Is There A Long Trade Left In FTSE?

OK, no fancy analysis today. I’m back on the street, settling into trade mode. This time I’m keeping an eye on the FTSE (^FTSE).

Yeah, I know, I know; I’m always bearish on equities. Well, the long-term fundamental view does tend to cloud the trading picture (and at times the cloud got pretty red) so I’m back to scrapping in the street, looking for quick gains when the charts tell me.

FTSE hit the headlines yesterday, regaining the 5000 mantle and celebrated this morning by knocking up a further 40 points in early trade. A pullback was justified as the shorter charts were all screaming out ‘overbought’. But I’m not convinced the celebrations are over yet so I’m watching out for a small ‘buy’ set-up.

Using a 30-minute chart my trigger will be the 5-period EMA crossing the 6-period SMA by 2-3 points, combined with an RSI above 52. This method is a bit more subjective than some I use, but the thinking behind it is to give both crossovers 2-3 points clearance.

I don’t want to be the tail-end Charlie in this bull rally, so if the trade does trigger I’ll be using a fairly tight stop loss to get me out if I’m wrong. The downside to this method is that I can’t just set a limit order and go for a coffee; it needs good old-fashioned screen watching.

How the US reacts will probably determine whether this trade kicks in. Barbie doll, Meredith Whitney came out bearish on stocks and US housing over lunchtime so it’ll be interesting to see whether investors take as much note as they did of her recent bullish comments.

Subscribe by RSS Subscribe by Email