Did FTSE 100 bottom on Friday?

FTSE 100 (FTSE:UKX)

Written at 22:14 on 17 September

We kinda noticed the UK market had a pretty rotten Friday with the index fall ending just a few points above our “near-term” target at 7,185. What was interesting (from our perspective) is we’d expected a stumble around 7,255 on the way down. In reality, the stumble occurred just a few points higher.

We suspect a calibration issue may be involved as this behaviour, both with the drop target and the stutter zone, makes us suspect the market actually has bottomed at 7,195 points and we should hope for a near-term bounce.

We’ll start by embracing our optimistic naivety and look at upward potentials, if indeed the FTSE (UKX) is showing underlying strength.

When we look at obvious manipulation trends, the FTSE currently needs better than 7,267 to suggest the immediate downward force has eased. But, to be realistic, the original trend forcing the market down is sitting at 7,360 currently, so to be utterly sane, we require finding excuses to better such a point.

As the market closed at 7,212 points, if it were to make it above 7,267 it enters a cycle where 7,322 is believable with secondary, if bettered, at 7,365.

This obviously takes the index into a region where the end of the week was but a bad dream. And, better still, 7,476 becomes attainable.

Visually, though, we’re clutching at straws.

Now below 7,195 and weakness toward 7,165 is expected which, when broken, now starts a cycle down to 7,094 initially, but realistically we’re expecting a bounce now at 7,040 points.

If triggered, the index needs better than 7,267 to nonsense the drop potentials.

FERRARI (NYSE:RACE)

Those who watched the Singapore race were rewarded, ambition overtaking ability for the Ferrari guys, a synchronised crash ending both cars’ race.

It also left us looking hard at our Ferrari share price article last week where we questioned whether Ferrari Share Trend could really prophesise their chances in a race. We wrote “apparently the Ferrari Formula 1 team probably face a pretty lacklustre weekend”.

About the only fundamental we used to believe related to race teams and now, even that one is questionable.

We’re the first folk to say there was no way a trend signal should have predicted both Ferrari drivers hitting each other, all it related to was Ferrari (RACE) share price. But the two red cars experienced magnetic attraction, trashing the chances of a good race from the front.

As far as Ferrari’s share price is concerned, our outlook remains unchanged and, despite any near-term fake rises, it’ll probably bottom around $93.17, according to our software.

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.

Source.