Hello there. I'm Steven Mayne from Falcon Securities and welcome to CantosCharts.

During this session we'll be looking into 2010 starting with the FTSE 100. Obviously throughout 2009 we have had quite a volatile session on all of the world indices and what we can now see is that the market has recovered quite strongly off the March lows, actually recovering over 50 per cent of the fall from 2007. Obviously looking forward we really want to see what's going to be going on from here.

So looking at the monthly timeframe we can see firstly that we're relatively over-bought on the Stochastic. Now this gives us an indication that the next shorter term move (so on a monthly timeframe, say for the first quarter of next year) we should really be prepared for a small downturn on the market. Be prepared for a downturn on the market really where we should be looking? Perhaps maybe a retest of the 200 simple moving average, or maybe one of the Fibonacci lines we've got on here on the screen.

Now if we do get any further pressure from here, maybe our target will be 5,500, which is the last Fibonacci retracement.

Now are we generally going to be moving up or down? Well the key at the momentum indicators where you can see the MACD here and the RSI still are remaining positive. They are still positively trading upwards and not really currently in over-bought territory suggesting that even though we might have a rocky start to the year, it does seem like we should be expecting some further up from this.

Now just having a quick overview of the monthly timeframe where markets recovered over 50 percent of its Fibonacci retracement, or the Fibonacci retracement moved down from the highs of 2007 to the March lows. We remain generally positive on the RSI and MACD, but the Stochastic has formed a sell signal, so therefore we should expect some volatility at the very start of the year, so possibly some down moves there.

Zooming into the weekly timeframe to give us a more up-to-date look, we can see that the RSI and indeed the MACD, which something we've spoken about many times on the weekly timeframe, remain in this positive uptrend that was forming from the March low. Therefore, really until we break these lines, and we are quite close to them, we should still remain moving positive. But a break of this, especially on the RSI, could give the market the impetus to start moving down. If we do start moving down, really this 200 moving average is probably where we should initially target.

To add to that concern we can see we've got a negative diverging Stochastic here. By negative divergence we mean the price action has moved up whilst the indicator has moved down and we have a clear sell signal now on the Stochastic. We also just have a sell signal on the MACD as well putting further evidence really that we should expect some downward pressure on the market, or at least at the start of the year.

Therefore, just to summarise on the FTSE 100 weekly, we do remain in uptrend on the MACD and also the RSI. The price action also remains in an uptrend currently. We do have a sell signal formed on the Stochastic suggesting that downward moves now are likely. If we do have a downward move, probably a move back to the 200 simple moving average is probably going to be a sensible target for short sellers of the FTSE 100.

Now moving across the pond onto the Dow Jones. Again starting with the monthly timeframe here, we can see just like the FTSE we recovered 50 per cent of the big move down from 2007 to March. We can also see that Stochastic has moved heavily to over-bought status, but as yet still to form a sell signal and the RSI and the MACD do remain positive, therefore we really are suggesting that there should be one more push up here on the Dow Jones, perhaps moving up to the last Fibonacci retracement, so about 11,260 for anybody who is still long on the market. That's probably a good target to have.

With the Stochastic so high though, of course down moves are likely in the short-term and again, just like the FTSE here, really the 200 simple moving average is normally quite a good target to have. We can see that quite clearly the black line.

Just to summarise on the monthly timeframe, the Dow has now recovered over 50 per cent of its fall. The Stochastic is in over-bought territory, but the MACD and the RSI remain moving in a positive trend and therefore, we should expect on this timeframe a short-term pullback really before moving forward again.

Now zooming in to the weekly timeframe we've got some approximate support and resistance lines here. (Should be able to draw those on any basic graphing package.) We've got our support here on the RSI as well, so it does seem that we are forming an upward pattern here, but this could actually be a bearish formation if this support is broken, so I would draw that on to your Dow weekly charts at home and really if this does get tested and broken we should expect a sharp fall down here. The reason we're saying this obviously the Stochastic on the monthly and the weekly timeframe is very over-bought. We can also see that the RSI is really hanging onto support here. Any break of that we should really be seeing some sharp down moves. So really about 9,000 could be a possible downward target here on the Dow, but when you move back to the monthly timeframe, that is still generally in an uptrend. It does seem like this could only be a short-term correction.

Therefore, just having a quick overview of the Dow Jones on the weekly timeframe, we do remain in a positive trend but we do obviously have those support and resistance lines there. Please really look out for those. If there's any break above the resistance, a strong up move there, any break down from the support we should really expect sharp following down moves.

Now, obviously concentrating on the Stochastic of the Dow Jones we can see how high and over-bought that is. In fact it's forming sell signals negatively diverging from the price action. When this does happen we should experience, or it does suggest strongly that we will experience further down moves on the market in the short to medium-term, so please be careful and watch this very closely. Obviously if we break the support of the price action, which we've already seen on the charts, we break the support on the RSI, this will be a key indicator to suggest that further volatile down moves are quite likely. So I think that 200 simple moving average will be very good for short sellers. That gives us quite a reasonable target in the short to medium to have.

Thank you for watching CantosCharts. Please tune in tomorrow where we'll be looking at some stocks to watch for 2010.