FTSE for Friday, the AIM market and forecasts for Nasdaq
4th November 2022 07:32
by Alistair Strang from Trends and Targets
At the end of a big week for central banks and interest rate rises, independent analyst Alistair Strang looks at the UK's top flight stocks, smaller companies index and the main US markets.
We’re waiting with baited breath for the FTSE 100 to burst into life, the UK’s main index again achieving a “higher high” since closing above the point of trend-break on Tuesday.
Okay, so far things are proving about as exciting as a report on Facebook's (Meta Platforms Inc Class A (NASDAQ:META)) share price, something we still suspect shall bottom by $77. It’s currently in the 80’s.
But for the FTSE, on Tuesday it closed a whole six points above the trend-break level, and Thursday's close was eight points above the trend level. However, it’s the AIM which is of immediate concern.
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Currently trading at around 809, the AIM needs to exceed 861 points to exceed its personal Pandemic trend-break level and cause an outbreak of enthusiasm. Thankfully, this index doesn’t need to try terribly hard to kick itself into life.
Past performance is not a guide to future performance
At present, we’d regard 825 as a viable trigger level for the AIM, a number which should trigger movement to an initial 842 with secondary, if exceeded, working out at 867 points. This should permit this index to close above the critical 861 points and, as a result, discover itself trading in a zone where a longer-term attraction should be viewed at 1,098 points.
Perhaps it shall be the case the AIM will discover its own little patch of sunlight and start some recovery, maybe even with one of these mythical Santa Rally events. Otherwise, it’s actually trading in a zone where our ultimate bottom works out at a silly looking 575 points.
FTSE 100
Things are becoming a little concerning, thanks to efforts in the USA and UK to derail economic hopes with interest rates. The latest Bank of England projections suggesting they’ve successfully forced the UK into recession for the next couple of years will prove especially worrying for folk with variable mortgages, reminding of a lyric from a (terrible) David Bowie song “Putting out the fire with gasoline”.
We’re more than a little puzzled “they” opted to wait until the FTSE was showing signs of recovery before acting. In the USA, things are already looking quite fragile, and now it appears the Nasdaq intends to bottom at around 9,200 points. Similarly, the S&P 500 looks like it may struggle to avoid a visit to the 3,000 point level but, conversely, Wall Street isn’t showing any great signals for calamity, needing below 31,550 to raise the first eyebrow.
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Near-term, the FTSE 100 below 7,075 points looks capable of reversal to an initial 7,031 with secondary, when broken, down at 6,968 points and hopefully a bounce. If triggered, the tightest stop looks reasonable at 7,121 points.
Past performance is not a guide to future performance
Our alternate, happier, scenario from a world which promotes the concept of the UK market heading to 7,467 points, suggests strength above 7,208 points should take aim at an initial 7,251 with our longer term (or later that day) secondary ambition working out at 7,331 points. Hopefully our little bit of sunlight also shines on the FTSE.
Have a good weekend.
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.
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