FTSE for Friday: feeling rotten but looking great
There have been times recently when market behaviour has made life difficult for investors, so independent analyst Alistair Strang looks at the big picture for some perspective.
6th September 2024 07:39
by Alistair Strang from Trends and Targets
It’s a useful exercise sometimes to step back and review the really big picture. This is often particularly advantageous, when things don’t feel like they are going as planned, a description which is more than apt when applied to the FTSE 100.
So we’ve given a chart with a 30-year review. It’s worth remembering September is usually a pretty foul month on the markets, perhaps because most folk are shaking off their “holiday brain” and having some trouble getting fully involved in work.
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A glance at the Big Picture chart shows there is currently a risk below 8,240 points triggers a push down to 8,120 with our secondary working out at a bottom of 7,859 points. Given the index is presently around 8,245, these are not massively frightening numbers and the secondary even calculates with colliding against the Red uptrend since 2020.
To cause real panic, the FTSE (from our perspective) needs below 7,130 to generate serious concern, and the index is actually miles away from such a level.
All this drama conceals the fact the UK index now needs below 5,200 points to cause serious fright, below 7,859 being the first convincing sign domino’s have started to fall.
Our converse stance, perhaps once September is over with ongoing improvements to interest rates, the FTSE 100 now has the potential for some really strong movement. Visually, above 8,500 points now implies a cycle commencing to an initial 9,220 points and our secondary works out just over 10,000 points and an almost certain pause for thought. We’re in a ridiculous situation when the FTSE feels rotten but actually, looks great!
Source: Trends and Targets. Past performance is not a guide to future performance.
As for the near term, the FTSE is certainly at risk from the coming US payroll numbers, due at 1.30pm today.
From an immediate perspective, it seems movement below 8,220 risks triggering reversal to an initial 8,190 points. Our secondary, should such a level break, calculates at 8,120 points. Should this scenario kick into life, the tightest stop is quite wide at 8,280 points.
Of course, due to the underlying trend for the FTSE 100 currently being up, our alternate scenario suggests above 8,286 points allows recovery to an initial 8,319 points with our longer-term secondary, if beaten, calculating at 8,375 points.
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.
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