If June was depressing for stocks then July has so far been indecisive. The FTSE has traded in a narrow 200 point range. The wise thing would have been to just stay out and do nothing, as the intra-day volatility has increased so the indicators so useful in a trending market have been failing. A lesson for the future. The last time the FTSE did nothing for so long was last October, which just goes to show, if any more proof was needed, that we are at a decisive level. As bad news just piles on top of more bad news the support at this level seems to be purely technical. That doesn't mean the support is not real, just that historically the oversold indicators have predicted a reversal, even if temporary. For example, on 11 June the daily RSI showed an oversold market and the FTSE went up for 4 straight days before continuing its downward spiral. It could be as little as that or it could be much larger. The RSI gives no indication of the size of the reversal. As I've said before, it could be just enough to switch off the oversold red light. Fridays are usually volatile days, although if nothing much happens will hang on to the options till Monday as the Dow has been making significant moves in the last hour.
11 Jul 2008
Subscribe to:
Post Comments (Atom)
Posts
Oil on the rise again - higher than even last night's close. This could be the knock-out punch. Interestingly the FTSE now generally moves in the opposite direction to oil, as most markets do. So the support from oil and mining sectors has dried up as these sectors may have temporarily topped out.
ReplyDelete