FTSE 100 (FTSE): Choppy outlook in the second half of 2019

Hopes of a rather large Fed rate cut this month were dashed last Friday. The better-than-expected job numbers suggested that any rate cut will be minimal (read: 25bps). Prices adjusted immediately; gold corrected, stocks slipped, and bonds consolidated.

By contrast, in the prior week, all went up. The market appears to be dangerously correlated. A coincidence? More importantly, where should one diversify – cash?

Here in the UK, the FTSE 100 Index is holding on to the breakout at 7,500 – only just. The spurt from 7,400 is reverting to its medium-term moving average (50-day EMA).

With the index encountering stiff resistance at 7,600-7,800, a push through this barrier would require more constituents to join rally, such as Vodafone, BT Group, and other laggards in the utility and supermarket sectors. Many constituents are making 52-week lows still.

Given Footsie’s choppy chart this year, I doubt it can make all the way to its 2018 highs in a clean trend. Expect a choppy – and potentially trendless – pattern this summer, with plenty of reversionary trends into its moving averages.

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