FTSE 100 Price Outlook - Multi-Month Rally Boosted by UK Local Election Results
FTSE 100 Price Outlook
- Labour shadow minister says Hartlepool loss ‘absolutely shattering’.
- FTSE 100 remains in a strong multi-month uptrend.
The FTSE 100 is back at highs last seen in February 2020 after the Conservative Party grabbed the Labour stronghold of Hartlepool for the first time since the constituency was created in 1974. This victory is seen as more than symbolic with the Labour leader Sir Keir Starmer’s leadership now being put under the microscope for the first time as rival factions gather. While this, and other, Conservative gains is giving the market a push higher, later today or tomorrow morning the Scottish election results will be announced with a majority victory for the Scottish National Party (SNP) widely expected. This may temper recent FTSE gains as this outcome may lead to calls for IndyRef2, although political commentators expect this vote to be 2-3 years down the line.
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The FTSE 100 is now pushing the higher bound of the multi-month bullish channel and may take stock ahead of the weekend. The move higher continues to print new higher lows, while all three simple moving averages remain in a positive formation. The CCI indicator warns of the current overbought status of the market and this may need to go back to neutral territory before any further upside occurs.
FTSE Daily Price Chart (July 2020 – May 7, 2021)
Retail trader data show 44.67% of traders are net-long with the ratio of traders short to long at 1.24 to 1.The number of traders net-long is 2.48% lower than yesterday and 38.17% lower from last week, while the number of traders net-short is 1.07% higher than yesterday and 41.28% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests FTSE 100 prices may continue to rise.
Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger FTSE 100-bullish contrarian trading bias.
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