The FTSE 100 closed up near 6170; this level has been tested three times this week. In general, when a level is tested repeatedly it will be broken, so odds favour a break above 6170 today. But the S&P 500 is not in sync with the FTSE. If the S&P goes down from current levels, it’s hard to see the FTSE going up - unless there is an alternate wave count on the S&P.
Oil is still firm this morning. I thought we saw the top in oil, but this stuff is resilient and it looks like it will make a new high above 46. This would help the FTSE rally.
Wall Street closed down sharply last night on concerns about consumer spending. There are signs consumer spending is slowing after disappointing earnings from Disney and Macy’s. The retail sector weighed on the index, with the Dow Jones sinking 217 pts.
This morning the FTSE is lower in pre-open, yet it seems the index is attracted to 6170. The pattern this week is sideways, which means there is an increased probability the index will return to 6170 and break higher.
We are looking at wave iv (circled), and if the shape of it is in three legs it will end at 6180 on 10th May or, if wave (b) is a triangle, it will end at 6200 today or tomorrow. One scenario considers the high at 6180 as part of a running triangle which is wave (b). If so, wave (b) ended yesterday at 6131 and the next move is wave (c) up to 6200. But upside is limited - rally or not, the next move is down to complete wave v (circled).
