Sentiment is no longer bearish but we can't say that sentiment is bullish because the 34-day BTI is still declining. Sentiment will turn bullish when both indicators are up. Yesterday we saw some good economic numbers from China and Europe and (manufacturing PMIs), mixed numbers in the US and weak retail sales in the UK. In the US better jobless claims was offset by weaker than expected new home sales.
Overall the news was positive, the S&P 500 set another record closing high. Earnings reports have been well received, they have provided the fuel to the recent rally, the question is what will happen when the earnings season draws to a close? I guess investors will turn to valuations and geopolitical risks and the stock market will decline. This could happen in early August.
Right now and until August the FTSE should continue to rally, the UK index is in the midst of an impulse wave up.
|FTSE 100||Today||Next few days||Next few weeks|
|Key Reversal Levels|
|FTSE 100 cash||below 6767||below 6691||below 6636|
|FTSE 100 Future||below 6721||below 6645||below 6590|
The trend is likely to reverse when the trend reversal is 75%. A breach of a key reversal level implies a neutral position.
Research provided by e-Yield