FTSE100, who's getting demoted?

It's getting around to that time again when the FTSE100 and 250 play relegation and promotion.

Companies that look like dropping to the FTSE 250 include public sector outsourcer Serco, oil services company Wood Group and struggling miner ENRC. Of these, Wood Group is a little surprising as it wasn't that long ago that they were promoted from the 250. Mind you, the share price has been under pressure recently as results have failed to impress.

Going up from the FTSE250 will be Sports Direct International, a UK High Street retailing success during what has been a difficult time, now valued at a touch over £4 billion. They are expected to be joined by packaging company Mondi and a former Greece listed company Coca Cola Hellenic.

Valued at around a £billion, Partnership Assurance is tipped to join the FTSE250.

One AIM company that is hoping to join the FTSE250 this year is Quindell Portfolio (see - Quindell Portfolio, incredibly cheap or crash and burn), the share price of which has recovered from around 5p to currently around 17p after undergoing a short sell attack earlier this year. Doubt they are going to make it this time though, although their ambition is to be FTSE100 eventually.

AIM shares lifted by ISA buying

Well, it has been a few weeks since UK investors could put AIM shares in their tax free ISA's and it looks like this has provided a lift for AIM companies.

Aug 9 (Reuters) - London's beleaguered junior stock market is on track for its best weekly volumes in two months, fuelled by rule changes that prompted investors to snap up stocks, particularly in the beaten-down basic resources sector.

The lurch higher in volumes on AIM, a sub-market of the London Stock Exchange, followed implementation on Monday of a government plan to let people invest in small firms while avoiding tax to help drive economic recovery.

http://uk.reuters.com/article/2013/08/09/europe-stocks-aim-idUKL6N0G92IP20130809

That's a few weeks ago, but anyone following AIM shares cannot help but have noticed that the price on many seems to be up while in general the main market has been going through a will it, won't it, finally correct this summer mood.

In the last month the FTSE AIM all share is up over 4%, compared to -2.7% for the FTSE100 and  + 0.36% for the FTSE250.  Certainly some of the shares that I follow, which tend to be the more liquid AIM companies, do seem to have found a flurry of buying that has resulted in higher prices. This shouldn't be a one way ticket though as these shares still offer more volatility and can surprise big time if they announce something the market doesn't like.

Lloyds PLC pleases market, UK Government finally in profit.

Lloyds Banking Group gave the market and banking sector something to cheer about today as it came in with some decent numbers, but the one stat that stands out today is 73.6p. That is the average price that the UK Government paid for 39% of Lloyds back in the dark days of the credit crunch. The UK Government is now in profit on its "investment", or rather the UK taxpayer is.

Had the Government not intervened back than the chances are that Lloyds would have gone under. Certainly Halifax/HBOS which Lloyds took over after pressure from the last Labour Government in 2009 would have gone under. HBOS was effectively bust, having been one of the major players in handing out questionable mortgages to people they really shouldn't have given money to.

Looking at their charts today, it is difficult to get too enthusiastic about Lloyds hitting 74p as pre-financial crisis it was heading for 600p.  And let's not forget that Halifax/HBOS was also a FTSE100 company back then and in 2007 it hit a high of 1150p. Long term buy and hold investors who hung on have been wiped out, but at least 74p is better than the 20p or so of a few years ago.

Still, the Government may now be thinking that sooner rather than later they may want to cash in their gain? The only problem is how do you sell 39% of a company the size of Lloyds into the market without seeing a big fall in the share price? 39% is a lot of shares to unload and I would have thought that any major buyer may want a discount.  The one thing that isn't likely to happen is a generous sell off to the taxpayers that saved the company.

FTSE100 Update - Central Bankers to the rescue

With the US closed yesterday, EU and UK Central Bankers took center stage and basically gave the markets what they wanted to hear.  Low IR's, perhaps even lower for some time to come, QE still on tap if needed, the UK market lapped it up almost hitting 200 points for the day. Unlike Bernanke in the US, the ECB's  Draghi effectively said that any exit from this dovish stance is very distant.

Market is up again so far today, but will await the US job numbers. Again we could be in for an interesting day because if the numbers come in weak then markets might actually jump higher on it because the US Fed will have less reason to taper QE. A good jobs number could ironically bring back the old doubt and fear that the easy money policies might be about to end and markets could go the other way on this "good" news.

