Market Outlook – 25 June 2012

25 Jun

Monday to Wednesday we saw positive market growth and then Thursday happened, which lead to a nondescript trading day on Friday.

Looking across all indices it is clear that this is NOT a decisive end to the recent rally – the market has managed to hold the line above key pivotal points. 

Economic Calendar

There was not much data for last week and what there was, was not of the most influential nature. Some numbers came out of the property sector and the data was reasonable.

The good news – all data considered, there are improvements in the figures from the construction and general property market. There is still a long way to go to see these markets to return to the prosperity seen before the recession but they are improving.

The coming week :-

  • new home sales data 
  • consumer confidence statistics

Stock Markets

Chart forFTSE 100 (^FTSE)

 

The markets are in a neutral position – neither positive nor negative. We wait to see the catalyst which will shake it out of a current narrow trading range. It looks likely that the bulls may have a momentum edge, but the ceiling is looking just as tough as the floor is now.  With that in mind…

Last week’s FTSE 100 high around 5,620 confirms one of the items the bulls should have been worried about – resistance at the 150-day moving average line.  The upper 20-day Bollinger band has also shown a point of resistance. This may be a tough threshold to cross.

VIX Index (CBOE Volatility Index)

Chart forVOLATILITY S&P 500 (^VIX)

 The VIX index spiked on Thursday to above 20 and has since dropped back to 18.11, back below both the 200 day and 150 day resistance level. This adds weight to te bulls argument, at least short-term. In fact, had it not been for the VIX’s new trend back under its key moving average lines and then its continued pressure on the lower Bollinger band lines, we might not be able to say the VIX was clearly moving lower. 

SO WHAT DO WE THINK THIS MEANS ?

It may not be exciting but there is no strong trading indicator – the market’s are at a crossroads. My personal expectations are bullish – ultimately based on the VIX and the overall market momentum.

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