Market Opinion Equities

Equities
Tough Times

As for the FTSE, we are actually going to hold on to our year-long bullish view while the market still trades above 5,100. Given the oversold reading of the daily RSI, we think that the market may recover over the next few days, although short-term resistance does exist in the 5,250 region. If 5,100 gives way, then a major uptrend has been broken, which is bad news, and alters our standpoint.

With regards to the Nikkei, the short-term direction is tough to call. We viewed the break of 13,200 as negative, but the positive price action of Friday could signal some more upside. Still, the gap on the daily chart between 12,700 and 12,800 is an obvious downside objective.

Nevertheless, short-term movements aside, we still like the Nikkei from a medium-term investment perspective, and, as you know, have done so since below 12,000. The Japanese, tertiary index jumped by 1.7% m-o-m in August, signalling some sustainability to the economic recovery, while rising incomes bode well for domestic demand.

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