Sentiment is upbeat following Macron's victory in the French election. Stock markets are breathing a sigh of relief this morning but since the open I have noted a lack of upward momentum above 7300.
This was a landslide victory for Macron and the second largest victory margin in modern French history with 31%. The largest victory margin was recorded by Chirac when he defeated Jean-Marie Le Pen (Marine’s father) in 2002 by a 64% margin. So clearly the Front National has no chance of winning a French election unless they change their image.
The stock market was also boosted by a good job report on Friday, the US nonfarm payrolls report was better than expected, the S&P 500 closed near its all-time high on Friday. Today however, the S&P is still trading below its all-time high (2401) in pre-open.
There is some resistance above 2390, this is evident, the S&P appears to struggle above that level. Perhaps the US index is not ready to break higher. We still have the alternate wave count in which the index could produce a deeper pullback before moving higher. This deeper pullback is consistent with the alternate wave count on the FTSE.
The FTSE is in a five-wave rally [i,ii,iii,iv,v (circle)], it’s possible wave ii (circle) ended at 7197.3 because today the FTSE broke above the top of wave i (circle), an indication wave iii (circle) up is underway. But the pattern inside wave ii (circle) is not a clear zigzag in three legs [(a),(b),(c)], therefore chances are the index will pullback again to complete wave ii (circle) before moving higher. In the next few weeks the FTSE could be trading near 7500.
