The markets have done very well indeed beginning Monday, FTSE managed to get up and away from the all-important 6,000 support, the support being more psychological than technical in my opinion.
So, is the correction over? Can we feel safe going long and get ourselves some stocks at good prices?
As I have said it before, unless we can climb back over DJIA 17,000 the direction is not conclusive. The higher moves this week could simply be a bull trap and all could be taken away in the coming weeks. If you are not a day trader … and you like to play it safe, then I feel there are two numbers here which are significant and will show the direction more conclusively to the end of the year.
FTSE 6,000 and DJIA 17,000.
If FTSE 6,000 breaks I feel we will free fall all the way down to 5,000 and if we can manage above 17,000 DJIA then time to go long without losing too much sleep over our trades. In short, I am bearish under DJIA 17k and very bullish above and a drop under 6k FTSE would signal a sell for me.
This month of September is a month that no large moves up or down will surprise me, so I am staying out of speculating … and waiting for the above numbers to hit on FTSE and DJIA for a safer trade.
I am not one of those people who looks back and think: “pity, I should have gone long and I missed on big rises or falls” … In this market, I’d rather keep, then powder dry and wait patiently.
Watching TESCO (TSCO) closely, I feel at £2.00 ish it could be a good short down to 175/180 area. Unless it can manage very positive news.
Good luck
All in my humble opinion and no investment advice intended.