Of late, the FTSE (London Times Stock Exchange) has been struggling to make new highs. When looking to the left on the daily chart, we see that lower highs and lower lows (even though minimal) are beginning to accumulate. In addition, this level appears to bring out plenty of supply (sellers). The overall trend is up, but tightening within an ascending triangle. This price action makes us sit up and take notice. A substantial move could be in the works within the next three months. The FTSE has struggled since early 2013 to clear the 2008 highs. We’d like to see this index break upward (or at minimum, hold this level) to confirm all other current global equity bull markets. If FTSE breaks down, it will cause us to watch all other global equity markets (most notably, the US) with more scrutiny. Keep calm, curious investor.
One of my favorite trades of the year has been bonds. Up 10% YTD, our bond proxy, TLT (an ETF), is now at an important inflection point. Recently, it made a lower low and a lower high. Today, it bounced off an upward trendline that runs parallel to the dominant trendline for the past 6 months. It must stay above this trendline and continue daily closes above the line in the sand (dashed line at 110.67), in order to remain long. If it complies, and can clear the last two recent highs, I would consider adding to this position (let’s worry about that later). If it does not hold here, we’ll take our 10% and find something else that likes to increase our portfolio.
Have a safe 4th of July. Remember our independence!