Interactive Investor

FTSE for Friday: how big could the next fall be?

17th September 2021 07:33

Alistair Strang from Trends and Targets

After a largely sideways summer, independent analyst Alistair Strang assesses the odds and potential scale of a sell-off.

We’ve reason, yet again, to be slightly nervous with the FTSE 100 from a Big Picture perspective. The index is now on its ninth uptrend, since October last year. Most of the ducks appear to be lined up, just awaiting a final trigger for reversal to commence to a potential 6,830 points. 

It’s not a pretty picture and below 6,998 points looks like providing the final trigger. In terms of reversals, this certainly isn’t a crash of biblical proportions, but below 6,830 would certainly justify real concern. To escape this mess, the FTSE need only close a session above 7,069 points.

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

As for Friday, the market is mildly interesting, as weakness below 7,016 points looks capable of triggering reversals to an initial 6,985 points. If broken, our secondary calculates at 6,949 points. 

Given the market closed Thursday at 7,027 points, very little movement is required to light the touch-paper, but we’d advocate extreme caution, if such a trigger is hit by a spike down (again) in the opening minute of trade. The tightest stop appears to be 7,059 points.

Our alternate scenario comes should the FTSE stumble above 7,059, as this apparently makes 7,096 a viable ambition. If exceeded, our secondary is at 7,116 points, along with a strong hint of some further recovery in the coming week. 

The tightest stop, in this game plan, is quite attractive at 7,025 points. Our usual caveat, regarding any opening second spike remains.

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.