The divergence between the UK and the US stock market remains in place, the FTSE has been declining for three weeks, the S&P is near the top. This move down in the FTSE has pushed the 34-day BTI to oversold, below -400. This indicator is a trend reversal indicator, not a timing indicator. When this indicator is oversold the FTSE is near a major bottom, the trend will turn up and the rally will last more than two weeks.
It’s not a timing indicator because being oversold does not mean the rally will start now, it could start in a week or two or three. Basically from today I expect a large rally but I can’t say when. This is not ideal because according to the Elliott wave count we are in a third wave down and the current sideways move is the second wave.
This sideways move could be a triangle [a,b,c,d,e] on the 30-min chart, in which case the FTSE will continue to move sideways in the next few days. After this move the FTSE would decline to complete the third wave and this would coincide with the oversold 34-day BTI. At that point the FTSE would be ready to rally.
