Yesterday – notes Greg Secker – we saw further falls on the FTSE and closed down 60 points at 4,121 with resistance at 4,200 not allowing the index to rally. There is now clear air down to 4,000, and we may see a fall back to the lows around 3,700. The Dow opened the day with another bearish break through support at 8,140 and dropped precisely to the major 8,000 support level. The index held firmly at this level and proceeded to rally 300 points from lows before closing the session with a gain of just 12 points. The index rallied sharply the last few times it has tested 8,000 and today’s reaction lies within this framework. If the Dow holds above 8,000, we could see another quick test of 8,500 or higher. Today in the foreign exchange news we are expecting the US monthly core CPI at 13:30. This is the change in price of goods and services purchased by consumers excluding food and energy. If the actual figure is greater than the forecast then this is good for the currency. Food and energy prices account for about a quarter of CPI but tend to be volatile and distort the underlying trend. Then at 14:55 we see the University of Michigan Consumer Sentiment report is due for release. Analysts are expecting a slight fall from 60.1 to 59.2. This report is a composite index based on surveyed consumers and is released on a monthly basis in the middle of the month. There are 2 versions of this data – preliminary and revised. The preliminary release is the earliest and tends to have most effect. Have a good days trading to finish off the week.
