FTSE 100 Technical Analysis

Monday, February 18, 2013, Marketing Communication FTSE 100, Daily Please click on graph above to open a larger image In the past couple of weeks the FTSE had posted some minor profit taking, orange lines. However the price action in recent days has lifted the index back to fresh multi year highs. This recent move higher came out of the price action breaking out of the near term trading range, orange lines. The bulls would have hoped this was a traditional flag pattern giving considerable upside potential. Candlestick followers however will be slightly concerned that these recent higher highs were posted only on an intra-day basis, and this higher high was followed by a Bearish Engulfing candlestick pattern, and then followed by an Inside Day, Harami Cross, all signalling that the recent buying momentum may have run its course. This negative argument also gains weight from the clear RSI divergence where the RSI has not posted a higher high. The index remains above the near term Moving Average, grey line, and above the near term trend line, blue line, so any weakness seen ahead would still be seen ‘only’ as profit taking and not seen as trigger to open short sales. Only a break under the near term trend line, and break of the 6225 lows would open up more negative near term targets. So in summary the FTSE has posted some sharp moves higher from November, and seems to have moved into some natural consolidation areas. Possible take profits for the active, and we see traders keen to buy on any near term weakness to the 6225 support, only looking to turn out-right bearish on confirmed moves under 6225. Free Access Seminar on Elliott Wave Counting Our next seminar will be on Elliott Wave Analysis.  The presentation will be at our office at One Churchill Place, Canary Wharf, London. Elliott Wave Analysis is one of the more esoteric technical tools and as a result it can be open to abuse and criticism. However the basic fundamentals, which will be covered in this seminar, can provide a useful framework for trading. Registration is freely available to all, not just Cantor Index clients. If you would like to register for what we hope will be an informative and enjoyable evening, please cklick on the banner above to open the registration page, or alternatively please contact us by email and we can add you to the guest list. FTSE 100, Weekly Please click on graph above to open a larger image Last updated, February 18th, 2013 The graph above is a great deal more detailed than usual, as I will be using this as an example at the Elliott Wave Seminar next week, as mentioned above this event is free to all readers, not just Cantor clients, so feel free to register if you would like to be run through the logic of this graph in more detail. With Elliott Wave there often numerous potential counts, so the graph above is not THE count on the FTSE, just one potential count. This count suggest that the sell-off through the 2007-2008 was a 5,3,5, Zig Zag correction, and we currently are in Wave 5 of the following impulse. This count does offer up considerable upside targets, and does suggest that the FTSE is set for a strong H1, and is set to post a move up through its all time highs. FTSE 100, Monthly Please click on graph above to open a larger image Text last updated, February 4th, 2013 The monthly timescale naturally takes the long term view so the commentary in this section will only be updated as when market events dictate. So regular readers of this report will only need to read the monthly and weekly sections on a relatively infrequent basis. However we include all the information to give new readers the full picture. The monthly graph for the FTSE 100 quite clearly shows how the index posted an extremely powerful move into the end of the last century, first red line. From the all time highs in the index at 6950 the FTSE slumped 50% to the 2003 lows. In hindsight we can see this move as an understandable and even justifiable re-examination of the strong gains posted in the previous 20-30 years. The market currently remains well above these lows, which tells us that the Eurozone sovereign debt issues, technically at least, are not as significant as the general press would have us believe. The FTSE remains in a trendless state, having posted lower highs in 2007, and higher lows in 2008, converging black lines. Retracement levels calculated from the all time highs to the 2003 lows create some interesting levels. We suspect that these levels will continue to be of use for the quarters ahead. The FTSE 100 remains in a trendless state over the long term, with lower highs and higher lows, trading in the shadow of the TMT sell-off. Moves under the longer term trend line, far right red diagonal line, could trigger the start of a more significant retracement, as seen with the breaks lower in 2001 and 2008. The breaks above the 2011 highs have opened up more optimistic long-term targets, with moves up to the 2007 highs now seen on the cards, while the strong longer term trend holds. S&P 500 Graph, Monthly The S&P monthly graph is uploaded to show how the broader US index has posted a broadening formation over this period, posting higher highs in 2007, and lower lows in 2009, and that the recent moves have brought the index up close to its all time highs. Nikkei 225, Quarterly, Semi-log Please click on graph above to open a larger image Text last updated, December 3rd, 2012 Enclosed above is a