FTSE 100 (UKX)

 

What are the odds of FTSE 100 sinking to 6,800?

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What are the odds of FTSE 100 sinking to 6,800?

Written 9th February 00:18

FTSE for Friday (FTSE:UKX)

It's rare for us to approach the weekend with a "thank goodness it's over" but the last week has been rather foul. We love market volatility as it makes life bearable but the FTSE (UKX) has shown more movement in the last three weeks than it did all last year!

Making the mental switch from Cruise Control to Race Track performance has not been straightforward and oddly, even the market itself appears to tie itself in knots of confusion.

Our usual rule of thumb, movements over 50% strength to initial targets, used to be an utterly reliable direction indicator. For the present, it's not.

The other day, when the FTSE exceeded 7,305 points, this was supposed to herald a surprise market recovery, one which was noticeably absent. Instead, the market has ticked the last box for travel down to the 6,800 level we mentioned at the start of this week.

Are we convinced?

Nope. Or not entirely. But the immediate situation isn't great. The FTSE closed at 7,162 points, creating the situation where the market needs below 7,160 near term (remember, we are talking about the FTSE, not after hours futures) to point at near term reversal toward 7,117 points.

Secondary, if broken, is a little scary at 7,063 points, though, to be honest, it could easily continue down to the 7,000 level.

Do remember, a nice solid sounding number like 7,000 provides absolutely no certainty of a bounce. We'd imagine a lot of folks took a long position on Wall St when it hit 24,000 points on Thursday. Most of 'em are now "walking funny".

For the FTSE to makes us consider the possibility of a miracle recovery, near term above 7,204 certainly betters the painfully obvious immediate downtrend, opening the door for some growth toward 7,244 points initially with secondary, if bettered, a less likely 7,288.

Have a good weekend, you probably deserve it!

 

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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.