Once again the two sentiment indicators are not confirming each other, we cannot say if sentiment is bullish or bearish. But the turn down in the BTI at a time when the market is rallying is unusual. A declining BTI is bearish, now we need the 34-day BTI to turn down too in order to conclude sentiment is bearish. What we can say is that the odds of a pullback have increased. The question is, will it a small pullback or something more significant? I think it will be a small pullback based on the pattern and also because next week we enter a bullish seasonal period, I can’t see a large drop over the Christmas period, unless something new and unexpected occurs. In the last two weeks of December volumes will drop and the market tends to go up. I suspect this period will coincide with the final move up in the FTSE 100. At the ECB meeting yesterday the news was mixed, the ECB extended their asset purchase program but they reduced the monthly amount. Today the FTSE 100 is likely to trade in the range 6870-6950.
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