Market Report 10 May 2015

The result of the General Election must surely now provide a solid platform for the UK indices to make further progress. The charts were in good shape anyway, so with a Conservative majority being the best possible outcome for the market, it’s hard to see why FTSE shouldn’t advance now. With the uncertainty of the election result removed from the equation and business able to breathe a big sigh of relief that there won’t be a Labour/SNP government, there really should be a clear open road ahead for the FTSE100. Also, the result was not in the market already.
Remember, on the technical front, we’ve recently broken out of a two-year range taking the index to an all-time high, and we’ve had a near Coppock signal. If FTSE can’t make progress now, it never will.
The last time I wrote the index stood at 7089, and it managed to make another ATH a fortnight ago closing at 7103. It’s currently at 7046 having gained 159pts on Friday. Since the breakout, the chart clearly has an uptrend characteristic about it with a sequence of higher highs and higher lows:
Screen Shot 2015-08-26 at 10.42.15
In spite of Friday’s 2.3% gain in response to the election result, FTSE only has an extension above the 20 day moving average of 0.3% and a 7-day RSI of 59. These levels provide a lot of headroom, so this is another factor why the FTSE100 should head higher now.
The FTSE250 is also at an all-time high, and the All-Share index is very close. You know the rule very well by now, but I enjoy saying it so here it is again: one all-time high leads to another and another. The prospects for the UK market must surely be the best they have been for a long time, and the main question you have to ask is not whether it’s likely to go up, but whether it’s likely to go up by more than the alternatives.
Last month the Dow was at 18057 and it has advanced to 18191. If you look at the bar chart, the price action seems very choppy. However, the P&F chart cuts through most of that to reveal a pretty clear underlying picture of an index in a steady uptrend:
Screen Shot 2015-08-26 at 10.42.53
Progress has slowed lately, but we have been spoiled somewhat in recent years by the bull market’s rate of advance. The key observation from the chart is that there is no evidence to suggest the bull market is over.
The S&P500 has also moved higher from 2102 last time to 2116 as I write:
Screen Shot 2015-08-26 at 10.44.13
It is just a couple of points away from the ATH and with its chart looking similar to the Dow, we can expect a new all-time high very soon on both indices:
(c) Robert Newgrosh 2015
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May 10, 2015