FTSE 100: Is it too early to hit the panic button just yet?

Written 2 April 2018


This column is being written on the 2nd April and thus, can be regarded as serious. Then again, it is about the FTSE (UKX), so perhaps not too serious. Should we opt to go with a couple of our throwaway comments to end last week, it’s maybe best to read the following fairly attentively.

Our problem comes from mass media pundits, the so called ‘experts’, who are about to assure everyone the market is collapsing and a repetition of the lows of 2009 is around the corner.

Alas, these are the same ‘experts’ who warned continuously of a “double bottom” following the 2009 shambles, blissfully ignorant 2009 WAS the double bottom following the markets self-immolation back in 2003.

Equally, not one of these ‘experts’ was calling for a high this year at nearly 7,800. Their primary coin in trade appears to be a fee, filmed looking wise while producing headline grabbing commentary at the same time.

About the only ‘print it and pin it on a wall’ comment we feel able to give is, should the market break roughly 6161.437 points – red on the chart – then a trip toward a bottom of 5,527 becomes almost inevitable. Secondary, if broken, is at 4,041 where it almost must bounce.

Already, pundits are warning the financial sector is doomed, pointing at a repeat of the USA mortgage crisis.

If we choose to view Barclays Bank (BARC) as an early warning signal, back in 2008 the bank achieved volatility during the first quarter of 107p. This time around, it has achieved 33p volatility, actually closing the quarter higher than it opened.

We’ve chosen Barx, ‘cos they’ve not played around with their share issue numbers nor been ‘interfered with’ by politicians. Broadly speaking, other shares in the financial sector are proving relatively resilient, if somewhat boring.

It can be assumed we are not running around suggesting the sky is falling, despite a pretty grotty start to the year. In fact, uncomfortable numbers of readers are probably nodding sagely, noting the FTSE has failed to reach our oft mooted 6,800 level of doom.

The lowest actually achieved has been 6,867 before the current bounce and as we often mention, a bounce before a drop target often will prove an indication of strength.

We’ve a trigger level at 7,120 points. If the FTSE index makes it above such a point, we shall be convinced the bottom is “in” and plan for future growth toward 7,217 points.

If bettered, secondary is around 7,301.71 points and we need to stir the tea leaves again at such a point due to future potentials sounding like Government predictions of growth.

For now, should the FTSE better 7,120, our bottom potential of 6,800 appears unlikely. And if it betters 7,350, the calculation is impossible!

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.

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. 

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