Interactive Investor

FTSE for Friday and Nasdaq analysis too

11th February 2022 10:06

Alistair Strang from interactive investor

The FTSE 100 is clearly wearing a superhero mask, says independent analyst Alistair Strang, who also considers the future direction of the Nasdaq.

With all the controversy about vaccines and masks, a decision to wear a different type of mask to a hospital appointment provoked some interesting results. Immediately recognised as, unlike in films, they don't hide your identity. More importantly, the nurses were in hysterics, the ward sister gleefully 'borrowing' the superhero mask for a staff meeting. It appears that the FTSE is also clearly wearing its own version of a superhero mask.

Witnessing a day, where the FTSE yet again did well, despite a backdrop of the Nasdaq down 2.3%, Wall St down by 1.5%, France down, and Germany flat, the UK market has continued to excel in the initial optimism that followed the pre-pandemic high being exceeded.

Unfortunately, the market is now facing the next major hurdle. It closed Thursday at 7,672 points, marginally below the previous high in January 2020 of 7,674 points. We'd be comfortable if Friday would again experience gains, if the UK index just managed a few points higher. However, the visual implication given by this behaviour may be of slight nerves in the marketplace. Even the day high, at 7,687 points, proved slightly below the previous high on the blue trend at 7,689 points. Perhaps we are being a little pedantic, but we are more than a little curious as to what level the FTSE will run out of steam, while it catches up with the previously flamboyant nature of other markets in the world.

The immediate situation for the FTSE 100 is pretty straightforward as movement above 7,688 points should next target recovery to an initial 7,714 with secondary, if bettered, at 7,770 points. If triggered, the tightest stop looks like 7,622 points.

Our alternate scenario allows weakness below 7,622 to provoke reversals to an initial 7,579 with secondary, if broken, a bottom of 7,613 points and, hopefully, a proper bounce. The index now needs below 7,380 to justify real panic.

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

As for the Nasdaq, it feels difficult letting a 2.3% reversal pass without comment. Presently trading at 14,705 points, the market requires below 14,450 to justify ongoing concern as this calculates with the potential of reversal to 13,755 next. If broken, our secondary works out at 12,941 points and visually, we'd hope for a rebound. Given price movements on the Nasdaq this week, we're already resigned to 13,755 making 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. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.