Caution very much the watchword here…

The FTSE is now, on a daily basis, the most overbought on the RSI measure (make sure to read this months School Corner in the latest edition of our mag just out for an explanation of ho to interpret this) since May 1997… Not in itself a reason to reverse but another cautionary element to bear in mind at present.

The chart below incorporates the 17 day bollinger band wth 3 standard deviations used and we can see that the RSI is at 82 – well over the usual 70 measure that generally typifies a pull back. Stochastics need to come back too. We continue to build a short position expecting a pull back to at least 6100 in the weeks ahead.