FTSE 100 for the week: Is 8,000 possible?

We've been appalled at the number of shares basically treading water recently (the banks, anyone?) and a glance at the FTSE 100 reveals a pretty similar story.

The FTSE has been a 200-point thick flat line for five weeks but, similar to the retail banks and many other shares, should be going up.

This sort of nonsense is always a concern due to gravity. If things don't go up, they often go down - with the fault directly at the door of Isaac Newton, the bloke who invented gravity. Many things would be a lot easier, if not for the pull earthward...

When we look at the immediate downtrend on the FTSE, it appears 7,350 is pretty important and movement above should bring growth toward 7,445 points - rather painfully and precisely challenging the highs of March.

But the hiatus since the start of March has brought something new to the table as, while we'd been banging on about 7,520 as a big picture ambition, the stock market is now liable to ignore our advice and power upward to a gravity defying 8,022 points.

To delay the potential (substantially) on the immediate movement cycle, the market needs now trade below 7,250 points. And to utterly foul the potential, it needs below 6,290 points - the dashed middle red line on the chart below.

One funny feature about the market is the blue line - a flat trend or glass ceiling, depending on which bit of gibberish you prefer.

When we decided flat trends were important last year, this ridiculous line at the 7,100 level now advises we must see the market above 7,920 before now getting excited about the future as we're showing some distant targets which, frankly, are hard to accept.

To return to the dangers of Isaac Newton's invention, what happens if the FTSE now manages below 7,250 points? 7,040

Initially, weakness to 7,190 but the secondary at 7,040 looks horribly real - and, worse, capable of bringing the FTSE below the blue line and into the realms of real danger, allowing us to mention 6,750 in passing.

For now, it feels like the markets are poised for a politician to do something really stupid. And in the absence of real stupidity, things are basically marching on the spot.

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.