A weak Asian session has left FTSE futures opening lower this morning and very near 5344. This is the area where a large rally developed at the end of November. As mentioned before, markets like to retest key areas. The market is still trading sideways and I will only change my view on the overall direction of the market (I favour higher prices towards year end) if we see 2 x closes (FTSE closing price at 4.30pm) under neath 5344. At present the chart patterns do not support lower prices. The action is corrective which indicates this is a pause before we go higher.
The markets will also soon be entering a low volume period with traders going on holiday so you could see institutions push the market up on low volume towards year end. After all they want their bonuses. Only fresh negative news out of Europe will block this scenario. France losing its AAA rating is likely but this won't come as a shock to the market at this stage.
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