When we started collating our pre-market commentary once London closed, Radio Two was on in the background and their daily 5:20pm market report even mentioned the lack of shares activity. This is effecting stock markets, not just in UK but worldwide. Apparently volumes in London are down 50%. As can be guessed, we do not enjoy prefacing comment against individual stocks with the words ‘Outlook Unchanged’.
Office conversation turned to whether this ‘lack of activity’ may perhaps be due to investors being trapped in so many stocks where ‘the drop’ has been overcooked.
We were somewhat reassured by the FTSE movements at the open yesterday, along with those of the DOW. Both allowed us to mutter ‘target met’ which is a good thing as it tends to indicate some sense is returning to the indices as the last few weeks have been a bit illogical.
We’d anticipated a bit of a stutter on the DOW at around 13225 level but a nearly 80 point drop surprised us. Unfortunately, that is exactly what occurred last night and the movement still has not bottomed as it risks a visit toward 13135 today.
This will not bode particularly well for the FTSE when it opens, especially as a few shares in the list below are showing signs of slight relaxation; with the slightly mad exception of the retail banking sector!
The FTSE proved stronger than expected yesterday, stopping above our bottom target by 13 points. Whether this indicates the index is stronger than expected remains to be seen. Movement below yesterday’s low of 5813 remains with the potential of a drop to 5800.
Generally, we watch the DOW JONES during the evening in the hope of divining some thoughts for the next day. Last night, it remained fairly clueless in direction though upward movement of strength looks probable should it exceed 13211 as a movement toward 13320 will beckon.
Our Monday ‘blog’ tends to be somewhat more in-depth as we utilise the weekend to take a hard look at the bigger picture rather than simply focussing on near term opportunities and threats.
If the FTSE were a share, we'd write something like - on route to 5955 with secondary at 6200. However, there is a risk of it running into a trend which dates back to 2007. As a result, movement in the near term above 5880 looks problematic but should the FTSE close above 5900, it enters territory where we can safely speculate on a move toward 6200.
Our initiative yesterday in talking about stocks we’ve been emailed about seemed to pay dividends for those involved in STAN and NVTA. Our comments on SAR also proved horribly valid but it’s never pleasant watching people waving goodbye as their investment goes on a holiday.
A strange day on the FTSE followed by a stranger evening on the DOW. The market proved stronger than expected yesterday and even our gentle bottom target was not achieved by a pretty massive 14 points. We finished analysis with the uncomfortable sensation ‘something’ was not allowing things to drop too far, nor rise too far.