Here’s what the FTSE 100 could do this week

The FTSE this week (FTSE:UKX)

Some of the financial commentators make quite a thing about the FTSE 100 (UKX) closing one day last week at a new all-time high.

We’ve been fairly restrained with the party poppers, though, as, while closing prices are critical to our outlook, equally critical is that point in time where intraday traffic also betters any previous levels.

In the case of the FTSE, achieving 7,565 was very nice, but still quite a distance below the all-time high of 7,598 points. So forgive our lack of frothy exuberance.

That said, we’re actually fairly optimistic for the near future due to normal rules telling us the market should achieve 7,676 points on the current cycle, perhaps even 7,725 points.

To spoil the party, the index needs to slither below 7,400 points just to scupper the immediate uptrend.

In keeping with our habit of measuring events to try and establish a trend, apparently if the FTSE weakens below 7,500 it should drop to 7,474 points. The danger comes if 7,474 breaks as it’s the first sign of weakness, allowing a path to 7,420 to make itself known. If the movement triggers, the tightest stop feels like 7,550 points.

In summary, it’s not looking too wintry for either the FTSE nor the DAX currently. While intraday moves are proving lacklustre, there must surely come a point where the markets notice the strength of their respective indices and respond accordingly. After all, it usually works that way with shares!

The DAX (DBI:DAX)

It’s probably one of these uncomfortable subjects, but it’s become increasingly difficult to ignore what’s happening in Germany.

The smart money has spent October frantically shorting a market which has refused to drop while discounting the salient detail Germany that has been getting high.

Literally, from 1 October the DAX moved into the highest of high territories and, thus far, it has refused to come down. In fact, if we’re to be realistic, the market is now expected to reach for 13,407 points.

Longer term, our secondary comes in at 14,029 points where some serious hesitation is almost mandatory. Such has been the pace of acceleration that the index need only slip below 12,950 to drop out the immediate uptrend, so there’s the absolute tightest stop level point.

We don’t for a minute believe the immediate uptrend will hold. Surely some politician will be planning on saying something stupid in an attempt to justify their incompetence.

 

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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