The markets are still in a steady uptrend, however, serious resistance points are ahead (covered by Steve Briggs market round up video
here). The question is how much more steam is there left in the current upward move? Most of the news flow doesn't appear to be positive enough that the markets would steam ahead and in the case of the FTSE100 break through 6000 and then 6100, which has been a serious resistance level in the last year. Markets try to look ahead and while it is just possible that much of the bad news is already priced in, any perceived bad Euro news could soon send the markets into a tailspin again. We have to be aware that the potential for a downward move is now greater as the current trend heads towards exhaustion.
For now, things are still positive and we await for price on the charts to test the 20dma and then the 50 dma if the first doesn't hold. Looking at the charts, there is a little daylight between the averages and price, so there is still room for a sell off and the trend to still be up.
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FTSE100
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Update worth noting.
ReplyDelete"Hedge funds that base investment decisions on economic trends are unwinding bets against European stocks (SXXP) at the fastest pace in three years, speculating policy makers will step up the fight against the debt crisis.
The degree by which macro funds are trailing the Euro Stoxx 50 Index (SX5E) is narrowing at the fastest rate since 2009, a sign managers are covering short sales by buying shares, according to data compiled by Bloomberg and JPMorgan Chase & Co. The proportion of shares on loan in the Stoxx Europe 600 Index, an indication of short interest, has fallen to 2.9 percent from 3.4 percent in May, data from London-based Markit show.
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Shorts Closed
Hedge funds last closed short bets this fast in April 2009 just before a 35 percent rally in the Stoxx 600. Macro funds have failed to keep up with the market this year, rising 0.1 percent compared with an 8.1 percent advance in the MSCI World Index of equities in developed economies, according to data compiled by Bloomberg."
http://www.bloomberg.com/news/2012-08-12/hedge-funds-capitulate-on-european-shorts-at-fastest-since-2009.html