Visit Interactive Investor's FTSE 100 discussion board to compare strategies, share knowledge and validate decisions.
FTSE 100 (UKX)
What happens to FTSE 100 if 7,096 breaks?
By Alistair Strang | Fri, 21st April 2017 - 08:48
FTSE for Friday & France (CAC40)
It seems a few folk harbor a suspicion the French index will "Do a FTSE" if the electorate are sufficiently stupid to elect a candidate of whom the media do not approve. Will we be, once again, facing a "petulant child" barrage of headlines once France declares?
To make some sense of the future potentials, there's quite a few major differences between the CAC40 and the Dow/FTSE. Most critical from our perspective is that France has failed to better its 'pre-2009-crash high' and remains in recovery mode rather than a growth mode.
Both the Dow & FTSE 100 (UKX) had bettered their prior highs pre-Brexit & pre-Trump, which resulted in the situation of volatility promoting upward oomph.
France, alas, does not currently enjoy such a luxury so caution is advised unless fairly strict criteria are met. We shall take the attitude "if it were a share, what next" against the index as generally this proves safe if attempting to mark the transit from 'les miserables' to 'just miserable'.
As a result of this stance, it appears France needs better than 5,143 to suggest any downward spike due to the election result was indeed an over-reaction.
Such a movement will suggest coming growth toward 5,807 initially, maybe even 6,073 as this represents a similar ambition to our phantom FTSE 7,520 the market keeps avoiding. If triggered and the markets follow the FTSE & Dow example, stop can be set at sod all, but we'd prefer seeing it around 5,056 to pretend sanity.
Of course, there are some (often broke) adrenalin junkies who try and pick 'bottom' when negative news erupts like a teenagers’ pimple.
In the case of the CAC, below 5,020 would now bother us as it permits 4,845 with secondary 4,548 points. Should the market chose to open just above either of these points in the case of 'the wrong' candidate being selected, opening a long position with a stop just below the target level might make some sense.
FTSE for Friday
Aside from the market moving to our bottom target with exquisite precision, this week has been pretty boring and we're genuinely not sold on any possible direction currently. The immediate scenario is of movement above 7,134 promoting some growth to 7,156 points.
Our secondary, should such an ambition be exceeded, is at 7,188 points. If triggered, stop level is around 7,096 points which gives a fair risk/reward balance.
What happens should 7,096 break?
We'd tend expect weakness to an initial 7,065 points with secondary, if broken, at a rather nasty 6,935 points.
Of course, whether the secondary could be expected on the same day will be best judged by whatever news is polluting the airwaves.
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.
|Day Range||7356.16 / 7406.53|
|52Week Range||6,678.74 / 7,598.99|
|Last Update: 16:35:29 (18/11/17)|