Sentiment is bearish and the FTSE is rallying this morning, the index closed up yesterday following last week slide. It seems there is strong support near 5870. The low in December was 5872, yesterday's low was 5866.5, if the rally is underway we could have a double bottom. However a double bottom is a reversal pattern, yet I don't expect a reversal here, the trend is down and once the bounce is done I expect the FTSE to break below 5866.5.
Today the FTSE is boosted by the much improved trade data from China. Imports fell 7.6% and that was better than the 11.5% fall predicted by economists. The positive data is helping Asian stocks rally, the FTSE will open higher this morning.
Last night oil made a new low below $30 but today oil is bouncing back, this is positive for oil stocks and the FTSE. As a result the FTSE is trading near 6000 as I write. The pullback in late afternoon yesterday was wave b, this wave may have ended at 5927. I say "may have ended" because it's not clear if the decline in the S&P is complete. A break to new lows in the S&P would drag the FTSE below 5900 and probably below the previous low at 5866.5, this is a possibility. As long as the FTSE remains above 5900 we assume that the next move is a rally to 6070 for wave (ii).
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