Sentiment turned bullish after the 34-day BTI turned up. Despite a potential pull back in the short term, bullish sentiment at this stage is normal because the FTSE 100 is in a fifth wave up on the daily chart.
Sentiment is bullish but there are always stories that will have a negative impact on the market like the sanctions against Russia or a bad earnings report. Yesterday it was UPS who disappointed the market. In this situation (when sentiment is bullish) these bad stories provide an opportunity to buy the FTSE.
Meanwhile, analysts are optimistic on the economy, a Reuters survey of economists found that GDP is likely growing at 3 percent per year. And after the market closed Twitter Inc. jumped 14 percent after reporting a sharp increase in revenues. On the economic front US consumer confidence beat expectations but the S&P 500 closed down, it seems the US index is near a top.
This would make sense because more than half of US companies have reported earnings and as I said a few days ago the good news is priced in. There is a risk the S&P will turn down and drag the FTSE lower in the short term.
The FTSE has still some momentum and unlike the S&P, the UK index closed up yesterday but there was resistance below 6840. I was expecting a rally to 6850, so the question today is: will the FTSE push to that level today or did the rally end at 6833 yesterday?
Difficult to tell because 6833 is a new high above last week high, in theory we could say that the rally ended at 6833.