Chartist still optimistic on FTSE 100

FTSE for the week

Please remember, we're talking about the FTSE 100 (UKX) during trading hours and not FTSE futures. Though, in honesty, we're rarely surprised if targets are met on futures once the UK market closes at 4.30pm.

As headlines continue to exhaust adjectives to describe the market trading higher than at any point, our bucket of tea leaves continue to give 7,358 as the next major point of interest, around which some "proper" volatility is expected.

This remains interesting given the immediate cycle points at movement above 7,211 is now supposed to achieve an initial near-term 7,272 with secondary, if bettered, at 7,320 points.

This obviously takes the market into the region where we suspect short positions will become pretty valid, but the "however" comes if the market finds any excuse to gap the index upward at the open. This is liable to foul our numbers (again) as it will become probable "the market" wants to better 7,358 without too many amateur dramatics.

We'd be failing our duty, if we ignored the possibility of a slowdown. The market closed the short trading week at 7,210 and need only slump below 7,180 to break the immediate uptrend and signal the chance of reversal to 7,152 points.

As with our thoughts on Friday, only if below 7,152 will be concern justified as our secondary is now at 7,135 points. But, of course, the red line on the chart illustrates the uptrend since the start of December and for real panic, the market now needs below 7,135 as we get to mention 7,100.

For now, we lean toward optimism (aka gullibility) and suspect the 7,300 region will make an appearance...

Sirius Petroleum again!

Sirius Petroleum managed to provoke a shedload of emails due to its 49% intraday volatility following our article on the 5th. Importantly, the share has managed closure above the immediate downtrend and, therefore, we're supposed to embrace optimism.

To get the good news out of the way before we allow reality to rear its ugly head, Sirius Pet closed the week in a position where future growth to 2.1p is possible with secondary 3.5p. If a slowdown is planned, trading below 1.10 would alarm us given it carries the threat of a bounce from around 1p.

And, if the drop is real rather than a slowdown, 0.825p is the secondary. The spoiler obviously is this would take the share price once again below the 'blue' line on the chart, away from the region of hope.

However, share price performance on the 6th was useful as it "proved" we've been watching the correct trend, always something of a relief. In normal trading conditions, we'd not be surprised to see it weaken to 1.1p or so, essentially bonking against the long term 'blue' downtrend.

Our rulebook thereafter does not allow us to take rises seriously until it starts trading above the high of the 6th which was 1.375p mid-price.

Finally, one thing we were relieved to notice was crucial from our perspective. The chatroom on Interactive Investor is mercifully lacking in evidence of over-enthusiastic comment, always a risk with this sort of miracle share.

The price indeed appears to be reacting to a trend with the result we can mention a long term 6p is now seen as a distant influence. We shall revisit SRSP should it better 3.5p in the future as this will prove significant.

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.