The FTSE 100 has gone back and forth during the course of the trading session on Thursday as we continue to see the 6600 level offer quite a bit of both support and resistance. With that being the case and the fact that we have formed a very neutral candlestick tells me that we still have a lot of deciding to do. After all, the FTSE 100 is trying to decide whether or not it was going to focus on growth in the United Kingdom, or the fear that we see around the world.
The 50 day EMA sits just below and offers support near the 6534 handle. I do think that we need to pay close attention to the gilts in the United Kingdom, because rising rates will be a major problem. This is the same situation that we are seeing in the United States, with traders simply starting to get a bit cautious due to higher interest rates as it is easier to clip coupons instead of taking the risk that a stock or Index can offer. That being said, the market is still looking very much like it wants to go higher so I think that part of what you are seeing here is not necessarily people running, but perhaps a bit of portfolio rebalancing.
I still believe that if we can break above the 6675 handle, the market then could go to the 6750 level. If we can break above there, then the market is likely to go looking towards the 6800 level, possibly even the 6900 level. At this point, the FTSE 100 is still a “buy on the dips” type of market, at least as long as we can stay above the 200 day EMA which is currently at the 6375 handle. It is difficult to imagine that the market is going to break down below that level very quickly, but at this point in time I think that we continue to buy the dips going forward and therefore I remain bullish. I do not know certainly think that we are going to shoot straight up in the air, but clearly there is more positivity after the negativity, especially with the vaccination rate in the United Kingdom being higher than most of its peers around the world. The markets will continue to be choppy regardless of what happens next.
