FTSE 100 can make record high now

RBS and FTSE 100 for Friday (LSE:RBS & FTSE:UKX)

That was a fast week, and while we'd prefer to pretend Royal Bank of Scotland's share price doesn't exist, it's the third of the clown banks deserving of mention.

There has been an extremely odd facet to recent RBS price movements and it relates to the blue line on the chart. One thing our software does is extrapolate movements both forward and backward in time. The fruitcake suggestion is that recent movements relate to a price high from 20 February, 2007. At this point in its career, the adjusted price of RBS shares was 7,226p.

This is why we insist on a human element when running analysis as it's hard to accept RBS is being influenced from a time when the share price was 72 quid. This sort of rubbish, if true, would imply any positive influences on the bank's share price are liable to provide extremely flamboyant rises. We're just impressed the share price somehow avoided getting to 96p - 9.6p in old money.

A glance at RBS quickly tells us there's about to be an issue at the 260p level. Basically, on a bunch of occasions, people bought the share at 260p this year and have been stuffed royally each time.

If for no other reason, these folk are going to create selling pressure if the price reaches 260p again as they're probably fed up watching their money take a year off. However, even if we regard the 2007 trend as a load of tosh, the harsh truth is that RBS currently needs to better 330p before we can regard it as going up rather than just recovering. As a result, we need to look for reasons which could cause RBS to interfere with the 330p level.

Near-term, it appears anything above 224p should generate growth toward 236p initially with secondary, if bettered, at 265p. As mentioned earlier, there's a glass ceiling at the 260p level and thus, an ambition slightly above should give RBS sufficient reason to actually close a session above the glass ceiling.

In our experience, once a ceiling breaks, any stutters tend be short-lived and future growth becomes very real. Suddenly, the price runs into a problem as our target with closure above 260p is an ambition of 323p sometime in the future.

While, currently, this is unable to challenge what we regard as the "real" downtrend, by January 2017 any successful hit at this level gives a good chance of moving the share from Recovery to Growth mode.

The only negative is shown by the red line on the chart below. As RBS is a fully paid up member of the clown sector of the marketplace, some care must be taken at any excuse to drive the price below 180p ('red') as a visit to 96p once again becomes viable.

We shall again visit the retail banks in January next year.

FTSE 100 for FRIDAY (LSE:UKX)

We'd expected Thursday to pay a bit of a price for Wednesday's exuberance on the FTSE 100 but, aside from a crushingly boring day, the market opted not to crush everyone's hopes for December.

Instead, London managed to close the session in a position pointing at "top" on the current movement cycle of 7,155 points. The FTSE needs to flop below 6,800 points to drip out of the immediate upward trend and cancel our 7,155 ambition.

Critically, the market has - unsurprisingly as something stunk - regained the Brexit uptrend and, therefore, we remain hopeful of Santa making an appearance.

Regular readers will be aware of our frequent comments regarding 6,903 on the FTSE since June 24th of this year. Essentially, the market kept hitting this target level and even managed to close at 6,903 on Wednesday 7 December.

We eventually concluded it related to a horizontal trend - something we'd never theorised previously - and by closing on the eighth at 6,932 points, the market has made our 7,155 ambition viable.

Let's be clear tho', we're not expecting a 220-point day Friday. But the market does need to slither below 6,800 to trash the prospect. In fact, below 6,850 would panic us as this implies the Brexit uptrend has again broken. So, if feeling brave with an eye on the main chance, about the best we can justify is a rather wide 90-point stop!

Near-term, it seems the FTSE can justify a rise toward 6,975 points with movement above 6,940. Secondary comes in at a rather surprising 7,070 points.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.