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There’s a bit of divergence going on between US and European stock indices currently. I’ve taken the S&P500 and FTSE100 as an illustration.

First up we have a daily chart of the FTSE. There’s been a bit of a rally off the 11th February low. But as we can see from the Andrews’ Pitchfork it isn’t developing into a decent uptrend. In fact, the FTSE has been running into resistance around 6,200. As things stand going into Friday’s close it doesn’t look as if the index has the legs to rally and close significantly above here. Of course, it may get a lift if the US continues to push higher overnight, but the question is whether that will carry on through next week? Investors seem to be holding back. It could be Brexit-related, but it also has much to do with the heavy weighting of mining, energy and banking stocks in the index.



By contrast, the S&P rally off the 11th February low is much more convincing. The S&P has tracked along the median line of the Andrews’ Pitchfork and delivered steady gains. As things stand it looks as if it could now head back up towards 2,082 the closing high at the end of last year. However, it’s worth noting that the S&P hasn’t managed to challenge the upper resistance line of the pitchfork while the Average True Range has been falling steadily. This could be an indication that the rally is running out of steam.



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Posted by David Morrison

Category: PM Bulletin


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