FTSE 100 approaching a resistance area

<p>Today I would like to update you on the position of the 34-day BTI. I discussed this indicator last week, it is near an overbought area. Here is the updated chart:</p>
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<p><a href="https://www.bettertrader.co.uk/.a/6a0162ff9ddd58970d026be4295549200d-pi"><img alt="34-dayBTI201203" border="0" height="431" src="https://www.bettertrader.co.uk/.a/6a0162ff9ddd58970d026be4295590200d-pi" title="34-dayBTI201203" width="600" /></a></p>
<p>The FTSE 100 is at resistance when the 34-day BTI is above 400. Right now the indicator is still below 400 (red line), this suggests the FTSE 100 will rally more before it turns down to start a multi-week decline. This final move up will push the 34-day BTI above 400.</p>
<p>Please note this is not a timing indicator, the FTSE will not always turn down immediately after the indicator reaches 400. Sometimes the rally will continue for a while, sometimes it will turn down immediately.</p>
<p>This indicator tells us bad news is coming.</p>
<p>There will be some news that will prompt a stock market sell off but I don't know what it is.</p>
<p>A rally in GBP/USD is a possibility, there will probably be a trade deal between EU and UK and the pound will soar. The would be bearish for the FTSE 100, a large rally in GBP/USD would hit many companies in the FTSE 100 index, these companies sell in dollar.</p>
<p>Bond yields could rally and they are rallying, this would be bearish for stocks. Yesterday the 10Y yield rallied back to the previous high, a breakout is imminent, yields will rise above 1%.</p>
<p>As the S&amp;P is at new all-time high there may not be enough reasons to go ahead with the stimulus package, this would be bearish for stocks. Politicians and the Fed like to intervene when the stock market is low or in distress, that is not the case right now. With the stock market at all-time high and a Covid vaccine investors could be disappointed as officials are reluctant to go ahead with the stimulus. They are more likely to do something after a stock market correction.</p>
<p>In addition optimism is high in the US and valuations are expensive, another reason to be cautious.</p>
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