Please try another search
This article was written exclusively for Investing.com.
Global stocks have surged back higher this week, with the FTSE reaching a new high for the year. The index has not peaked above last year’s high yet, so in that regard it is still miles behind its US and European counterparts. It clearly has some catching up to do, and this week’s break out suggests it may go on to close the gap down a little at least.
The FTSE is a commodity-heavy index, so the big gains we have seen for crude oil and copper prices have helped energy stocks and miners. Meanwhile, banks have risen along with yields in recent times, as investors have become optimistic about a steady economic recovery and look forward to mild policy tightening from the Bank of England. Earnings have been decent. Had it not been for worries over inflation and supply-chain disruptions, we may have already seen record highs for the FTSE given accommodative central bank policies around the world and a sharp economic recovery from the pandemic.
As mentioned, the index could be on the verge of a bigger recovery, as this technical development suggests:
The FTSE may have just resolved a 6-month consolidation where it had been trading sideways within about 360 points. The index has broken out and should it hold the breakout then we may see a significant move to the upside, simply because of the length of time the bulls and bears had battled it out for the bulk of this year. As a minimum, I reckon the index will now rise a further 360 points or so, which is equivalent to the height of the prior consolidation range.
But it could easily go on to reach much higher levels, with the 2020 peak at 7690 and the all-time high that was hit in 2018 at 7903 not being too out of sight.
While the breakout is clearly bullish, especially as it is in the direction of the long-term trend (e.g. 200-day average is pointing higher), there is the possibility we may see short-term pullbacks here and there. The markets rarely rise without a pause. If the FTSE does dip, then the most important short-term support level to watch is at 7150, which is the base of this week’s breakout. Ideally, we wouldn’t like to see the FTSE go back deeper into the prior consolidation range as this would point to a fake or a weak breakout attempt.
The Russell 2000 (IWM) has been defending its 50-day MA over the early part of 2024, but the last few days have seen a shift in this support with 'sell' triggers in the MACD and...
Amid upcoming central bank meetings and crucial macroeconomic data releases, market sentiment is poised for potential shifts. While broader market indexes may continue to...
This year, the S&P 500 has seen a remarkable streak of 17 new all-time highs, outpacing many previous years. Notably, Warren Buffett's Berkshire Hathaway has stakes in two...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.