The FTSE 100 is higher by 0.58% at the time of writing, as bargain hunters buy stocks following last week’s strong decline.
However, the downward trend is not over for the FTSE 100 as the index would need to break Friday’s high of 6012 before we can state with more confidence that the bearish trend is over.
Aggressive traders may however opt to enter on a break to the 5953 high (please see chart below). The reason for this is that we are seeing tentative signs of the DAX 30 and S&P 500 turning from bearish to bullish. If the DAX breaks Friday’s high of 10,123, the short-term bearish trend would be over for now, while the trend defining level for the S&P 500 remains yesterday’s high of 1937.
Developments supporting higher stock markets in the short-term are Friday’s NFP print (292K vs. a Bloomberg forecast of 200K), a stronger to stable Chinese Yuan, and the Chinese CSI 300 index stabilising relatively close to its August 2015 low. The CSI 300 is approximately 6.4% away from its low, and on the other end of the scale, 17.6% from its December high. This tilts the risk-reward ratio in favour of bullish traders (download this guide for more on the topic).
Data on Tap
Small Business Optimism Index and JOLTS Job Openings will be published this afternoon. The median projection of the 21 analysts polled by Bloomberg News is that the index will reach 95, from 94.8 in November, while JOLTS are projecting a rise in outcome of 5440 from 5383 in October.
FTSE 100 | FXCM: UK100
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
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