Interactive Investor

Can the FTSE 100 hold onto this 100-point gain?

28th December 2018 10:40

Alistair Strang from Trends and Targets

The blue-chip index has been especially volatile over the Christmas period, so chartist Alistair Strang looks at where stocks could be heading next, as well as a resurgence at Anglo African Oil and Gas.

FTSE for Friday & Anglo African Oil and Gas (LSE:AAOG)

Something really peculiar occurred with Anglo African Oil & Gas. When we last covered it, our data provider claimed a low of 5p on 8 November. But when we checked actual trades, the lowest mid-price on the day was just above 6p! The peculiar thing was it reached our target of 10.25p quite confidently, a target extrapolated from the share price at our last commentary (6.9p) and the claimed low of November 8th (5p).

Genuinely, we're in the dark over this. Our normal logic for price movements only produced the 10.25p target level based on the strength of a bounce from a low, a low which didn't actually exist and now looks like one of these 'fat finger' things.

The situation now is almost comical. Continued moves bettering 11.25p look capable of 12.8p next. If exceeded, our secondary is a less confident 14.25p though we should admit positive news could easily drive this to 16.4p, a point where a visual glass ceiling awaits. And all this magic is based on something we know to be untrue, due to literally checking every trade on the books for November 8th.

Our inclination is to continue calculations, which appears the only safe way to proceed given the market moved the price in accordance with this imaginary low! The price now needs below 7p to justify panic.
 

Source: Trends and Targets. Past performance is not a guide to future performance

FTSE for Friday

The market is now officially a shambles. From a bigger picture viewpoint, traffic now below 6,536 enters a phase with an initial ambition of 6,350 points. If broken, secondary is a bottom at 5,840 points! 

Thursday presented a specific issue as the FTSE 100 was expected to bounce at 6,555 points. Instead, the market broke below this level, hitting a low of 6,536 before the rebound.

The near-term situation is fairly straightforward. The FTSE (the market during trading hours, not futures) requires above 6,611 points to enter a cycle to an initial 6,625 points. If exceeded, secondary is at 6,650 points apparently. 

Unfortunately, we have to remember the index did break our 6,555 on Thursday and this implies weakness. As a result, even though our initial target may be bettered, there's a very real risk any rebound will fade by 6,640 points.

Alternately, if it all intends to go wrong, below 6,536 expects a trip down to an initial 6,490 points. If (when) broken, secondary is at 6,430 points, a level where some sort of near-term bounce can be hoped.

Source: Trends and Targets. Past performance is not a reliable indicator of future results

As always, please remember we are discussing the FTSE itself, during trading hours.

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