FTSE for Friday: greater optimism after an illogical week
20th January 2023 07:56
by Alistair Strang from Trends and Targets
With the great and good of the business community at the the World Economic Forum in Davos, markets have behaved strangely, reckons independent analyst Alistair Strang. Here are his latest forecasts for the UK's leading index.
Thursday evenings are not supposed to be this way. While most folk are thinking “one more day until the weekend”, we’re assigned to sitting here thinking “what the heck is going on?”. Normally, our FTSE for Friday column almost writes itself but following three completely illogical sessions on the FTSE 100 index, writing “we’re puzzled” is an exercise in understatement.
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We’ve a bit of a suspicion that reversals are due to ease, if only due to a good argument favouring the current 3,911 point S&P bouncing at 3,875 points. Equally, we shall be interested in what happens, should the Nasdaq achieve 11,185 points, roughly 100 points below its current level. As for Germany and the DAX, it already should be bouncing but really needs above 15,000 to confirm the sentiment.
When we bunch all this together and apply the arguments to the FTSE 100, there’s an insinuation the UK market should struggle to make its way below 7,713 points, if it reads the same script as other markets. Who knows, perhaps it’s the case the “grown ups” are all at Davos with the markets being run by those who cannot ski, playing safe this week. Should this be the case, next week could be interesting, as visually there are strong arguments developing which favour gains fairly soon.
Source: Trends and Targets. Past performance is not a guide to future performance.
Near term, we’re supposed to believe weakness below 7,713 on the FTSE should introduce weakness to a tame 7,695 with secondary, if broken, a more dramatic 7,635 points. If triggered, the tightest stop loss level looks like 7,753 points.
Our converse, happier scenario, questions the potentials, if the index manages above 7,780. This looks capable of triggering recovery to a useful 7,820 points with our secondary, if exceeded, working out at 7,872 points and a return to the level where the market resided before everyone went skiing in Switzerland, almost making it like this week didn’t happen!
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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