That first hurdle – the minor resistance at 6775 – had held the index in check for much of the past year. As a result, my short recommendation is now upgraded to neutral and short positions may be closed.
There are early signs that global share markets are poised to resume their five-year-long bull market. It remains an early call on the FTSE, however, as my long-term target at 6922 must also be overcome. The resistance centred around this level is much stronger, and at its core is the line representing a 100% rise from the unique low in March 2009. It will surely prove a challenge to break above this important level.
Last week’s update touched on the possibility that mergers and acquisition activity might have the potential to drive ‘cheap’ UK shares higher. Investment wise, nothing spurs the animal instincts more than large-scale takeover activity, and in this regard it appears the Americans are coming.
Recommendation: neutral. Sell short at 6922. Stop-losses should then be placed on momentum above 7185.