#FTSE #DAX ‘Santa Rally’ sounds like a town south of LA and we’re at the time when ‘Santa’ speculation starts to rear its head on the stock markets. Is ‘Santa’ even real? There’s little doubt people are embracing the Xmas spirit early with exterior lights and even the odd Xmas tree appearing, doubtless due to many folk wanting cheered up as this awful year approaches an end. We’re starting to suspect this need for optimism may spread to the stock markets and thankfully, there are some fairly easy signs to watch for.
The UK’s AIM market, home of the eternal optimist, has already started the party with the FTSE:AXX describing higher levels than achieved before the March Covid-19 drop. This is pretty unusual, a feat currently beyond the FTSE, the DAX, and France’s CAC40. Across the Atlantic, the DOW is carefully attempting higher levels while the S&P500 has recoiled in shock following a couple of upward attempts. Visually, we suspect the concept of a ‘Santa Rally’ shall prove real this year, thanks to markets appearing to surge at the starting line.
The question as always; where’s the starting line anyway?
We’ve written previously about ‘Glass Ceilings’ and our preferred idiom, the Horizontal Trend. There’s absolutely no rule dictating a trend line should head up or down. Sometimes, the most important trend line, when identifying a trend break, is the horizontal one. Our preferred demand is for a market (or price) to actually close above the level of the Horizontal Trend to provide proof an instrument is actually about to move properly. In the case of the FTSE, this implies closing a session above 6509 points shall justify a party popper. For Germany and the DAX, the index needs close a session above 13,268 points.
For the AIM however, the Xmas tree is up, illuminated, and there are lights decorating the outside of the house. People may even be smiling!
Presently the AIM is trading around 1019 points, only requiring to exceed 1025 points to suggest a cycle is commencing toward 1233 points. A 20% rise on the junior market cannot be sneezed at, despite it being winter. Given the rate of acceleration during the last month, if this pace continues our target level should appear around Xmas time. This has fairly significant implications for members of the AIM, when this sort of acceleration occurs, bounces and surges tend be quite flamboyant, exceeding expectations.
Importantly, should the FTSE itself manage above our 6509 trigger level, our thoughts against the AIM shall improve to “Print This Out, compare with what actually happens!”
FTSE for FRIDAY (FTSE:UKX) We remain quite proud of how widely read our Friday FTSE article is, quite literally worldwide. Apparently we’re a thing in UAE currently as the Emirates is 3rd of the list of international visitors. Good old Reunion island remains in the Top 10, clinging on at #9.
The FTSE closed the session on Thursday at 6333 points, now requiring above 6378 to signal the potential of some proper recovery. Such a movement calculates with an initial ambition of 6428 points with secondary, if exceeded, a rather more impressive 6476 points. Visually, this should position the UK market for further upward nudges next week. If this scenario triggers, the tightest “safe” stop loss level looks wide at 6313 points.
Alternately, below 6283 becomes problematic, allowing weakness to establish to an initial 6233 with secondary, if broken, at 6156 points.
What does Friday hold? Very difficult to say, thanks to the UK market spending the last 4 days effectively doing nothing except pretend to breathe.
Have a good weekend.
FUTURES
| Time Issued | Market | Price At Issue | Short Entry | Fast Exit | Slow Exit | Stop | Long Entry | Fast Exit | Slow Exit | Stop | Prior |
| 10:39:54PM | BRENT | 44.26 | 43.88 | 43.46 | 44.54 | 44.67 | 44.9 | 44.21 | |||
| 10:41:28PM | GOLD | 1866.33 | 1852 | 1846.5 | 1867 | 1871 | 1874.5 | 1863 | ‘cess | ||
| 10:42:58PM | FTSE | 6354.39 | 6309 | 6284 | 6350 | 6370 | 6380.5 | 6330 | |||
| 10:44:36PM | FRANCE | 5499.8 | 5459 | 5440 | 5496 | 5501 | 5510.5 | 5463 | Shambles | ||
| 10:50:59PM | GERMANY | 13103 | 13031 | 12967 | 13131 | 13156 | 13179.5 | 13070 | |||
| 10:52:33PM | US500 | 3567.25 | 3544 | 3501 | 3586 | 3586 | 3598 | 3552 | |||
| 10:54:18PM | DOW | 29385 | 29235 | 29136.5 | 29433 | 29522 | 29547 | 29360 | ‘cess | ||
| 11:04:00PM | NASDAQ | 11970 | 11804 | 11725.5 | 11905 | 12002 | 12045.5 | 11936 | ‘cess | ||
| 11:06:28PM | JAPAN | 25446 | 25425 | 25343 | 25561 | 25634 | 25715 | 25487 |