The FTSE 100 tried to rally during the trading session on Thursday but continues to struggle near the all-time high. Quite frankly, the market got here rather rapidly so would not be a huge surprise to see a pullback at this point. That does not necessarily mean that the market is going to fall apart, rather that we just got a little ahead of ourselves. With that in mind, I think the market probably continues to look at the 7200 level underneath as important, especially now that the 50 day EMA is starting to reach towards that same area.
Keep an eye on potential lockdowns in the United Kingdom, as Christmas is approaching. After all, it is Boris Johnson that said just the other day that perhaps more restrictions are necessary. If that is going to be the case, then it is very likely that we would see the stock market in London pull back just a bit. Furthermore, just simple overextension is probably an issue to pay close attention to. Nonetheless, I think that any pullback will end up being a nice buying opportunity.
I do not have any interest in shorting, at least not until we break significantly below the 200 day EMA, which is right at the 7000 handle as well. With that being said, the market is very bullish, and has to be looked at through the prism of bullish attitude. The candlestick for the trading session on Wednesday was a shooting star, and the Thursday candlestick seems to be confirming that pullback coming. Nonetheless, if we turn around a break above the top of the candlesticks of the last couple of days, then it is likely that we could go higher. That would have the market breaking above the 7400 level and looking towards the 7500 level.
I think that there will be a lot of value to be add here, if you are patient enough to get involved at lower levels. Simply look at it as the potential for finding “cheap stocks” in order to get long again. I believe at this point in time we are more likely than not going to continue to see upward pressure as we head into the end of the year, but may be in a more gradual move than what we have witnessed over the last week or so.
