FTSE100, oversold bounce due?

The big news this week will probably come when the Fed meets and concludes on Wednesday. Much of the current uncertainty came about when Ben Bernanke talked about the tapering of QE and that it could possibly end sooner as against later. The market seemed to take this as a signal that it would end quickly, all in one go and that it was as good an excuse as any to sell off. If anything the sell off in equities has been stronger outside the US, the UK getting to around 6900 before the latest fall to 6300. It's believed that Bernanke will basically say the same as before, but for the benefit of the trader panic types, it will be made a little clearer on what is likely to happen.

“We suspect that this week Bernanke will continue to say tapering will happen at some point, could happen this year but will be data-dependent, and that we are still a long way off from removing the very easy policy stance the Fed has in place,” said Jim Reid, strategist at Deutsche Bank.

“We still think that the Fed will struggle to taper very much and very early, but the debate is now going to be around for a while,” said Reid.

http://www.marketwatch.com/story/stock-futures-up-sharply-on-fed-clarity-hopes-2013-06-17?link=MW_popular

In other words, same as before, data dependent and nothing likely to happen until the "recovery" is fully in place. Even then it likely will be a slow winding down, gradual, over time. What they will not do is turn it off totally on a specific date.

Whether this relaxes the markets is anyone's guess, but the FTSE100 is showing that it is ready for a bounce after the recent fall. The Daily chart looks set to retrace some of the lost ground of the last month, but would probably need to go through 6600 and then use that as support if recent highs are to be challenged again. If it fails to get to 6600 and it becomes resistance then we could see a second wave down that confirms a downtrend.  The 20dma is just touching the 50dma to a potential downside crossover on daily chart. Weekly chart is also weaker, but the monthly still gives hope to the bull case.

Charts below;

FTSE100 - Daily

FTSE100 - Weekly

FTSE100 - Monthly