FTSE 100 - daily chart for the ftse 100 7th October 2010
The FTSE 100 index traded in a narrow range once again yesterday, as traders and investors preferred not to participate actively, ahead of today’s Non Farm Payroll release in the US, due at 1.30pm UK time. The FTSE 100 broke briefly above the 5700 level, but failed to hold, closing the trading session lower at 5,662.13 as US markets traded nervously ahead of the NFP release.
The technical picture for the FTSE 100 remains firmly bullish as we continue to trade above all four moving averages, and with the platform of support now below in the 5,500 to 5,700 area, this should provide the springboard for a continuation of the recent bullish trend, which has been given further weight recently with the 40 day moving average crossing above the 200 day moving average. Our short term target remains the 5,833 high of mid April, with 6,000 a realistic target before the end of the calendar year.
Dow Jones - daily chart 7th October 2010
Over in the US we saw a similar picture with a quiet day on the Dow Jones, as once again investors sat on the sidelines ahead of today’s NFP release which should give a clue to the longer term economic outlook, which in turn is likely to influence the FED policy regarding quantitative easing. The fundamental news yesterday for the US once again centred on the jobs market, with the release of the weekly unemployment figures which came in marginally better than expected, and certainly better than was feared following the ADP jobs numbers on Wednesday, which were far worse than expected. However, with traders and investors now waiting for key NFP data today, there was little reaction to the news, as the Dow ended with a small doji cross candle which just failed to breach the 11,000 level, before closing the trading session at 10,948.58, much as expected.
The technical picture however still remains firmly bullish ahead of today’s NFP release, as we continue to hold above all four moving averages on the daily chart, whilst the longer term trend is likely to be dictated by the FED’s determination to implement further QE measures shortly. Indeed this single policy has dominated markets over the last few weeks, with equities, bonds and commodities all rising in tandem, something which rarely happens, throwing all traditional correlations into reverse as a result. Should the FED fail to deliver on their promise, then this could trigger a sharp sell off in equities around the world in due course, and today’s NFP figures could be the catalyst for the FED to act.
Trading volume yesterday was below average once again at 141.9M as traders decided to wait for today’s market numbers before investing once again.
