Well, the FTSE hasn’t followed the script I set out in my last post, so I think I’ll have to write that one off as a failure. It has actually risen around 200 points from where I suggested it was due a small drop, but, undeterred, I am now looking for a much larger drop (back to the 200 day moving average – the red line) from here. I think the index has got ahead of itself after taking off so strongly from the sideways movement around 5800 and seems to have met strong resistance just below 6400. The Dow is also displaying uncharacteristic hesitancy in breaking through for a new all-time high just above 14000 and I suspect this resistance will prevail and the indices drop back to a more comfortable level before progressing further.
There is also the fiscal cliff spending cuts to reconsider at the end of the month, but I am not sure they will have that much of an effect this time. I think it is likely that the market will assume that another fudge will be made to resolve the issue, just like last time.