The jump yesterday effectively took out the lower high possibility that I posted a few days ago. Still not a full bullish turn and we may now be entering into a period of consolidation.

FTSE100 - Daily

FTSE100 Update - A stripped down look at lower highs being formed

So, after a few days of summer relief fear is back on the agenda today, the word Portugal being used a lot to describe the sell off. As we should know by now, when the market needs a reason for a sell off or profit taking it can usually find something. That's not to say that the wider macro issues are not important, but anyone following this blog will know by now that quite often the market turns a blind eye to news, good or bad, just as often as it will take it into account. Usually the news will serve its purpose, whatever the market sentiment is at the time. Often it is just plain old noise.

However, the charts are suggesting a sentiment change. The first of the two FTSE100 charts below is a stripped down version that shows that we seem to be in a wave down pattern. I'm not that proficient at Elliot waves or wave theory and whether they offer us a "scientific" approach to technical analysis, but anyone who looks at charts for any length of time cannot fail to see that markets and individual shares often move in waves, up and down. These waves will often have higher highs in an upward move and lower highs when falling.

The charts below are suggesting lower highs, the market unable or unwilling to sustain any bounce. A wave formation is also emerging that could see more downside as so far it looks like this is only the beginning of a third wave down. MACD also suggests that the daily chart is weakening to further downside. FTSE100 does have support levels below 6000. If the latest fall today continues watch out for what happens on the next bounce, as 6300 is the approximate lower high just achieved. Any bounce that does not clear that and sets another lower high suggests weakness and more downside.

The weekly and Monthly charts, not included here, also suggest weakness, although the latter still offers hope to bulls that the longer term upward trend is still in place.

It's also Summer, and markets can drift on low volume numbers.

For charts click below:

FTSE100, worst performers.

Fear appears to be back in the market whether it is QE tapering, China growth, China banking system, there's always something to give the markets the excuse to fall once sentiment has changed. It would seem sentiment has changed in the last month or two which is hardly a surprise given the bull run before. Whether this is just a correction that will see markets revert later in the year to their usual seasonal bullishness cycle remains to be seen.

For now, it is worth having a look at the FTSE100 worst performers because despite all the bullishness about some companies and sectors have seen crash level falls.

6 months

Fresnillo  -53%
Antofagasta  -39%
Randgold Resources  -33%
Anglo American  -31%
Rio Tinto  -26%

3 months

Fresnillo  -35%
Randgold Resources  -26%
Anglo American  -24%
Glencore  -24%
G4S  -20%

30 Days

Aberdeen Asset Management  -27%
Arm Holdings  -23%
Severn Trent  -21%
Old Mutual  -20%
Vedanta Resources  -20%

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;

Severn Trent, bid fails, so is it now cheap?

One of the interesting things about following a bid story is what happens in the immediate aftermath when the bid is turned down and the potential buyers withdraw their offer and walk away. 

The short back-and-forth battle between Severn Trent and LongRiver Partners has come to an abrupt end, with the consortium announcing the withdrawal of its bidding interest for the water group late on Tuesday night.

The result was a sharp drop in Severn Trent's share price on Wednesday morning, down as much as 8.0% early on.

The stock surged to multi-year highs last month after the consortium - comprising Canadian investment group Borealis, the Kuwait Investment Office and Universities Superannuation Scheme Limited - first announced its intention to take over the company, the latest UK utility group to attract the attention of foreign investors.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=10090&action=news&story_id=20958376

The bid had been increased to 2200p a share which at the current price of around 1760p means that it is now some way off what the bidders were prepared to pay, and even further away from what Severn Trent themselves seemed to think was fair value. Difficult to say what that figure is, but it looks like it must have been a number that was high enough to make the bidders walk.

However, is the company now worth around 450p less than that bid price? Leaving aside looking at the fundamentals, it is always interesting to see how the market gets hyped when there is a chance of a bid, price gets pushed up to what is thought to be as close to a sale value as possible, often higher, which makes you wonder why it was priced lower in the first place. Euphoria of the bid plays its part, bandwagon jumpers get in hoping for a quick profit, but if someone was prepared to pay 2200p now for Severn Trent does that mean it is a bargain at around 1750?

