The FTSE 100 rallied a bit during the trading session on Wednesday only to give up some of the gains and form a less-than-impressive candlestick. We continue to dance around the 6600 level, which is a round figure that will attract a certain amount of attention. I think what we are looking at here is an opportunity to buy on the dips in order to get involved in a market that is trying to break out. To the downside, we have the 50-day EMA offering a bit of support, but I think more importantly we also have the 6500 level offering a bit of psychological support in that same general vicinity, so I think this market that could be a “buy on the dips” scenario.
Keep in mind that the FTSE 100 is going to pay close attention to the reopening scenario in the United Kingdom, which is one of the biggest drivers. The idea is that the United Kingdom has vaccinated roughly 25% of its population, at least the first part of the two-shot system, so they are way ahead of several of their G-10 peers.
If we do break above the top of the candlestick for the trading session on Wednesday, that would obviously be a very bullish sign and could send this market towards the 6750 handle, which was the high before there. After that, the market likely will go looking towards the 6900 level, perhaps even the 7000 level. In general, this is a market that continues to look bullish over the longer term, but that does not necessarily mean that it is going to be easy to get to the higher levels. It is going to remain choppy, but I think that will continue to be the case in several indices around the world, not just the FTSE 100. Pay close attention to gilts and the yield that they are offering, as if yields continue to shoot higher, that could cause a little bit of a drag on stocks. That being said, the trend is higher, and I think that continues to be the main focus here.
