FTSE 100: Reasons to be bullish

Written 7th January 2018

FTSE Outlook (FTSE:UKX)

The FTSE (UKX) managed a high of 7,727 points. Our target was 7,726 points. Unfortunately, given the days trading range was only 38 points, it was not the most exciting event but it did mirror the rather boring first fake week at work.

This week should hopefully prove more interesting as many grown-ups return to work following a proper festive break. They shall be faced with the situation of a FTSE now trading higher than ever before and better still, breaking above the horrible 7,100 to 7,600 trading range 2017 inflicted upon us. The situation now is fairly straightforward. In the event of the index beating 7,728 points, we’re looking for growth toward 7,750 points next.

While perhaps this is not terribly exciting, should 7,750 be bettered, a longer term cycle toward 7,933 will be seen commencing. In fact, we’re probably risking being a bit bashful as the big picture calculation tosses out 8,200 points as a major point of interest in the future.

Of course, we’ve always a “however” to dust down and polish. The FTSE had, what we call a “glass ceiling” at 7,600 points. When shares break above these artificial constructs, invariably we witness a movement to our initial target level – 7,750 – before a share price rewinds, almost as if gathering strength for the next surge upward. It results in the situation where we should probably look for danger signals on the FTSE (though we’re at an utter loss with the Dow Jones!)

For any weakness on the FTSE to start ringing alarm bells, below 7,540 indicates the potential of a drift down to 7,440 initially with secondary, if broken, a very probable bottom around 7,290 points.

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.

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