Hello. My name is Michael Hewson from spread betting firm CMC Markets. This is CantosCharts.

Over the past couple of days I've looked at the recent strength or rebound in the USD. I've also looked at commodity prices and the affect that the rebound in the USD has had. Now I'm going to look at equity prices.

I'm going to start with the FTSE 100. The FTSE 100, since its lows in 2009, has done fairly well. It has gone from lows of 3,460. It peaked in early March around 5,833. Since then it has had trouble sustaining its momentum and started to slip lower. It bounced off its 100 week moving average around about 4,780 in early June and since then it has rallied back higher on some USD weakness and commodity market strength.

You may recall I talked about the mining sector yesterday. The FTSE 100 is comprised of about 40 to 50 per cent of commodity-related stocks, so the mining sector has a great bearing on what the FTSE 100 does, as do commodity prices.

So let's look at a slightly shorter term view on the FTSE 100. This is a six month chart. It's a daily candlestick chart and we can see the lows in early July 4,790. We've been unable to get back above 5,434, or the 5,400 level. As you can see, there is a series of highs right across from mid-May all the way across to where we are now and that really is the key level for the FTSE 100 between 5,400 and 5,430. 61.8 Fibonacci retracement of that down move.

It has also now recently broken below its 100 week moving average. It's finding resistance around 5,320. There is a possibility, given the recent rebound in the USD and the recent capital rotation out of risky assets, that we could see further equity market weakness.

For a better idea of what the FTSE may do we have to move across the pond to the US and I think looking at the Dow Jones and the S&P 500 will give you a better indication of where UK equities could go over the coming weeks and months.

The Dow Jones has been performing similarly well over the past year or so, but again, it's finding momentum difficult to sustain and last week it posted a bearish engulfing week and that is significant.

Again, it has found support around about this 100 week moving average but the price action is getting compressed between the 100 and 200 weeks. The 200 week is currently capping it. The 100 week is currently supporting it. So at the moment it's caught between two stalls. But last week's bearish engulfing week will pile further pressure on in terms of equity market falls and we could see further falls back towards 10,000 towards the recent lows around 9,500.

Let's look at that in a slightly shorter term timeframe. That pretty much bears out what I've said. We're finding a little bit of support around 10,250 which is the 38.2 per cent retracement. If we break below that, then we're looking at 10,170 which is the 50 per cent and then 10,000 which is 61.8n per cent.

So let's see if that's replicated on the S&P 500 and it pretty much is. Again, looking over the last year or so, 18 months, same upward move; same declining momentum. We found support at 1,008 which also happened to be the 38.2 per cent retracement of last year's lows at 666.8 to this year's highs at 1,220. So the 1,000 level is very key on the S&P 500.

On the flipside of that, on the top side, we're finding that the 200 day moving average, or 40 week moving average, is finding it very, very difficult to sustain gains above that and that's borne out much better on this chart here which is a much shorter term.

61.8 retracement is the big, big level for the S&P 500 1,140, but here we have the 100 week moving average and the 200 week moving average and it's basically holding below both of them.

So for the momentum it looks to me as if we could see further equity market weakness now that we've seen these breaks lower in equity markets and the weakness in commodity prices. We could see a move back towards 1,008, which was the lows, early in July.

That concludes today's presentation. Thanks very much for listening. My name is Michael Hewson and this is Cantos Charts.