FTSE 100: Warning signs you should look out for

The market is now trading below this year's uptrend. Our chartist raises his concerns.

FTSE for Friday

Unusually, this is a report I'd prefer not to write! Why? Because the market is making little sense presently.

August is supposed to be a bit boring and predictable, except now there's a combination of Mr Trump & Boris and it seems the world doesn't know how to react.

There's often a reversal in the markets at the end of July / start of August and we often feel it's the case of the markets being "parked" during the holiday season.

This allows a bit of volatility but strong movements are never expected until the grown-ups return in September.

This year has been just a little different and the FTSE 100, for instance, has been abandoned in a region where the big picture promises reversal down to 6,600 or so.

As the chart below highlights, the market is now trading below this year's uptrend, only needing some negative force to drive a dangerous and sharp reversal.

Taking the attitude of the market indeed being parked, it appears anything near term on the FTSE above 7,286 points should prove capable of a lift to an initial 7,332 points.

If exceeded (and we do not expect all this on a Friday!) our secondary calculation is at 7,408 points.

As the chart illustrates, the primary target indicates a challenge return to the red uptrend.

If the secondary is achieved, it will appear the drop was indeed inspired by the holiday mood and we should hope for further recovery as the month continues.

Of course, we'd be remiss if we didn't peer into the abyss...

It looks like the index now requires to fall below 7,207 points to cause anguish as this calculates with an initial potential of 7,185 points.

If broken, secondary is at 7,156 points. Visually, there is reason to hope for a bounce, should 7,156 make an appearance.

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.