quarterly graph on the Nikkei. We include this for those readers who may simply assume that all major stock markets are in a perennial bull trend, with only temporary bearish aberrations. This shows that G7 nations can be, and indeed some have been, in major bearish trends for over 25 years. Contact Us For Spread Bet Sales:- 0044 (0) 207 894 8800 For CFD Sales/Traders:- 0044 (0) 207 894 8883 E-mail:- sales@cantorcapital.com Graphs Graph images are created on Bloomberg, and remain under copyright to Bloomberg. Depending on your email settings the images contained in this note may not be downloaded correctly on the first viewing. Select the view 'Web version' link on the header, which will open a browser window that will display the images correctly. Unsubscribing From E-mails If you would like to be removed from all Cantor Capital Commentary notes then please click on the ‘Update Preferences’ link on the header, or the ‘Edit your subscription’ link on the footer and select the ‘Unsubscribe’ link at the bottom of this page that appears. This will remove your email from all Cantor Capital Commentary distribution lists. Regulatory Disclaimer This market commentary note (“note”) has been issued by Cantor Fitzgerald Europe (“CFE”), which is authorised and regulated by the Financial Services Authority (“FSA”). Cantor Index is a trading name of CFE. This note is defined by the FSA as a marketing communication. This note has been prepared and distributed for information purposes only and represents the personal views and opinions of the sender. This note is not “investment research”, a “research recommendation” or a product of the Research Department. Please be aware that the CFE Research Department may issue a formal recommendation and target price on the stocks mentioned, which may differ from the opinion given here.  This note may contain information obtained by CFE from third parties; the source of information will usually be disclosed.  CFE makes no representation and gives no warranty as to the accuracy or completeness of the contents of this note. Any person placing reliance upon this note does so at their own risk. Investors should consider this note as only a single factor in making their investment decision. The investment discussed in this note may be unsuitable for investors depending on their specific investment objectives and financial position. CFE, its officers, employees and affiliates shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in this note or any reliance on this note. The recipient is strongly recommended to see independent legal, tax and financial advice. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. The price or value of the investments to which this note relates; either directly or indirectly, may fall or rise against the interest of investors. This note should not be considered to be a solicitation nor an offer of advice for the purposes of the sale or purchase of any security, investment or derivative.  The information contained in this note is not intended to form the basis of any investment decision and should not be considered a recommendation by CFE or any other person in relation to any of the companies, stock, commodities, currencies or other markets mentioned / referred to in this note. All the information contained herein is based upon information available to the public and has been obtained from sources believed to be reliable. However, the information contained in this note has not been verified by CFE and CFE undertakes no obligation to provide recipients of this note with any additional information or any update to or correction of the information contained in this note. This note is provided by CFE and may be forwarded unamended and in its entirety. This note may not be used in whole or in part to create any other work. All rights reserved. CFE is authorised and regulated by the FSA under Firm Reference Number 149380. CFE - FSA Register Information: http://www.fsa.gov.uk/register/firmBasicDetails.do?sid=61341 Registered in England No. 02505767 Registered Address: 17 Crosswall, London, EC3N 2LB Risk Warning Trading CFDs carries a high level of risk to your capital and is not suitable for all customers. Furthermore, margined products use leverage to increase the level of exposure to the product, and as a result your losses may substantially exceed your initial deposit and require you to make additional deposits at short notice. Prior to trading leveraged CFDs, you should carefully consider your investment objectives, experience and risk appetite and should not invest money that you cannot afford to lose. Spread Bets are leveraged products placing your capital at risk. Losses can quickly exceed your initial deposit and thus require you to make additional deposits at short notice to maintain your positions. Leveraged products are not suitable for all customers. Please ensure you understand the risks involved before opening an account. You should ensure you fully understand the risks and seek independent financial advice if in doubt. CFE provides an execution only service and does not offer investment advice. These products are not intended for people under the age of 18 or for US residents. The distribution of this note in other jurisdictions may be restricted by law and persons into whose possession this note comes should inform themselves about and observe any such restrictions. By accepting this note you agree to be bound by the foregoing instructions.