The FTSE 100 closed down Friday. It's the same story, mining stocks are weak. Very strange mining stocks are unable to rally, normally when they are oversold they bounce back. But in the current environment they are in freefall which means the FTSE is unlikely to rise by a significant amount.
The other negative factor is the drop in Chinese stocks. I have not given my opinion on Chinese stocks in recent months because the wave count is not clear, but during the summer the bubble burst and I have always said that Chinese stocks are in a bear market. Bear markets don't die easily, the rally from the August low may have reassured investors but not me, I remain bearish and Friday's 5.5% drop is probably the start of the next leg down. The Shanghai composite index is down again today, if the decline continue the FTSE will struggle even more, the index is unlikely to return above the previous high at 6488.
This is why the rally may not last very long. We know that December is bullish for stocks but the negative factors are creeping up, which means the FTSE will struggle to rally after the first week of December. The index has the potential to rally below 6500 in the short term, thereafter I expect the bear market to resume.
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