FTSE for Friday: rally reignites talk of 8,000 for the FTSE 100
6th January 2023 07:21
by Alistair Strang from Trends and Targets
Despite a cost-of-living crisis and likely recession, many UK shares have started 2023 strongly. Independent analyst Alistair Strang runs the numbers and gives a view on what could happen next.
Gratifyingly, the FTSE 100 managed to end Thursday in positive territory, everywhere else in Europe and the USA embracing the colour Red.
For folk used to the market, the FTSE has closed above the previous three highs of 2022. If attempting a quick call as to market direction, this visually implies further gains should be anticipated. After all, near-term movement above 7,660 points should bring further movement to an initial 7,705 points, a quite respectable ambition. Our secondary, should this level be exceeded, works out at 7,750 points, along with a chance of some hesitation.
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However, yet another potential signal is teasing the FTSE, the Green horizontal trend on the chart below. This level is currently at 7,667 points, and closure above shall prove a really big deal. This shall indicate the FTSE has finally managed to exceed the pre-pandemic highs of 2020, entering a phase where a longer-term 8,080 looks like a sane ambition.
This optimistic gesture, while nowhere close to how other markets performed once they exceeded their personal Covid-19 levels, certainly gives hope for the FTSE future.
Source: Trends and Targets. Past performance is not a guide to future performance.
As always, we’ve some room for concern, thanks to how the rest of the world performed on Thursday. After all, the FTSE 100 has often appeared incapable of seeing a bandwagon without clambering on board.
With everything else looking a little Red, there’s always a risk of the FTSE shall decide it’s missing out on the chance of some self harm. Currently market futures for Friday are giving little away, but we suspect further reversals shall occur in the USA and Europe.
Our converse scenario, should the FTSE opt to follow the herd, allows weakness now below 7,594 to bring reversal to an initial 7,560 points with secondary, if broken, at 7,470 points (again) and hopefully a bounce. Quite odd why that number keeps cropping up!
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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