Things aren't as simple as that as quite often the bidding company over values and pays too much. A few years back, a private bidder was prepared to offer over 200p a share for HMV, a company that in stock market terms went bust and is now privately held, the recent buyer getting it and all its potential future problems on the cheap. Severn Trent isn't HMV. As a utility stock it clearly has a premium value to longer term investors.

Next week the company goes ex-dividend, so anyone buying before the ex-div date will pick up 45.5p a share. By then, given the failed bid and the current state of the markets in general, the share could fall even further. Therein lies the problem, at least in the short term Severn Trent is in a down trend and anyone buying in for the dividend may well see further falls until the dust settles and market sentiment decides it's looking cheap again and their must be other potential bidders out there. One might assume that at some stage in the future, further bids, not necessarily from the same consortium, are likely to be made in what is an attractive sector for takeovers and you have to wonder if 2200p is now the minimum benchmark for anyone interested in Severn Trent.

FTSE shuffle time, Russian miners out, builders to get promoted?

It is perhaps a sign of the times that the quarterly FTSE100 reshuffle due to be announced this week could see a couple of under performing miners drop out, replaced by companies from the bullish construction sector.

Both Evraz, the steelmaker and iron ore producer in which Chelsea FC-owner Roman Abramovich has a major stake, and precious metals miner Polymetal International are expected to be relegated from the main board at this week's FTSE Group quarterly index review.

Buoyed by signs of a recovery in the housing market, which has stoked demand for their shares, analysts say Travis and Persimmon are in line to take their places.

http://www.telegraph.co.uk/finance/markets/10108670/Persimmon-and-Travis-Perkins-head-for-the-FTSE-100.html

Travis shares are up 40%, Persimmon 50% this year, in part driven by the Help to Buy intervention of the UK Government, widely seen as a potentially dangerous prop to the housing market, but the type of policy typically undertaken by the politicians when house prices stop going up.

"The wider construction market obviously remains under pressure but housebuilding is an important component of what Travis does," said Andrew Nussey, an analyst at Peel Hunt. He said the Government's Help to Buy scheme had aided homebuilders, Travis' "principal customer base". and "more activity from the housebuilders translates into more business for Travis".

http://www.telegraph.co.uk/finance/markets/10108670/Persimmon-and-Travis-Perkins-head-for-the-FTSE-100.html

Persimmon currently trades on a P/E of over 20, Travis 16.1, so both have generous valuations, but are clearly in a sector that should benefit for the next 2 to 3 years from Government intervention.

Meanwhile, despite the bullish stock market move since the new year, Evraz is down almost 50% in that time, Polymetal around 35%.

Tesco, up today, ready to disappoint tomorrow?

It was a surprise today to see Tesco on the rise.  Fair enough the market was up as often seems to be the case on Tuesday at the moment. A rise of 6p, 1.7% in the share price to a little over 364p might not seem much, but it comes on the eve of an IMS that is expected to disappoint. In fact, judging by what some are saying, Tesco could deliver a terrible set of figures tomorrow, a reminder of its UK profit warning back in January 2012.

Tesco’s first quarter results out Wednesday are likely to disappoint, according to Investec. 

The broker expects like-for-like sales to fall as much as 1.0% in the UK, 2.5% in Asia and 5.0% in Europe. It downgraded the stocks to a ‘sell’ rating and issued a target price of 295p. 

"The UK still lacks momentum and international is going from bad to worse," Investec analyst Dave McCarthy said. 

He said the international side of the business is a growing problem and after 15 years there is no sign of acceptable returns. 

The company’s latest results will come after the retailer last month reported its first annual profit decline in two decades. 

http://www.digitallook.com/news/20941271/Wednesday_preview_Tesco_to_report_first_quarter_results.html?username=&ac=

This analysis, especially on Tesco's international performance is a little unfair. 15 years of no sign of acceptable returns? That's pushing it considering they have been growing fairly strongly in most of their overseas markets for some time. You do wonder if Investec have a short on at the moment when they make silly statements like that.

