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FTSE 100 Still Near The Top

ByThierry Laduguie
Published 23/04/2015, 07:31
UK100
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US500
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Sentiment was bullish, not anymore. My sentiment indicator is neutral and it looks like sentiment will turn bearish. The 13-day BTI is no longer overbought but this indicator has already given a sell signal. As I said when a timing indicator gives a sell signal the decline does not always occur immediately, and with the S&P still strong chances are the decline will resume in a few days.

Despite a disappointing Chinese HSBC (LONDON:HSBA) manufacturing PMI, markets are strong. The strongest market is China which is hitting multi year highs. I hear that lots of people in China who don’t invest in the stock market are now speculating, playing the stock market is now their favourite pastime. To me this sounds like an overheated market. When we see an increased participation from the public the stock market is in a bubble and the bubble is about to burst. This is another reason to be cautious if you are a long term investor.

Meanwhile discussions between Greece and its creditors continue. The truth is nobody knows what will happen to Greece. If Greece default or leave the euro the stock market will sell off and people who are long will lose money. This is the risk, and the risk is increasing day by day. I think this is why we see resistance above 7100, investors are not comfortable above this level.

We are still in a situation where the FTSE could rally before the next leg down starts because the S&P 500 is rising. In any case the FTSE is due to decline, the decline is wave i (circle).

FTSE 100: 120 min chart

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