Wall Street continues to make new highs and today we have two important announcements, the Autumn Statement from the Chancellor at 12:30 and the FOMC statement at 19:00. Volatility should pick up this afternoon and we could see some sharp intraday moves so stop losses will be at risk.
Tonight, the message from the FOMC statement will probably be that of a committee ready to hike rates in December. It would appear the market has already priced in a rate hike. Furthermore today is the day before Thanksgiving so the mood will be positive tonight, at a time when the S&P is expected to pullback. US markets will be closed tomorrow and they will close early on Friday.
I am not saying the S&P won’t pullback but in general the market tends to rise during Thanksgiving, similar to Christmas. The question now is, will the pullback occurs before or after Thanksgiving? Given the positive seasonal influence the pullback is more likely to occur next week.
The FTSE rallied above the recent trading range, the sideways move is broken and the direction is up but for how long? The FTSE has been the laggard, I don’t think it has the strength to catch up with the S&P. We could see a move to 6900 at best, the rally is wave (c) and this move could end anywhere in the range 6850-6900.
The expected pull back in the S&P will coincide with wave (d) down in the FTSE. As you can see the timing of the pullback in the FTSE will coincide with the timing of the pullback in the S&P. If the S&P pulls back early next week, chances are wave (d) down in the FTSE will be delayed. The FTSE is tracing out a triangle [(a),(b),(c),(d),(e)] for wave iv (circle). This could be a descending triangle where wave (d) will end near the bottom of wave (b), wave (b) ended at 6709. In this case the next move is down to that level.
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