But why the enthusiasm of the price rise today? Why would anyone be buying today if tomorrow is going to produce a bad result? Could it be that some in the know were selling today, the price being ramped up slightly to draw in as many eve of bad IMS statement mug punters as possible? In other words, the long term buy and hold retail buyers? Perhaps that is being too conspiratorial, but given the expectation of further bad news, the best Tesco shareholders can hope for in the morning is that things aren't as bad as predicted and the market reacts kindly. Chances are if the IMS is bad, Tesco could fall a lot more than the 6p it gained today. Let's see what happens in the morning.

FTSE100, bull run over or just pausing for breath?

So, we ended the week with it feeling a little like the old volatile times of not so long ago, a little complaceny being shaken off. The market seems to have turned its attention back to worry about macro issues and some old fears seemed to resurface. Does this mean the current bull run is over? A look at the charts would suggest no, at least not until some serious damage is done to the longer term weekly and monthly charts.

Below are the FTSE100 daily, weekly and monthly charts. The daily is bearish, the latest move down putting a dent in the previous bullish mood. However, one look at the weekly chart shows it still has a little way to go before the bullish trend can be said to be over. MACD is just turning negative, but is some way off the zero line, it could easily turn back up again. The Monthly chart is still positively bullish, MACD still looks quite strong. The monthly chart does give some hope to bears in that the latest candle with a long upper shadow is negative and bearish.

A long upper shadow indicates that the Bulls controlled the ball for part of the game, but lost control by the end and the Bears made an impressive comeback.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks

Worth noting however, that price had been outside the rising Bollinger Band on the Monthly chart and has now fallen back within it. Price had effectively got ahead of itself and once this happens it is not unusual to see it fall back inside the band. The Bollinger Band is still positive.

All to play for next week, the FTSE currently called to be down around 50 when the markets open on Monday.

Daily, weekly and monthly charts below.

FTSE100 - another look at the monthly chart, 7000 on the cards?

It has been quite an amazing run since the new year, even more so when you consider that the markets had been going well as 2012 ended. In this post at the end of January I entertained the possibility that we would see 7000 at some stage this year, but I didn't think we would be getting over 6800 by mid to late May and within touching distance of 6900. Mind you, back in January I did say that the monthly chart almost looked too good and that continues, the chart is very bullish. Every minor dip has been bought and while we must assume that at some stage there will be a correction of sorts, there is very little for bears in this chart. Many who went short the FTSE, and other indices, because it looked too high or a correction must be just around the corner will have got their fingers burnt. They must be looking at a different chart to the ones I'm seeing as there have been few signals to go short.

One thought that has occurred to me is that as valuations become stretched as the market goes higher, it is just possible that in a low IR environment where there is little return to be had on cash in the bank, the markets might be just as happy with smaller returns in terms of dividend yield from companies going forward. Therefore, more racy valuations, which we are already starting to see on many stocks may become the new norm as chasing growth and momentum seems back in vogue, but the yield still beats cash on deposit.

The FTSE100 currently has an average dividend yield of 3% and a P/E over 17 and as the index goes higher yield goes lower and P/E's become more stretched. The markets are pricing in recovery, but at a time when you will struggle to get 1-2% on cash, a 3% yield with capital growth thrown in is very attractive. However, one has to wonder how much longer shares offering 4%+ yields will be available and as the bull continues how long will it be before the average FTSE yield is closer to 2% than 3%? Even if it gets to 2%, it beats cash in the bank, although capital risk is always higher with our cash in shares, except of course when the banking system itself faces collapse as it did in 2008. Any correction that does happen pushes up that yield, assuming companies continue to do well and there is no further economic tailwinds ahead. For now, the market seems content to accept a lower overall yield from equities it would seem.

FTSE100 - Monthly

FTSE100 Update - Bull run continues

FTSE100 continues to go up with every brief dip being bought. Both the daily and weekly charts look bullish. On the daily chart we have just had a new 20/50 dma crossover to the upside, the same crossover on the weekly chart having been positive for some time. Bollinger Band has opened towards the upside and while the MACD is slightly extended on the daily chart it is only just crossing on the weekly chart. This suggests that even if we get a pullback on the daily, the trend remains bullish as long as the weekly MACD trends up. Certainly no sign of Sell in May so far.

Click to see charts below.

William Hill gallops into the FTSE100

The pending merger between Xstrata and Glencore has left a space for a new entrant to the FTSE100 and William Hill after some pretty impressive momentum in the last 6-9 months sneaked up to take it on the line. Trouble is, it is another momentum stock with stretched fundamentals now joining the 100. A year or so ago it had an impressive dividend yield of over 4% which is now around 2.5%.

