Stock Market Spread Betting: Short Term Spike or More Upside to Come?

Posted on | August 3, 2010 |

Although the markets closed lower in last week’s trading we have seen an upturn on momentum. This would suggest that the move to the downside may be a temporary pullback.

Since the start of 2010 we had witnessed a decline from the January highs suggesting bearish factors were in play. However the month of July proved that the bulls may be back in control.

The key question is are we seeing a short term spike up or is there more upside potential?

FTSE 100 clears above 5331 level

Previously the FTSE 100 had played out a Double Top pattern at the 5331 level. A narrow pullback reversed the bearish pattern to clear above the resistance level and now seems to be heading towards the 20 day moving average for potential support.

But we note that the MA is pointing towards the upside. The conflict we have is that momentum has turned lower. Immediate price action would require the index to stay above 5215 – 5170 to tackle 5435 as the upside key objective.

Dow Jones flirting with 10594

Once again the Dow Jones spread betting market has attempted to break above the important 10594 level. Initial resistance at 10385 has been cleared but the index needs to turn positive fairly quickly in order to maintain a chance at aiming for the 10630 level.

If we continue to see higher highs then a possible attempt towards 10906 may be on the cards.

The 10200 mark remains important support coinciding with the 20 day Moving Average otherwise the floor could open for a potential decline towards 9915.

Short term momentum is positive which should help the index remain positive as long as we hold 10200.

Crude Oil may breakout to the upside soon

The September Nymex Crude Oil contract has managed to get back above the 20 day Moving Average and see a positive turn on the momentum index.

Long term the commodity is still trading within a channel of $70-$80 but recently Oil has spent more time above the 20 MA rather than below.

This may be hinting that further upside potential may be on the cards.

For now as long as we stay above $75.00 the upside objective becomes $80.00 - $83.60

Please remember that Spread Betting and CFD Trading are leveraged products that carry a high level of risk to your capital and can result in losses that could quickly exceed your initial outlay. These products may not be suitable for everyone, so please make sure you fully understand the risks involved.

Spread Betting and CFD comments by Sandy Jadeja, Chief Technical Analyst, City Index.

The above should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.

Neither City Index not Spread-Betting.org warrant or represent that the material is accurate, complete, not misleading, or fit for the purpose which it is intended and it should not be relied upon as such.

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