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FTSE-100 peak pattern spotted!
My call for a breather in my last post was completely wrong, with the index taking off again. However, one of my peak patterns has occured in the FTSE since then (one small dip just above the twenty-day-moving-average, followed quickly by two just below) so I am now looking for a larger dip. I can see an obvious trigger for this: the US presidential election next week. Trump is the great unknown and a victory for him could cause mayhem. The polls are tightening, which could depress the stock market in the run up to election day and, if Clinton wins, this could be my dip, prior to a relief rally after the election, as she is the establishment candidate and a friend of Wall Street. If Trump wins however, there could be a much larger decline after the election as no one really knows what his policies are yet.
As for the December 14th Fed meeting where the next US interest rate rise is widely anticipated, this is still some way off, but it could also have a significant effect on the markets. Ordinarily, stock markets don't like increasing interest rates as they increase companies costs, but bonds markets don't like them either and this could increase the amount of money coming out of bonds and looking for a new home. Consequently, if this money finds its way into the stock market, the effect there could be limited or even positive.
