The FTSE 100 rallies after Tories’ win but fresh highs would be hard to come

So the elections are behind us and what a surprise that was, the Conservatives won the majority vote but what really caught most analysts, political and financial alike, was the way they won the race. Over the past weeks almost all predictions called for a very tight race, so tight actually that no one was willing to make a bet either way. All the polls called for a marginal difference between the two front-running parties and everybody was prepared for a thriller when the time came for the exit polls.

But as everyone knows by now, the Tories emerged as the clear and undisputed winner of the election and actually didn’t even need to form a coalition government. It goes without saying of course that this was perceived as a positive development for the London money markets and the FTSE and Cable both gained the following morning.

Focusing our analysis on the London index we saw the FTSE climbing sharply above the 7,000 points after the results hit the wires after having traded below the 6,900 area in the eve of the election. The fact that all predictions called for a possible stalemate between the two major parties in the UK had scared investors away but as soon as the clear win of the Tories was a fact the FTSE jumped almost 200 points to trade just shy of the 7,100 points this morning.

However the usual question that comes to mind after such a radical move in the main index is whether these gains can be sustained and if not what’s to come. My personal opinion is a bit reserved, I think that the rally was more a knee-jerk reaction from the market participants and the real question is whether the FTSE can remain afloat above the 7,000 points. I think that this will determine whether the FTSE can really make it into fresh 7,100+ highs.

I believe it will be difficult for the London index to break into new highs this week, the index seems a bit overbought after last week’s rally and the 7,100 barrier has been rejected by the FTSE a few times already the past month. I believe that a consolidation between the 7,000 and 7,100 points levels is more likely, however should the 6,980 points’ pivot level get breached then I will be looking to short the index towards the 6,910 support floor.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.

 

Be the first to comment on "The FTSE 100 rallies after Tories’ win but fresh highs would be hard to come"

Leave a comment

Your email address will not be published.


*


error

Enjoy this blog? Please spread the word :)