Can FTSE recovery match our S&P 500 success?

After an impressive result on the S&P 500, our chartist plots a course for the FTSE 100 Index.

We had a stunning result against the S&P, one so impressive we didn't notice until someone emailed. Our report in March detailed an upper target of 2954 for the S&P. It hit 2954.13 on the first of May, carefully going no higher since. How could we be so accurate, 49 days before the event?

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

It was interesting, on the initial surge to 2,884, the market actually bettered our target, reaching 2,885.25 before a slight fall back. Our rule of thumb is always, if an initial target is bettered, we expect the secondary to be achieved. Recently, we modified this thinking, adding "on the first surge" as an important part of the scenario. From our perspective, beating 2,884 (on the first surge) made 2,954 inevitable. The situation remains, quite forcibly, of short positions being in jeopardy if 2,954 bettered. The S&P shall find it difficult to restrain itself from growth.

It's important to remember we are discussing the S&P 500 index and NOT S&P 500 Futures. The Futures market will generally be a few points adrift from the actual index.

The situation now suggests growth above 2,954 should attempt an initial 3,003 points. Secondary, if bettered, calculates at 3,044 points. In fact, we shall regard the long term influence as coming from a distant looking 3,278 points.

Any attempt at a slowdown requires the index to fall below 2,816 points, though to be honest, we'd prefer the 2,800 level be broken to convince us of trouble. In such a scenario, our initial drop target is at 2,720 points with secondary, if broken, at 2,645. We would expect a reasonable bounce from the 2,645 level if it makes an appearance.

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

FTSE for FRIDAY (FTSE:UKX)

Maintaining the theme of success, our private report to clients at lunchtime Thursday proposed 7,352 as an initial target. The day high (and closing point) was 7,353.51, so we are supposed to believe the FTSE is due some further recovery.

Some slight doubts appear as generally a price will mess around for a while at an initial target, almost as it wants to confirm this was a correct trend level. We call this "stutters" and will not be surprised if the UK market stutters a bit on Friday.

However, the scenario now exists of movement beyond 7,354 suggesting coming travel up to 7,377 points next. Secondary, if bettered, calculates at 7,409 points.

We can calculate the tightest "sane" stop at 7,257 points. But realistically, below 7,318 points would cause raised eyebrows, if such a movement occurred following an upward trigger.

If we review converse arguments, the index requires weaken below 7,257 before we dare take any reversal seriously. Such a triggering motion allows travel down to an initial 7,224 points with secondary, if broken on an initial drop, at 7,181 points. If triggered, the tightest stop is at 7,308 points.

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