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FTSE 100 Is Approaching Resistance

ByThierry Laduguie
Published 13/01/2021, 08:23
Updated 17/03/2024, 07:38

The FTSE 100 has rallied significantly in the last few months, the index is near a resistance area, momentum indicators are overbought. Given the outperformance of S&P 500 vs FTSE 100, there is a risk the FTSE won’t go much higher.

The S&P is also near resistance, it seems to me that the surge in commodity prices has pushed oil and mining stocks to overbought, these stocks will struggle to go higher in the short term, they will weigh on the FTSE and slow its advance.  

The third major sector in the index is banking, this sector benefits from higher bond yields. Yields have rallied sharply and I think they will continue to move up in the long term but in the next few days we could see a pullback in yields. Today yields are down while stocks are up, an indication there is some profit taking on yields and this will weigh on the banks.

The FTSE should underperform the S&P on the way up and as a result, there is a good chance the rally will be short lived.
FTSE

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