If there is to be a Christmas rally, its the US which will be the catalyst and drag the FTSE up. Why? The S&P closed over 1257 on Friday. 1257 was the opening price for 2012 and whilst we trade above here its bullish. The period leading up to thanks giving is also traditionally bullish.
Institutions are more focused on their own performance for the last quarter rather than Europe and will enter the market in fear they will miss a rally (opportunity).
We have the US presidential election next year and you often see rallies develop in ''hope'' of positive economic change. Remember the stock markets price information in 6-9 months ahead of the actual events
All the bad news is out! Albeit there is large cloud of uncertainty looming over the stock markets and there is always the risk of the European crisis deteriorating further.
So the above are some factors which we need to consider and although the current pattern is bearish we need to stay nimble in this market. For now I am trading what I see but its important we stay flexible in this market and not marry the up side or the downside whilst so much uncertainty and volatility remains. When stock markets are this uncertain they should fall but markets don't also behave as they should.
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