gravitational pull from the technical indicators to go down below the shirt-term average, and the strong incentive to keep up with the Asian markets by trying to move above the 200 day EMA.
Reminded me of the opening sequence from Spike Lee's "Mo' Better Blues" starring Denzel Washington and Wesley Snipes. A young boy was learning to play the trumpet in an upstairs apartment. His friends called him to come down and play, but his mother insisted that he finish his music lessons first. (A 'must see' movie for jazz lovers.)
The 3 months bar chart pattern of the FTSE 100 index will exemplify the analogy:-
(Please right-click on the image above; open it in a new tab or window for a better view.)
The slow stochastic has moved down near its 50% mark, with the gap between the %K and %D lines beginning to widen. The MACD has slipped below its signal line and both are dropping.
The ROC is moving sideways in negative territory. The RSI has also moved down near its 50% mark. The volumes continue to taper off. All the technical indicators are looking weaker than last week.
But the FTSE 100 index is refusing to throw in the towel. Today (May 29, '09) it is making another attempt to conquer the resistance of the long-term moving average.
Bottomline? Stock markets worldwide are ignoring the bad news and continuing the rally. That is a sign of strong bullish sentiment. The fight between the bulls and bears remain inconclusive in the UK market. The odds favour a small downward correction in the coming two weeks.
No comments:
Post a Comment