Friday saw the FTSE 100 hit the 7793 level then drop off a little bit from there. However, the bulls continue to hold all the cards, fuelled by the unrelenting bullishness in the US stock markets. To the point where we are now back at 7793 as I write this on Monday morning! The ASX 200 dropped back initially since its open, but is now on support at 6075, so we may well follow a similar pattern, while Asian markets continued to climb to record highs today.
U.S. markets are shut today for the Martin Luther King Jr. holiday. Retail sales data last week was better than expected, though in the UK it came in underwhelming. Construction company Carillion (LON:CLLN) is also on the ropes at the moment, and may be subject to a government bailout. If not then it may go into administration. We have further earnings data this week and option expiry on Friday. We may well see a rise to 7850 and then a stutter. Maybe!
Can’t see any major reason (apart from one small one, mentioned below) why we shouldn’t rise towards the fib level at 7826 today, especially as the bulls have fought back to retest the 7793 level after a small pullback on Friday. That said, the US markets are closed today so we may have a slightly slower session than we have been experiencing recently.
The spanner in the works for the FTSE bulls is that cable has risen to its highest level since the Brexit vote, breaking through the 136 resistance level. As cable rises, normally the FTSE 100 would take a breather or drop a bit, however, even with it pushing on to this 137+ level, the FTSE 100 has remained steadfastly bullish.
The bulls will be keen to break the 7793 level and that opens up a rise towards the 7826, and then 7840 above that. We may well see a stutter at this level as it will be the first time we have tested the top of the 10 day Raff channel for a while, though as its just above R3, a break of this level will likely see more upside quite quickly. Tight stops on shorts then!
Support wise, we have the daily pivot at 7772 initially and then the 200ema on the 30min at 7750 – a level that has supported well recently with the rise from 7690 last week and 7635 before that. For the moment therefore I still maintain a bullish stance unless a move below this moving average happens, in which case we may start to see the bears reappear.