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A strong finish on Friday and continually rising oil prices put indices at a vital crossroads. If major stock markets can avoid heavy losses today we may be looking at the beginning of a rally, as the pullback from the April high shakes out latecomers to the rally, while short positions increase.
As we will mention below, key support has held for the time being, which strengthens the bullish case, but the time has come for the buyers to do some heavy lifting. A failure today would signal that the weakness of late April/early May is set to continue.
Friday saw the index test the waters below 6100 once more, but again buyers came in to defend this key support area. Although the day has begun with small losses, if the index can hold above 6110 and (ideally) move above 6150, then a rally may have begun. A failure to hold 6100 today would certainly indicate a new drop is on the way, with overbought intraday stochastics suggesting that upward progress may be difficult.
A short position with a stop around the overnight high of 6180 could be one way of taking advantage of weakness, with the knowledge that any push through 6180 would likely confirm the bullish thesis.