Today's news was positive, the ECB gave European banks 530 billion euros in loans and the US GDP numbers beat estimates. The following intraday chart of FTSE 100 shows today's price action.
Note the two spikes at 10:35 (LTRO result) and 13:30 (US GDP), investors got excited by the positive news so prices spiked. That was a signal to sell. Why?
Stock markets are tired after the long advance of the last two months. When a market is tired, good news will fail to push prices higher.
In addition there is strong resistance above 5900 (see today's post). Since early February rallies above 5900 have been rejected and the pattern is terminal (ending diagonal).
The bottom line is: when a market is tired in a resistance area at the end of a terminal pattern, it is a sell.
Research provided by e-Yield