Interactive Investor

Not yet time to give up on FTSE 100

24th February 2017 09:15

Alistair Strang from Trends and Targets

Written: 23rd February 2017 - 23:49

FTSE for FRIDAY (LSE:UKX)

This week has been pretty boring on the FTSE 100, but the movement in the closing 20 minutes bothers us quite a lot.

While Thursdays are supposed to stink, due to ex-div adjustments, by the end of the day all manipulation has been enacted, but at 4:10pm, the market moved below the February uptrend (such as it was).

When we review January, the market broke the month’s uptrend around the 18th and slumped rather nastily for the rest of the month. It obviously begs the question, are we about to witness February coming to an end with a whimper?

The immediate situation (based on extrapolating just 20 minutes movement) suggests weakness below a near-term 7,262 will lead to a not very scary 7,251 points.

Secondary, if such a point breaks, calculates at 7,207 points. We're not sure the secondary will prove viable, given the dashed red line on the chart - an uptrend since the start of December last year.

As always, we've a "however". We don't trust end of day movements, especially when they do something this obvious. There's going to be a bunch of folk with coloured crayons doing exactly what we've done below and equally, rushing to the conclusion the market is probably about to be stuffed for a while.

Balancing all the negativity is the recent ‘blue’ downtrend with considerable control being applied to the High of Day on the market since February 20th.

It tells us the market need now better 7,310, making the slump at the close on the 23rd a 'fake' as growth toward a near-term 7,325 initially with secondary 7,346 points.

In fact, if it all goes nuts, we're still extrapolating 7,362 further up the food chain, with 7,520 a distant possibility. To cancel these prospects, the FTSE (ie; the market itself, not FTSE after-hours futures) needs now break below 7,100.

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.