FTSE for Friday: the route to its pre-pandemic high

Analyst Alistair Strang takes his regular look at prospects for the UK’s top index. He takes a peak at Australia too.

Wincing while making a report on a dead parrot, starts to feel different this week. Maybe, there is a faint heartbeat from the #FTSE, the UK’s resident deceased avian! 

It’s worth remembering we’re still awaiting the UK reaching the starting point where the index can reasonably be expected to move from recovery to growth. As this level is around 7,550 points, with the FTSE now at 7,076 points, there remains distance to travel until the UK reaches “the starting point”.

As most other countries have been trading above their pre-pandemic highs for some time, we can hope the FTSE discovers sufficient strength to reach the start line fairly fast. For instance, Wall Street kicked things off last November, Germany celebrated the start of 2021 by finally passing its pre-Covid high, and even France joined the party at the start of April. 

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The Australian market, the ASX 200 is currently prowling seductively at the starting line and we’re curious how long it shall take to “kick off”, experiencing a surge toward the 7,850 level. At time of writing, Australia is trading around 7,100 points and a 10% rise will prove worthwhile, confirming a desire to attain new all-time highs.

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

To return to the FTSE, we still need to search for strength capable of bringing the UK up to the 7,550 level. As always, please remember we are discussing the real time market and not after-hours futures!

The index closed Thursday’s session at 7,076, needing above just 7,088 to trigger a cycle toward an initial 7,125 points. If exceeded, we calculate a secondary at 7,182 as a viable ambition. If triggered, the tightest stop is painfully wide at 7,000 points.

Despite these targets obviously falling far short of our growth trigger of 7,550, an interesting aspect of the calculations is our secondary level. 

In the event the UK finds reason to trade above 7,182, the market hits a Big Picture trigger level, one which should promote a longer-term concept of growth to 7,719 points with secondary, if bettered, a very sane looking 8,069 points. This will suffice to confirm the FTSE moving into the future with other grownup markets.

The converse argument continues to recede, now requiring the FTSE below 6,760 points for concern, along with sharp reversal potential to 6,265 points.

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.