FTSE for Friday and the price of wood
20th August 2021 07:50
by Alistair Strang from Trends and Targets
Share on
Independent technical analyst Alistair Strang gives his view of the blue-chip index and why he's worried about the cost of timber.
An experience visiting a local timber merchant brought a new sentence to the table; “and what about the price of wood?”
We fear this may become important to the stock market, perhaps the wider economy. The problem is pretty basic. Wood has gotten seriously expensive, tripling in price during the last few months.
If we zoom out and regard this from a bigger picture stance, timber is such a basic building material and the need to re-cost future works must be giving problems. A call to a chum confirmed the issue, his company supplies and fits kitchens. Sales have declined to the extent he’s opting to close this part of his company.
The point behind this diatribe is an unpleasant suspicion a reality bomb is going to hit the UK markets in months to come.
As for the FTSE for Friday, the immediate drop (blamed on publication of Minutes from a US Federal Reserve meeting) produced a pretty vile Thursday and we suspect the story isn’t yet over.
At present, the FTSE needs to climb above 7,100 points to convince us weakness below 7,020 points shall probably trigger reversal to an initial 6,955 points next. If broken, our secondary calculates at 6,722 points and hopefully a proper bounce, should it be achieved.
Should the FTSE manage to clamber above 7,100, some slight gains appear possible toward an initial 7,125 points. If bettered, our secondary works out at a more useful 7,160 points. The important aspect to this secondary ambition comes from the Blue downtrend on the chart, the line which dates to the days before the pandemic hit the fan. Conventionally, regaining such an important trend will prove critical as strong recovery usually follows.
Once again, we end the week with the classic “It’s Fingers Crossed Time For The FTSE!”.
Have a good weekend.
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.