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FTSE 100 recovering
The recovery off 7400 continues, although those of bearish disposition will note that we are about to hit a downtrend line, which intersects with the rallies of last week, running down off the all-time high from the beginning of June. A failure to push above 7533 would be bearish, but we have seen this shallow descending trendline formation all too often this year, across a variety of indices. They have all ended with fresh breakouts to the upside, so bearish positions should be handled carefully. A drop from 7533 could suggest a return to the 7400 support zone, while above 7550 we are back on course to 7600.
A word on seasonality as the FTSE is now in the summer period when gains usually prove hard to sustain. The average performance over the past 20 years suggests a late-June rally tends to falter in early July, before a steady drift lower into September.
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