FTSE for Friday: about to break free of its malaise?
After moving sideways for six weeks, independent analyst Alistair Strang looks for clues that the FTSE 100 index can stage a breakout.
12th July 2024 07:28
by Alistair Strang from Trends and Targets
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The chart below, painting a picture of comparative performance by Wall Street, the German Dax, and the FTSE 100 since the pandemic low of 2020, doesn’t show the UK in a great light.
Wall Street more than doubled from 19,000 points to 39,000 points, the DAX more than doubled from 8,000 points to 18,000, and the FTSE went from 5,000 points to just 8,400 points.
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It’s not a pretty picture, vividly showing how painful the UK market has been underperforming during the last four years. But to keep current, the Spanish stock exchange, the Ibex35, has “only” moved from 6,000 points to 11,000, nearly double and substantially ahead of the FTSE. Perhaps this doesn’t bode well for Sunday and the football match which is getting harder to ignore.
Source: Trends and Targets. Past performance is not a guide to future performance.
As for the FTSE 100, we’d expected the UK to be flat while the election played out to its forgone conclusion. The days since the result have proven pretty placid in a period when other markets have felt like they intend go higher than immediate logic allows.
The Nasdaq for instance calculated with a theoretical “top” around 20,200 and this week has seen the index briefly head to 20,400 points before slightly reversing. Perhaps we are about ready to enter a period where the FTSE breaks free of its malaise and produce some gains?
If we’re correct in our theory, above just 8,234 points should trigger FTSE 100 gains to an initial 8,258 points with our longer-term secondary, if bettered, at a more useful 8,300 points. If triggered, the tightest stop could be tight at 8,190 but we really prefer 8,177 as a stop loss level.
From a Big Picture viewpoint, should such a lift occur, we can calculate a future 8,456 as apparently presenting a sensible target. Visually, we shall be concerned should the UK index make it to such a price level as it matches the highs from May of this year. That presents an image where any excuse for market jitters could easily provoke a series of nasty reversals in the months ahead.
Our immediate converse scenario shows with any movement below 8,177 risking triggering reversals to an initial 8,107 points with our secondary, if broken, a less likely 8,050 points. Visually, there’s obviously a reasonable argument to anticipate a rebound from the 8,107 level if such a calamity presents.
Have a good weekend.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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