The rally in the FTSE 100 continues to be accompanied by declining BTI (bearish divergence), this suggests that the next move will be down. We are in a transition period where stock markets are slowly rolling over to the next long term trend, which will be down. This process could accelerate in the event of more bad news but with November looming, this process is likely to be delayed.
Stocks tend to rally in November - December. The traditional Santa Claus rally starts in November, this is not a certainty but a probability. I should say stocks have a high probability of rallying during November-December. Recent economic data in particular Friday's data was well received by investors.
Solid UK GDP and better than expected US housing starts gave a boost to the market. Earnings reports from Microsoft and Procter &Gamble also helped.
When I say the next move will be down I can't guarantee if it will start today or next week. We must be patient with the stock market, when a move down is about to start based on the indicators, the move will occur. However, if the news is positive, the decline will be delayed.
That is what we saw last week, the pattern and indicators point to a decline but the news is positive so we are still waiting for the decline to start. There is nothing we can do because we can't predict the news, nobody can. This is why success is about placing bets when the odds are your favour.