The FTSE 100 has rallied significantly during the course of the trading session on Thursday, as the GDP numbers in the United Kingdom have come out lighter than anticipated. London traders celebrated this bad news by purchasing stocks under the hope of the Bank of England staying loose for the foreseeable future. After all, the Bank of England recently has balked at the idea of tapering its bond purchases, and with the GDP numbers sinking below the pre-pandemic levels, it is very difficult to imagine that London will be tightening anytime soon.
When there is no real reason to think that this market is going to fall for a significant amount of time, as the FTSE 100 has been in an uptrend for a while. Furthermore, we also have the 7200 level underneath which has been previous resistance. The “market memory” that could come, and that level suggests that it should now be the “floor the market.” Based upon the previous consolidation that we have seen and the measuring of that rectangle, the market could very well go looking towards the 7600 level.
The 50 day EMA is now hanging about the 7200 level as well, and as a result it is likely that we will see yet another reason for the market to rally based upon that indicator. We have been in an uptrend for quite some time, and that is not going to change anytime soon. That being said, you should look for little bits and pieces of value in this index, but that is really not anything different than any other market. You are looking for value that you can take advantage of, and you do not want to pay too much for the asset that you are trying to get your hands on.
If we break down below the 7100 level, then it is possible that the trend could change, but that does not seem very likely anytime soon. Ultimately, this is a market that will continue to play right along with the New York indices, where the idea of cheap money has been pushing asset prices higher for the last 13 years. London behaves much the way New York does, sucking in cheap money in order to buy assets. If the Bank of England truly is going to be very loose going forward, then that should continue to be reason enough for this move.
