A Christmas FTSE for Thursday
23rd December 2021 08:01
by Alistair Strang from Trends and Targets
Monday's slump is a distant memory as investors get into the party spirit. UK shares have now moved sharply higher and could soon threaten levels not seen since before the pandemic, believes analyst Alistair Strang.
Experience has taught there’s usually no point in giving an outlook for the day before Christmas. The half day of trading generally does next to nothing, aside from opening minute movements, then a frenzy of changes in the final 10 minutes of trading. As a result, we’ve decided to review the outlook for Thursday as it’s the last full day of trading before the Christmas break.
Amazingly, it appears some sort of rally is taking place on the FTSE 100, the market now opting to show some useful potentials.
Crucially, if these relatively near-term predictions come to fruition, the FTSE is going to find itself adrift in a region with the potential of a visit to an extraordinary 8,110 points sometime in the future.
Goodness knows what horrors politicians shall consider, if they notice the UK market has moved from recovery mode to growth mode. But then again, perhaps we’re reading too much into what could “just” be a rather delayed Santa Rally, one which could easily fade away by the end of the year!
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From an immediate perspective, it seems we should expect movement above 7,342 points to bring the FTSE 100 to an initial 7,378 points. Obviously, beware an initial spike at the open of the FTSE on Thursday unless the spike is prefaced by a gap. This sort of thing tends make any upward surge in the opening second fairly reliable.
Should 7,378 be exceeded, our secondary target level is at 7,450 points. This secondary target level is liable to prove significant, marking the highest level attained since the pandemic reversals of 2020. If this movement triggers, it looks like the tightest stop loss is quite wide at 7,292 points.
Source: Trends and Targets. Past performance is not a guide to future performance
A word of warning regarding our initial 7,378 target level. As the chart above illustrates, such an ambition matches the blue line, the FTSE downtrend since the high pre-pandemic. As a result, common sense alone indicates the potential for some hesitation at such a level.
The alternate pear-shaped scenario is pretty straightforward. Below 7,292 points risks reversal commencing to 7,260 points. If broken, our secondary calculates at 7,230 points.
On Thursday evening, we shall provide a “FTSE for Friday” scenario. It will be short and sweet, probably glanced at prior to being forgotten as many folk shall be solidly in holiday mode already.
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 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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