FTSE 100 (UKX)

 

Here's the game changer for FTSE 100

Share this
Here's the game changer for FTSE 100

FTSE for the week (FTSE:UKX)

A sneaking suspicion the FTSE 100 (UKX) has been reacting to the US Hurricane business makes us wonder whether any one the US fruitcake element will prove successful is blowing, shooting, praying, or looting the storm away.

Watching CNN news, the excitement was palpable when a wheelie bin blew over in Miami 10 hours before the storm made landfall. FTSE behaviour reminds us of the old adage, when the US catches a cold, the UK develops pneumonia.

If this indeed is the case, the coming week is liable to be trashed by a UK market rushing to the emergency department but, to be realistic, we'd refrain from panic unless the FTSE finds sufficient excuse to slither below 7,300 points.

In fact, if looking for early warning of coming troubles, even below 7,350 permits a raised eyebrow.

We've some doubts as to whether any storm effects will actually stick, mainly thanks to so called 'social media' and its ability to illustrate reality despite an entire world media becoming excited due to a Miami wheelie bin falling over in the early hours of Sunday morning, long before the hurricane actually arrived.

So, if the market is in trouble, below 7,350 gives early warning whereas if it's all probable fakery but above 7,388 gives an early clue of media hysterics being ignored. The interesting aspect is the proximity of both numbers, essentially suggesting the market doesn't have a clue what to do.

chart1

Our own thinking is to resort to looking at recent lows as they suggest should the future break below 7,300, a drop toward 7,250 now makes sense with secondary 7,183. And this, unfortunately, takes the index into the realms of lower lows with 7,020 proving to be the ruling attraction.

Equally, if we look for "higher highs", while above 7,388 gives some hope for an upward break, we'd prefer waiting see the FTSE better 7,440 as 7,525 looks about right, with secondary 7,600 points.

And, as mentioned on Friday, above 7,600 represents a game-changer for the FTSE, with 7,900 possible with secondary, if bettered, at a long term 8,700.

And if you think this means you can go long at 7,388 with a target of 8,700 and a stop just below 7,350... you're on your own. Sometimes, we don't take numbers too seriously. And sometimes we regret this flippant attitude.

chart2

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.


Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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.