FTSE for Friday: assessing potential for a record high
Recent performance has been more impressive, but can the FTSE 100 make a move above 8,000 stick? Independent analyst Alistair Strang runs his software to find out.
5th April 2024 07:36
by Alistair Strang from Trends and Targets
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The UK index, at around 7,975 currently, has almost achieved the unthinkable, needing only to close above 8,015 to move the index into the realms of all-time highs.
What’s annoying are the number of FTSE 100 constituents whose share prices continue to languish in the gutter, but the value of the index gains, due to the relegation of companies like Hiscox, Johnson Matthey, Hargreaves Lansdown, etc with other companies like Persimmon shuffling out to the FTSE 250, then being readmitted when their market capitalisation was perceived to have improved in relation to existing members of the main UK market.
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In other words, the LSE takes care to ensure the FTSE 100 reflects the largest companies, the numeric value of the index really not reflecting how well constituents are actually doing. Or in plain English, the FTSE flirting with the 8,000-point level provides absolutely no certainty Lloyds' share price shall shoot up, Glencore could continue pretending to be interesting, and BP continues to look like an untroubled puddle of oil despite the index appearing to flourish, due to the revolving door for companies whose market cap meet criteria.
But the FTSE 100 does look like it's on the edge of becoming entertaining.
Near term, above 7,991 points should prove interesting, calculating with the potential of movement to an initial 8,023 points with our secondary, if beaten, working out at 8,070 points. If triggered, the tightest stop works out at a fairly reasonable 7,943 points.
This secondary of 8,070 would represent a new all-time high from intraday trading levels, the prior offering of 8,047 points achieved on 16 February last year. But our rigid in-house rule demands both share price and index levels actually close a session above a prior level to make strength for the future a more comfortable proposition. As mentioned earlier, this demands the FTSE close above 8,015 points.
Below 7,943 points shows with the risk of triggering reversal to an initial 7,912 points with our secondary, if broken, at 7,850 points.
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.
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