Meanwhile, Ladbrokes has raided William Hill to fill a position where they are playing catch up with their FTSE100 rival.

British bookmaker Ladbrokes has hired Jim Mullen from William Hill to run its online operations as it tries to make up lost ground on its larger rival in the sector.

Ladbrokes' attempts to galvanise its digital business are borrowing heavily from the success enjoyed by market leader William Hill, which entered the FTSE 100 index of leading companies on Wednesday.

Mullen will have the title of director, digital when he starts work in November, Ladbrokes said on Wednesday. He worked as chief operating officer at William Hill's online operations.

Ladbrokes has formed a partnership with software developer Playtech to develop its online business, a fast expanding part of the gambling market. The companies launched a digital marketing services operation on Wednesday, to be based in the Israeli city of Tel Aviv.

http://au.news.yahoo.com/technology/news/article/-/16967171/ladbrokes-recruits-william-hill-man-to-run-digital-unit/

The Week Ahead 2 - 22nd to 26th April 2013

The week ahead.

Data:

22nd April 

EU Consumer Confidence Indicator 

23rd April 

US House Price Index 
US New Homes Sales 

25th April 

UK GDP (Preliminary) 
US Bloomberg Consumer Confidence
US Continuing Claims   
US Initial Jobless Claims 

26th April 

US GDP (Advance)  
EU M3 Money Supply  
US Personal Consumption Expenditures, Income, Spending  
US U. of Michigan Confidence 

Company Announcements

24th April 

Finals - Home Retail Group. Been going well recently but the fundamentals are looking quite generous for a retailer. Will be interesting to see what effect if any the March/April winter weather has had on business. Note - my mistake this result is due next week.

Finals - Brown N Group. I first mentioned Brown in this post, Retailers Under The Cosh as one to watch in the FTSE250, potential takeover target and probably undervalued. Back then it was around 242p, today 420p as of Friday's close. Be interesting to see if it can maintain this momentum once it announces its finals. Didn't give anything away back in March as to what to expect.

25th April 

Interim Management statement - Playtech. Has done well lately out of doing business with William Hill and has also recently agreed a deal with Ladbrokes.

Markets and charts

Tesco reports, now the hard work begins.

Tesco reported this morning and while there was nothing overly dramatic in the results there was enough perhaps to raise some eyebrows going forward and see the shares sell off a little.

Bottom line is that profits are down 52% which is huge, especially for a company the size of Tesco. A year ago they were at £4 billion in pre tax profits, now it is under £2 billion. However, much of this seems to be due to one off costs.

The decision to finally pull out of the US has been confirmed at a cost of around £1.2 billion. The market knew that this write off would have to happen from pulling out.

Another £800 million has come from property write downs that they are no longer going to develop. Again, this should have been priced into market thinking as Tesco had stated that they were going to concentrate and invest in current stores in the UK.

However, the £1 billion investment in the UK side does not seem to have had a dramatic effect thus far on the bottom line. Trading profits in the UK fell 8.3% in the 52 weeks to February.

There are also difficult economic headwinds to contend with overseas in Europe and Korea.

One big plus today is the continued growth online, up 13% with £3 billion of sales which at the very least will be a reminder to Morrisons that they need to get a move on to get online as they fall further behind.

Another plus is that in these low savings rates times, Tesco has maintained its dividend at around 4%.

For Tesco the hard work now really begins as one would expect these one off write downs to have little further effect going forward. Once out of the US, Tesco needs to get it right in the UK and then hope that any down turn in Europe isn't too severe. Then there's Korea, small overall, but still a dent on profits, with the prospect of war with the North always it seems just over the horizon.

The market will now be concentrating on the pay off from that £1 billion investment in the UK. Going forward Tesco needs to show that it has got this right. If it has then Tesco remains a decent recovery play going forward, but there is still enough doubt, especially as the UK is a very mature market where it might be difficult for the company to get back the market share it has lost. It should be remembered that Tesco had 30% of this market a few years ago and is still the market leader by some way. Getting back to 30% in itself will be a difficult job and remains the reason why ultimately Tesco has to develop elsewhere which despite the US failure includes overseas.

