How long will this latest FTSE 100 bounce last?

Our chartist explains what must happen for the main index to escape the immediate downtrend.

FTSE for Friday (FTSE:UKX)

This week has proven quite thrilling, possibly in a similar fashion to the thrill a hedgehog feels while crossing the M25!

There are early signs the hedgehog has reached the central reservation, possibly attempting to convince itself the worst is over...

I suspect the current recovery on the FTSE 100 shall prove short lived. But, for now, attempts are being made to join the hedgehog in its temporary sanctuary. My reasoning for this disbelief comes from two arguments.

Firstly, the market requires exceed 6,000 points to escape the immediate downtrend. Secondly, the force of market reversal broke all our drop trigger levels, therefore making proper market recovery unlikely. But of course, there is generally a chance to grab a near-term bounce, if feeling brave. 

Unless, of course, some sort of coronavirus miracle occurs and, in such a scenario, the FTSE 100 will recover like a rocket.

Near-term, movement exceeding 5,420 points should prove capable of an initial 5,483 points. If exceeded, my secondary calculates at 5,660 points and visually, there is justification for hesitation at such a market level.

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

S&P 500

From our perspective, the immediate market cannot be trusted to give trend lines any particular meaning.

The S&P 500 provides an excellent illustration for the state of the markets, the index making an utter joke of any attempt to paint a downtrend, an unrelenting picture of despair as it lost 1,000 points in a month.

While the trend line can obviously be nudged around the screen, about the only thing remaining is the word "maybe" if attempting to pick a signal for recovery.

Instead, we prefer our own methods at present, demanding near-term calculations be exceeded before daring to exhibit any real hope for a bounce.

To use a technical term, the market is "pretty insane" currently!

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.