Talking Points
- FTSE 100 remains capped by 6173 ahead of GDP and housing data for the U.S.
- In the case of a Christmas rally the FTSE 100 may reach the December 4 high of 6292.5
Despite of yesterday’s gain of 0.87%, the FTSE 100 remains firmly bearish below the December 9 high of 6173. The index is expected to reach 6000 and might then reach last week’s low of 5861. For a Christmas rally to kick-off the FTSE 100 would need to breach the December 9 high at 6173, in this scenario the index may reach the December 4 high of 6292.5
Data on tap in today session is U.S. GDP for the third quarter, U.S. house price index, Existing home sales, and Richmond Fed manufacturing index. I assume that it will be the housing data which triggers volatility as the GDP data is the final estimate.
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The Big Picture
As highlighted yesterday, the softest constituents of the FTSE 100 index are the Basic Materials and Gas & Oil sectors. With this in mind I would guess that stability in commodity markets is needed for us to expect a strong surge for the FTSE 100. This is something I don’t see as likely at this stage due to the strong Dollar and price-wars amongst commodity producers. These structural problems of the FTSE 100 may translate to a decline to the November 20, 2012, low at 5605 in the case the S&P 500 and DAX 30 pullback further.
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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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