FTSE 100 – The rally has run for 3 weeks now and so could end this week. It certainly has not shown to be very strong and there has been no significant increase in trading volume. If the rally continues then it could take the index up towards a meeting with its 30-wk moving average, currently at the 4260 level, but that is not looking a very real prospect. The downtrend is still the main trend and a 3 week rally is a perfectly normal reaction within a strong downtrend; if it does extend to 4th week this week then it could continue for up to 7 weeks. Doesn’t look too likely though.
FTSE 250 – The congestion phase continues and has now been in place for a frustrating, whipsawing, loss making, 22 weeks (since start of November 2008). It has to end at some point and that point may be nigh; the price of the index and the current level of its 30-wk moving average are close to touching. This is usually a decision point and, as the downtrend is still the main trend of this index, this could be a ‘kiss of death’ causing the market to recommence its downward spiral. Hold tight until the signals become clearer.
S&P 500 – This really is a very interesting picture. It is the big increase in recent trading volume on this index and on the DJIA) that gives rise to a need to watch the market movement very carefully over the next two or three weeks. The S&P 500 has pulled up back above the important resistance/support level at 790 and has powered upwards. But then it needed to – it had fallen too far too fast away from its 30-wk moving average and needed to get back closer. That it is now doing and so we should soon see if the buyers are going to continue to pile in or if they are going to get cold feet and so let the sellers take the index back down again. This week should give a good indication.
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