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Merlin spends so much time upside down I bet he walks on his hands.
Swine is both singular and plural K,a bit like Guiness lol.
Yes I’m looiking to go short but will it reverse on a Friday?
The FTSE 100 started what looks like a short term advance but beware, tonight we have an important announcement at 7pm. The FOMC meeting announcement will reveal the Fed’s intentions with regard to QE and scaling back asset purchases.
This could be a major market moving event, therefore my short term forecast can not be relied upon. There are two scenarios; the Fed announces the start of tapering and the market sells off or the Fed delays tapering and the market rallies.
If I had to guess I would go with the “tapering delay” scenario because we all know that tapering is coming anyway. Furthermore Ben Bernanke will leave the Fed in January and I don’t think at this stage he wants to tarnish his reputation a month before retiring. I believe that Fed officials are worried about the effect tapering could have on financial markets. How will the stock market react? Will tapering trigger a market crash? There is always this possibility in their mind. Remember the 10% sell off in May? That was caused by talks of tapering.
Bernanke knows this, and for this reason I don’t think he wants to take any risk before his departure. It is a bit like a football team playing in the World cup final. If your team was leading 1-0 with five minutes remaining, why would you take any risk? You would put all your players in defense and wait for the final whistle. So, it looks like Bernanke will leave the task of announcing tapering to Yellen. Bernanke will leave as a hero, will Yellen be the villain?
Yesterday’s decline pushed the FTSE below its 200-day moving average for the second time in two weeks. Normally the first decline below the moving average is followed by a strong rally, this is obviously not happening. Concerns about tonight FOMC meeting is the reason, investors are not in the mood to go long ahead of this really important announcement. I don’t blame them, I would do the same. What I can say is that there is support below the 200-day moving average, a sell off tonight would provide an opportunity to go long. TL
Its tough to see this reversing again today as we have reversed all yesterdays losses, it’s tough being a bear in this never ending grind up market.
Yesterday the FTSE 100 was finally showing some strength relative to the S&P 500 but today it is back down again. It is not clear where the weakness is coming from. Banks and miners are underperforming and this could be the reason. The decline was prompted by fears of valuations after Carl Icahn was reported as saying “a big drop could be around the corner”. Well, the fact that markets pulled back on the news is a puzzle. Stock markets have been in bubble territory for months and there have been many warnings, yet the S&P 500 is still hitting new highs.
This time however Carl Icahn could be right because my sentiment indicator has risen above 400. When the indicator rises above this level we are in a period of extreme optimism. What does that mean for the near term? An extreme in optimism coincides with a major top, so I expect a big drop sometime in the next few weeks but this does not mean the market will turn down immediately. The market can remain elevated for a short period of time. In addition the indicator is still bullish so odds are that the rally will continue in the near term.
Based on past signals the market tends to carry on higher after a move above 400. The only exception was on 22nd May this year when the indicator closed at 404 and the FTSE 100 turned down immediately. That date marked a major top [6875] and so far the FTSE is still trading below that level.
The question now is how far from the top are we? One way to find out is with the wave count on the S&P 500. I chose the S&P because it sports the clearest wave count, the next move should be a fifth wave up. The end of a fifth wave on extreme optimism makes a lot of sense to metherefore I expect a final move up before the market turns down.
Meanwhile the OECD cut global growth forecast as a result of a slowdown in emerging markets. This is a positive development for the bulls as it will reinforce the case for delaying tapering.
