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The FTSE has nearly reached my target
I suggested in my last post that I was looking for a bounce in the FTSE to its 200 day moving average and we are nearly there. The index has flattened off its rebound now and dipped a couple of times below the 20 dma which suggests to me that the rally is running out of steam. I wouldn't be surprised therefore to see another dip soon to support around 5,800. The rebound in the oil price (which has been driving the stock market) has faltered in recent days with Saudi Arabia suggesting it is less likely to cut output than had been thought. The fact that the FTSE has climbed steadily over the last six weeks or so may suggest that the worst is over and we may not see the further lows I was expecting, but I suspect another small dip is in order before we make further progress. Should the index continue sideways for some time however, that could suggest a sharper fall in the offing.
The Dow has bounced much more strongly than the FTSE and is looking overbought on its technical chart (relative strength over 80). It has been hugging its upper Bollinger band for some time now and looks ready for a dip to its 200 dma or lower Bollinger band.
