Over the last six trading days, the FTSE has broken the 20, 50 and today the 100-day moving averages. During the last twelve months, weaknesses in the markets have largely been perceived as buying opportunities, but this time more and more questions are being asked. Is this just a correction, or is it the beginning of a change in trend?
The IG client sentiment indicator for the FTSE now shows that 59% of clients are currently long, and demonstrates that our clients certainly believe this market weakness is a buying opportunity. Looking at recent volumes of business transacted on the FTSE, both Friday 31 May and Monday 3 June had decent volumes, but yesterday was the quietest day in the last three weeks. This indicates that although we are not being driven lower by volume of business, the majority of buyers are yet to be tempted off the sidelines.
One equity’s performance today does stand out, and for all the wrong reasons. Man Group Plc has closed down 16% on the day. This has pushed the company’s market capitalisation down to £2 billion, and once again the share price is below £1. The news will no doubt send panic through holders of the equity, sparking fears that it will make its way back down to previous lows around the 60p region.