Mark Austin FTSE Trading Update - 20th Jan 2011

 Good morning

Yesterday the price action for the FTSE starting to come into line with my elliott wave analysis. As you know I am bearish at this point and even if we make one more high above 6090 that will be short lived. We have been patient up until now but I believe some great short opportunities will soon be available to us.

Evidence that price action is forming a top:

We closed under 6000 yet again - A key psychological level
We failed to make a new high yesterday - failed retest
We had an negative outside day - This is when the FTSE makes a new high when compared to the previous day but then closes lower that the previous day
We closed under the MA 20

This price action cannot be ignored and signals the FTSE will reverse and turn down very shorty, if not now. The FTSE is renowned for strugging off such signals in the very short term but any upside is now limited. The strategy from now on is therefore to sell any strength. Up until now I had some compelling elliott wave analysis but the price action was still very bullish. I have therefore been sidelined. This is now changing.

We also have expiry on Friday. For those who are not aware, the markets often produce large large and significant moves after this event.