The BTI turned up on 1 April and is still rising and now the 34-day BTI has now turned up to confirm the BTI. Sentiment is bullish and in this situation odds favour a stock market rally. As expected the FTSE jumped after the Bank holiday weekend, on speculation that the Fed will not rush to hike rates after the weak nonfarm payrolls.
Helping the market was news that FedEx is seeking to buy TNT Express for $4.8 billion. M&A activity is positive for the market and today we have more M&A news, Royal Dutch Shell is to announce a takeover of BG Group for £45 billion. This deal would create the biggest company in the FTSE 100, so today the FTSE will be supported by the news and downside is limited.
Today we could see some volatility if we see some sharp moves in BG Group or Royal Dutch Shell. It looks like the FTSE will open lower but the real action will start after 8am when BG and Royal Dutch Shell will open. Right now it’s impossible to say where the index will be trading, if the decline extends the index is a buy.
The trend is up, sentiment is bullish and M&A activity is positive so I don’t expect a large pullback. Yesterday’s rally is part of a third wave, the rally should continue.