Lack of Follow-through After Vaccine-led Rally

  • The UK or Europe as a whole had been greatly impacted by the Covid-19 virus as seen from the sharp sell-off earlier this year as with most indices. In a bid to recover, the UK100 had rebounded strongly since April but fears of a second wave caused markets to drift lower.
  • More recently, the market again rallied strongly on the back of the news of vaccines having positive results. Based on the chart, the market moved strongly to an area of confluence of resistance – top of a possible channel and also a previous spike high. After the initial reaction, momentum seems to have dried up and there is no follow through on the positive news as early bulls start taking profits.
  • It seems as though traders are not confident of a further improvement in market conditions given potential logistical concerns on distribution of vaccines, and the ability of manufacturers to keep up and governments / health agencies to procure them for citizens. Markets remain in confusion and is at an area where further positive news can spark a rally back up to pre-covid levels. However as it is, market looks poised to drift downwards to form an ascending triangle before breaking out.

This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information.

Investments are subject to investment risks. The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated. The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange. You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low. Clients are advised to understand the nature and risks involved in margin trading.

You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualifies financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement. You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at before trading in this product.

Any CFD offered is not approved or endorsed by the issuer or originator of the underlying securities and the issuer or originator is not privy to the CFD contract. This advertisement has not been reviewed by the Monetary Authority of Singapore.