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FTSE 100 Uptrend Has Resumed

ByThierry Laduguie
Published 21/07/2014, 08:10
UK100
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Sentiment has turned bearish based on our indicators but judging by the strength of the US markets, it does not feel bearish right now. The shooting down of the Malaysian airliner over the Ukraine seems to have been shrugged off by market participants as they focus of earnings reports. Apple, McDonald, Coca Cola and Caterpillar report this week. The earnings reports have been okay that is what is supporting the markets.

Geopolitical concerns returned but the market is resilient, for this reason perhaps sentiment will turn bullish in the next few days. There is now increased evidence that Russia was involved in this incident, the U.N. security council is due to vote today on a resolution that would condemn the downing of the plane and the US has announced more sanctions against Russia. In addition the fighting is intensifying in Gaza and casualties are mounting on both sides.

Despite all this the US markets are near previous highs and the FTSE 100 is rallying and pulling away from its recent low at 6643. It would appear that the next leg up is underway but it won't be in a straight line, given the geopolitical risks, we could see a re-test of the previous low before we see new highs.

The 200-day moving average has once again done a good job, the drop below the 200-day moving average on 10 July when the index hit 6643 was a buy. On Friday the FTSE once again pulled back to the 200-day moving average, then rallied. Despite the bearish sentiment given by the BTI and the geopolitical risks it is hard to see the FTSE breaking below 6643, this level should remain intact.

FTSE 100 Chart

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