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FTSE 100 not out of the woods
By Alistair Strang | Thu, 27th April 2017 - 08:14
FTSE sermon & San Leon (FTSE:UKX & LSE:SLE)
Our brief FTSE (UKX) lesson is basic as we like to present illustrations of trend behaviour. So, if you're looking for a near-term tip on the index, this isn't the place to find it today. But if you're looking for a pretty certain sense of direction, read on.
Regular readers will be bored silly of our constant confusion as to whether to take the Post-Brexit market manipulation trend seriously or the visually more honest series of movements which bookended the Brexit Day stitch-up.
Thankfully, it finally appears the market is behaving with a degree of integrity; the inset on the chart revealing something quite fascinating from our perspective as it now appears Brexit Day is being ignored.
At times, what's important - often really important - is a price's behaviour when it approaches a trend line.
In the case of the FTSE, when we map 'red' we see - despite the recent big drop thanks to Mrs May not wanting her majority removed by (a not very publicised) police action on electoral fraud - the market has actually not regained the trend despite a fairly admirable bounce.
Instead, it is flirting with the idea, but we really need to see the FTSE trade above 7,347 - currently - before we can be assured some miracle recovery is almost certain.
Unless the index regains this trend, it's now languishing in territory where an initial bounce point of 7,040 makes sense, maybe even 6,750 if a politician says/does something silly. (With both local & national elections looming, this is - of course - highly unlikely.)
SAN LEON (SLE) has been enjoying a fairly reasonable bounce recently, one which has almost removed it from a logic which is pointing at 32.75p being anointed with trampoline juice. To completely escape this grotty drop potential, the share price need only better 'blue' (56p currently).
Last year, we'd given a half-hearted projection when the share price commenced trading and aside from the drop to 39p, the share has failed make any other meaningful triggers.
Near-term, trades above 50p should prove capable of 52.75p, a pretty useless ambition, but should 52.75p be bettered, we shall take the attitude of "bottom is in" and hope to see continued oomph toward 56p and a bonk against the 'blue' downtrend.
There's something quite surprising should this share actually manage to close above 'blue', as we're able to calculate future growth to an initial 70p as a potential stutter level. Secondary, if such is bettered, comes into play at 87p, but we'd suspect a positive news flow will be required.
Finally, any break of 'red' at 43p, currently, and our 32.75p becomes the most probable bottom. As the chart shows, there's certainly reason for hope currently.
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.