Where next for the FTSE 100?

FTSE 100 for Friday (FTSE:UKX)

This week started well, then stopped. In fact, it was rather like Ferrari’s performance in last Sunday’s Grand Prix, though not quite as funny.

We’re a bit concerned, ‘cos rather a few shares have triggered downward travel, though, quite oddly, the clown sector – the retail banks – are showing signs they wish increase in price. Let’s just say we don’t entirely trust ’em.

As for the FTSE 100 (UKX), it has rather failed to undo the damage inflicted on 14 September and visually appears to have moved down to what feels like a new trading range, floundering between the 7,300 level and, we suspect, somewhere around 7,025 points.

And yes, we know we sound like a stuck record, constantly repeating this bottom target, but unless the FTSE currently manages to wander above the blue line, currently 7,393 points, there are strong arguments favouring 7,025 as bottom.

Aside from the important detail, such a target level does not match anything in this year’s history. Visually, there’s a firm hint the market shall look at the 7,100 level and assume a bounce is justified. Numerically, about the best we can hope is 7,160 provoking a bounce as, if below, the FTSE is stuffed until just above the 7,000 level.

Who knows, maybe Mrs May will say something sensible… Like her resignation!

Near term, three days of effective flatlining make it difficult to project reasonable trades, but below 7,260 looks capable of a tragic 7,247 points. If triggered, stop can be above 7,284 points.

The reason for such a wide stop comes from the secondary target as, should 7,247 break, we’re looking for 7,227 points and hopefully some sort of recoil.

On the up side of life, we’re not inclined to trust near-term rises unless the FTSE (do remember, this is about the index, not after hours futures) betters 7,309. In such an event, we’re looking for some growth to 7,363 points with secondary, if bettered, at 7435.

We doubt either target is attainable in the same day as there’s a strong chance any rise will fizzle by 7,320 due to the index being seen in a downward phase.

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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