FTSE for Friday: forecasts for the blue-chip index
12th August 2022 08:09
by Alistair Strang from interactive investor
Independent analyst Alistair Strang highlights a profitable potential scenario for brave souls with patience.
We suspect the FTSE is avoiding doing anything useful during the holiday season. There's the extremely obvious blue line, currently at 7,646 points, and despite several arguments favouring movement towards it, the index assiduously avoids taking the initiative.
This nonsense is creating a situation where we expect the FTSE will spend the rest of the month dodging around between the 7,420 level and 100 points higher at 7,520. If we are correct, this certainly creates a profitable potential scenario for those brave souls with patience, effectively enabling anyone to take their best shot from halfway with a 50-point stop.
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Obviously, the halfway mark is at 7,470 points and by amazing coincidence, the FTSE closed yesterday at 7,469.83 points, pretty much bang on halfway.
Past performance is not a guide to future performance.
The immediate situation presents a picture where weakness now below 7,460 is supposed to present reversal to an initial 7,444 with secondary, if broken, at 7,420 points and hopefully a rebound. This, certainly, would be in accordance with our scenario, also presenting a situation where a long position could be opened at 7,420 with a reasonably tight stop, perhaps around 15 points below. The choice is yours, though.
Should there be a successful bounce from the 7,420 level, we would hope it would make its way towards an initial 7,450 points with secondary, if bettered, around 7,480 points. Then, we suspect it will settle back to the halfway mark before next time attempting a surge upwards.
Perhaps it is the holiday season, permitting such whimsical nonsense but it is quite strange how recent price movements are tending to adhere quite firmly to our calculations, almost confirming our often-repeated suspicion of the FTSE being “parked” for August, unless any world events start to drive contrary behaviour.
This would be a bit of a pity, because we are starting to enjoy the wonderful weather and feeling increasingly smug that we haven't scheduled “leave” until October.
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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