'Fiscal cliff' is a dirty word once again

The fiscal cliff is rearing its ugly head once again as the Obama administration has warned that the current debt cap could be reached by mid-October, rather than the mid-November originally forecast.  The markets could be in for a bumpy road ahead, or the next couple of months at least, as we'll most likely watch the Democrats vs Republicans play chicken with the US economy once again!

If we looked back how the markets reacted in the run-up to the past votes both in 2011 & 2013 we might have an idea of how people might react in the run-up to the event, as well as looking at what happened straight afterwards.

FTSE100 - Are we in for a bigger correction still?

We saw divergence on the momentum indicator and a cross on the MACD leading to sell off, we have since seen a brief recovery back to the 6520 level, but appears to have been rejected so our focus is back on the low made on 22/08/13 at 6351.  Charts confirm this price action as the indicators still look negative so we may look to test the bottom of the long term up channel around the 6150 / 6200 before seeing any significant buying interest.

FTSE100 - becoming a victim of the Summer lull

The FTSE100 was lacklustre last week, my view hasn't changed drastically as the MACD still in bearish mode and momentum downtrend holding.  The bulls should be a bit more encouraged however, by the recovery seen on Thursday and confirmation of the bearish rejection on the Friday.  For the time being we are very much stuck in the 6650 - 6550 range waiting for a breakout on either side, till then will be sitting on our hands.

Is the FTSE100 running out of momentum?

Interesting charts when you look at the FTSE100 this morning. We've got divergence occurring on the Momentum indictor and but still holding (just) on the uptrend line.  I cant help but feel that were going to have a pullback on after the consolidation.  Looks to me that we might head back down and test the 6550 level again on a break of the trend line or possibly down to the 6450 Fibb retracement.