A better week for the FTSE 100?

The FTSE forecast (FTSE:UKX)

With the market edging ever closer to the 6,800 level we’ve been moaning about for months, what happens if it breaks? Hopefully not a further diet of somnambulistic Formula 1 races or Top Gear rehashing old Top Gear programs.

Similar to our (once) favourite motorsport & car show, the FTSE 100 is certainly not filling us with inspiration as the danger remains of weakness below the 6,800 level starting a cycle down to 6,600 with secondary around 6,400.

The weird incidence of 200-point-drop stages appears to be caused by the almost ‘manual’ forced reversal on the FTSE since January. Visually, there is certainly a reasonable expectation the 6,600 level shall provoke a rebound, if achieved.

However, we’ve discussed the 6,800 level for rather a while and often these major drop targets will themselves give a bounce. The biggest problem for us shall come if the FTSE actually closes below such a point as it makes future weakness inevitable.

For now, the FTSE requires better than 7,135 just to recover above the immediate ‘blue’ downtrend on the chart. Worse, it needs better 7,290 (red) to convince us it’s actually going up again as 7,435 looks probable initially with secondary, if bettered, a confident sounding 7,640.

We expect some sort of near-term bounce, ideally just before the 6,800 level, but unfortunately the market has a fair bit of work to do to convince it’s becoming upwardly interesting again.

Source: interactive investor                Past performance is not a guide to future performance

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.

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