The FTSE 100 was pulling back last week but it is back near 7700 today in pre-open, it seems the index is not ready to go down. At the same it is struggling to break above 7700, the pattern is sideways and it has been sideways for two months.
The S&P 500 is surging and it looks like the US index will make a new high today. Earnings report from Alphabet (NASDAQ:GOOGL) (Google) beat expectations and because this company has a huge influence on the broader market, the S&P is rallying. However, the rally is in pre-open, this does not mean the S&P will make a new high after 2.30pm, but we must be prepared for a new high. Sometimes the market is at new highs in pre-open and opens below the previous high.
Meanwhile the Chinese Yuan is sliding and US bond yields are rising, but nobody cares. Sometimes people will focus on one thing and not the other, here the focus is on earnings. The rise in yields is not a problem as at the moment it is still below 3% where they have been recently, but the weakness in the Yuan is more serious. The pound is still struggling to rally, it had a good day last Friday and now it is struggling to extend the rally.
Once again the S&P is rallying during the earnings season, that is the main problem for short positions, sometimes I see a completed pattern (rally) based on the wave count but earnings reports will push the market higher. It seems the analysts are paid to manipulate the markets. If I did not go short people would question my logic and they would say I lost my discipline.
Right now and with the FTSE approaching 7700, this is key resistance area. A break above 7706 would increase the probability of an extended rally. But this morning sell off at the open indicates that the UK index is not happy to trade at 7700 or higher.
