FTSE for Friday: reasons to be optimistic about FTSE 100 index
21st April 2023 07:40
by Alistair Strang from Trends and Targets
The FTSE 100 has only fallen twice in the past 17 trading sessions, and independent analyst Alistair Strang is in a positive mood. Here's his latest forecast for Friday and beyond.
Perhaps it’s the good weather, but it’s easy to be fairly optimistic about the potentials for the FTSE 100 near-term.
Despite this week being extremely boring on the FTSE, presenting a market with a ridiculous 45-point trading range, our inclination is toward hope, because the sun is shining (at time of writing) and there’s another thing about movements worthy of mention.
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Generally speaking, when a share/commodity/index decides to have a relative flatline, it means something. When the flatline occurs as part of a drop cycle, we expect the final drop shall occur and take the stance of it just being a matter of time.
Equally – and hopefully the case with the FTSE 100 – when this sort of flatline behaviour takes place as part of a gain cycle, the converse is inevitably true, with a surge to the next level almost inevitable.
We should mention that the markets often keep an unpleasant movement in their bag of torture implements.
If the flatline (or glass ceiling) has been present for an extended period, a sharp price spike in the opposite direction to that expected is perfectly normal.
Quite cynically, we often wonder if this is an attempt to collect stop losses or worse, trigger orders. After all, if the FTSE is indeed about to “suffer” some further upward movement, wouldn’t it be a thrilling wheeze to spike the index downward at the open, doubtless just below 7,870 points to trigger a bunch of automated short positions.
This is why we always warn of the dangers of opening second spikes, as a price will invariably toddle away during the session in exactly the different direction from the spike.
It’s easy to imaging a bunch of smart traders placing a fire & forget order to short the FTSE if it goes below the 7,870 points from Monday's open. And if such a calamity occurred at the very open of the day anytime soon, we’d be pretty comfortable suspecting some market gains were about to take place. Of course, this is the stock market, and the only rule is there are no hard and fast rules. Sometimes, we think they change things, just to have a laugh!
Source: Trends and Targets. Past performance is not a guide to future performance.
For Friday, movement above 7,920 points (and not a spike in the opening second please) looks capable of provoking market recovery to 7,963 next with secondary, if bettered, calculating at a longer-term 8,062 points and a new all-time high for the FTSE. The tightest stop-loss looks quite reasonable at 7,850 points.
Our alternate doomsday prophecy works out with the potential of below 7,876 triggering reversal to 7,856 points with secondary, if broken, at 7,850 points. The proximity of these targets tends suggest some sort of bounce should be hoped for.
Have a good weekend.
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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