FTSE 100 Maintains A Bearish Bias, U.S. GDP On Tap

Despite of yesterday’s gain of 0.87%, the FTSE 100 remains firmly bearish below the December 9 high of 6173. The index is expected to reach 6000 and might then reach last week’s low of 5861. For a Christmas rally to kick-off the FTSE 100 would need to breach the December 9 high at 6173, in this scenario the index may reach the December 4 high of 6292.5

Data on tap in today session is U.S. GDP for the third quarter, U.S. house price index, Existing home sales, and Richmond Fed manufacturing index. I assume that it will be the housing data which triggers volatility as the GDP data is the final estimate.

The Big Picture

As highlighted yesterday, the softest constituents of the FTSE 100 index are the Basic Materials and Gas &Oil sectors. With this in mind I would guess that stability in commodity markets is needed for us to expect a strong surge for the FTSE 100. This is something I don’t see as likely at this stage due to the strong Dollar and price-wars amongst commodity producers. These structural problems of the FTSE 100 may translate to a decline to the November 20, 2012, low at 5605 in the case the S&P 500 and DAX 30 pullback further.