FTSE100 Update - Where next?

The direction of the FTSE100 is more negative than positive, but it is still a guessing game as to how the latest moves will ultimately play out.

Daily chart

A downtrend with two lower highs and potentially a third in play right now. The arrows on the chart show the downward direction, but also the potential for upside if that downward trend tram line is broken.

MACD is negative. Two lower highs showing divergence on the chart in Feb and March. The headshake described in my update the other day looks like it may be happening again as MACD is currently near enough to the zero line to give bulls fresh hope of an upward move, but could easily reverse and go further into oversold territory. It's been some time since MACD did that so it is due.

20 DMA looks like it is just about to go through 50 DMA on the downside.

Support on the chart at between 6250 and 6300 needs to hold.

Weekly chart.

Still a lot to play for

MACD is going negative, but is still some way off the zero line. We still have higher highs on the MACD.

20 and 50 DMA still holding on this chart.

Trend tram lines and support lines below suggest that on this longer time frame chart we could have a decent sell off yet still be in a general uptrend.

Overall, things look more negative and it will be interesting to see if the FTSE holds and we get consolidation between 6250 and 6500 or bigger falls below 6250. Right now there is less reason to be bullish, although if this is a bigger bear market move then it is very early stages.

Charts below:

FTSE100 Update - Finally rolling over?

A couple of days ago I posted a chart showing the FTSE100, it looked like it was ready to go up again. Indicators suggested that we might be in for an early reversal of a minor downtrend that had been in place over the previous couple of weeks. Well, it looks like we got a classic example of indicator headshake, looks like it is going one way and then suddenly reverses, the previous trend still in place.

This is something that needs to be watched out for whenever indicators look like they are reversing from an existing trend. I call it the headshake, because a little like the dummy move that defenders (put in your favorite sport here) are often sold by attackers, you can go one way and then suddenly find your foe has gone in the opposite direction. Yes, you can look like a dummy and markets behave in the same way to.

A typical example of this is the headshake that often happens in the early stages of a Bollinger Band expansion. The Bollinger Band will often, especially after a period of consolidation, open wide, the direction can be up or down. You can see on the chart below how the band opens like a bubble in places, but quite often the initial move that price is making is not the direction that price eventually goes. In other words, you might think the bands are opening to the upside because price seems to be heading that way when in fact it is going to eventually reverse after the initial move and go in the opposite direction. This why it is often important to wait for confirmation. It means you will always miss the early part of a move, but it should keep you clear of the headshake.

As for the FTSE100, the MACD has reversed, moving averages are under pressure and the Parabolic Sar didn't hold. The chart now looks negative, with the Bollinger Band opening towards the downside, unless of course what we are seeing is another headshake. Perhaps the US numbers due out later today will confirm one way or another the direction? If they don't meet market expectations, the charts are telling us we should go lower.

Chart:

FTSE100 Update - still looking positive

It must be getting boring, especially for market bears, that the charts are still looking pretty positive despite being very deep into an uptrend that seems to defy gravity. Not even North Korean talk of war threats (have they ever talked of anything other than war?) added to the Cyprus banking fiasco can shake the markets it would seem.

Price on the chart has been hovering between the 50 and 20 dma which seems to have flatlined, however, other indicators suggest that the next move may be up again. MACD is still above the zero line and after a period of decline is now heading up again. No green bars yet but the crossover is almost ready to go. This is supported by the Parabolic SAR indicator going positive with the first green dot on the chart under today's move up. That needs to hold, but if it does we should be going higher.

I do wonder if we might be heading for an ideal sell in May scenario this year?

FTSE100 - Daily

FTSE100 Update - Will market again buy on the dip?

FTSE100 reached the psychologically important 6500 and then sold off.  Hardly a surprise considering the recent run, chart still looks quite bullish although the MACD indicator is suggesting weakness again. The last time this happened on the daily chart we had a period of consolidation between 6300/400, before the move up to 6500. The 20 and 50 dma still looks quite positive and I would look to a move below them before declaring this trend move over. The FTSE has room to move down to around 6300 before hitting the tramline on the chart. So far the dips have been bought and fairly quickly, so we shouldn't have long to wait to see if this is the beginning of something more than a dip.

FTSE100 - Daily