Interactive Investor

FTSE 100: forecast for 10 July 2020

More fears about the global pandemic shook markets yesterday, but hitting this level is good news.

10th July 2020 08:50

Alistair Strang from Trends and Targets

More fears about the global pandemic shook markets yesterday, but hitting this level is good news.

FTSE for Friday & the DAX

Sometimes it feels like the FTSE 100 cannot pass a cliff without throwing itself off. Whereas Germany's DAX appears to see a cliff and try to climb. Is it a Covid-19 thing, or is it a looming UK internal problem?

A fairly simple illustration comes if we view each indices's rate of acceleration since the 16 March Covid-19 drop.

For the FTSE to equal the DAX's pace, it would already be showing a recovery high at around 6,800 points.

Instead, the best we've seen has been a slovenly 6,500 points, and worse, the UK index appears to have faltered recovery and now, to be blunt, is getting scary.

The DAX ,the other hand, achieved 12,900 points, whereas had it moved at similar pace to the FTSE, the best we'd expect would be 12,000 points.

The implication gives a 7.5% better pace for Germany. 
 
Germany on the other hand, presently trading around 12,500 points, seems no more frightening than a Donald Trump drunken late night tweet.

The immediate situation against the DAX suggests weakness below 12,450 risks losing a few hundred points as the index collapses to a trend testing 12,209 points.

We'd certainly be concerned if the market opts to spoil the party by gapping (manipulating) the index below the immediate red uptrend (12,200 points) anytime soon, as this risks some fairly nippy treatment.

Such a scenario will imply coming weakness to 11,650 with secondary, once any fake bounce completes, at a bottom (hopefully) of 10,870 points.

We've used the word "hopefully" deliberately, thanks to weakness below this red uptrend taking the index into a region where 9,200 calculates as an eventual drop level; but only with a bunch of other criteria satisfied.

That's about the end of the misery department as the DAX only need better 12,850 to enter a zone which threatens further recovery to 13,300 with secondary at a fairly useful 14,000 points.

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

As for the FTSE for Friday, as mentioned, the UK market did its usual Lemming thing on Thursday, creating the situation where weakness next below 6,040 should bring the index down to an initial 5,990 or so.

Hopefully, it rebounds from such a level as travel below calculates with 5,920 as the next point at which we'd hope for a rebound.

At present, we'll not be inclined to regard a miracle recovery on the FTSE (as always, we are discussing the live market, not after hours futures) unless the index betters 6,090 as this looks capable of recovery to an initial 6,127 points.

If exceeded, secondary calculates at a useful 6,185 points and will imply Thursday's drop should be treated as "fake" with the promise of further recovery.

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

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. 

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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