As the week closed out, the FTSE 100 continued in its reverse correlation to GBP as sterling recovered 0.3%, the 100 dropped 0.1% today and down -1.3% on the week. Meanwhile the 250 moved north by 0.5% in a bullish move closing near the highs on the day but down -1.4% on the week.
AIM took stock today closing flat having finally found support around the 900 mark in the All-Share this week and ending the week marginally in the green up 0.1%: both the All-Share and the AIM 100 remain bearish though they are showing signs that a recovery is in sight. Two consecutive closes above the 8EMA may well be the first green shoots: two closes above the 21EMA does indicate a short to mid- term change in trend and is the signal to look for. It is likely that forthcoming earnings will be the catalysts needed to set direction more firmly.
The TechMARK was similarly flat. Crude oil was also unch. having had a stunning run up nearly 6% on the week. This and a trading update from Hurricane oil (lifting the name 25% and above £1bn in market cap may well be a major contributor to the upward shift in AIM which helps to boost sentiment).
Market sentiment remains very sanguine with the US VIX close to its all-time lows and seemingly unconcerned. Now that the Fed put is back, traders and investors seem elated. The Fear & Greed Index is at 62 : a Greed reading.
As the second quarter closed two weeks ago, the next few weeks will see UK Q2 earnings coning thick and fast so expect some market turbulence according to the reception of these numbers. Given our run-up year to date in the big caps, there is likely to be a reasonable amount of good news priced-in (although GBP weakness is another factor). The US has enjoyed all-time-highs over the past week or so and are also sailing into Q2 earnings from next week: many would argue they are priced for perfection. Given that the VIX is almost at an all-time-low, few have taken protection so be watchful for a big lurch if numbers upset: when everyone is on the same side of the boat a correction can be sharp and unsettling.