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Oil And Yields Will Drive The FTSE 100 Lower

By Thierry LaduguieMarket OverviewFeb 10, 2022 09:10
uk.investing.com/analysis/oil-and-yields-will-drive-the-ftse-100-lower-200509899
Oil And Yields Will Drive The FTSE 100 Lower
By Thierry Laduguie   |  Feb 10, 2022 09:10
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Sentiment in the stock market is bullish but the rally is nearing an end, one of my indicators, the 34-day BTI, closed at 403 which is overbought.  When this indicator is overbought we see a trend reversal.  The trend will turn down and a multi week/month decline will follow.  This indicator does not tell us when the trend will turn down, it could be in a few days, next week or in two weeks.  But it should happen within a few weeks, this means you need to be prepared for this reversal.  

We can see the pattern is nearly complete which is another signal the trend will turn down, the FTSE 100 is approaching the top of the upper line of a rising wedge [A,B,C,D,E] which is a bearish pattern.  The counter trend bounce from the 2020 low is over, a major reversal will follow.  This major reversal in the FTSE will coincide with two things, declining oil price and declining yields and possibly declining commodity prices.  Take a look at crude oil below (bottom chart).  

The rally in crude oil since the low in 2020 is in five waves [1,2,3,4,5], an indication the trend will turn down.  Assuming the rally is wave (A), the next move is a decline to $40 for wave (B).  This decline in oil will hammer oil stocks like BP (LON:BP) and Shell (LON:RDSa), leading the FTSE lower.  Banks will also lead the FTSE lower because I believe yields will peak soon and when rate hikes start, the economy will weaken and inflation will drop which will trigger a sell off in yields.  When yields decline Banks go down.  These two major sectors will weigh on the FTSE, they will drag the FTSE significantly lower, the FTSE could go back to 5000 by the end of the year.

In the short term there could be some upside, markets have still have some momentum and sentiment is positive.  I expect markets to turn down within weeks.


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FTSE 100
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Oil And Yields Will Drive The FTSE 100 Lower
 

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Oil And Yields Will Drive The FTSE 100 Lower

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Robert Johnson
Robert Johnson Feb 12, 2022 10:39
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You said the same thing back in 2016 and you were completely wrong. Only Covid tanked the Ftse to near 5000. I guess if you keep posting the same twaddle eventually you'll be right.
Robert Johnson
Robert Johnson Feb 12, 2022 10:38
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You said the same thing back in 2016 and you were completely wrong. Only Covid tanked the Ftse to near 5000. I guess if you keep posting the same twaddle eventually you'll be right.
 
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