New FTSE 100 target and why this analyst loves Aussie stocks

Markets have taken a tumble in both hemispheres, so our chartist looks at potential here and down under.

FTSE panic and Australia too (FTSE:UKX) 

Closing the session at 7,078 points, we shall be quite interested if the UK index manages above 7,128 on Friday. This is liable to be significant, allowing recovery toward an initial 7,184 points with secondary, if bettered, at 7,214 points.

Our emergency commentary in our previous report proved worthwhile, if somewhat weird. We'd suggested the market would probably bottom at 7,027.

For those willing to cross their fingers and enter at such a level with a long, we'd proposed a stop down at 6,982 points. The market hit our target, bounced a little, dropped below target, bounced and again reversed to target.

Then bounced properly to 7,100 points. All it now needs is above 7,128 and we'll start to suspect bottom has been achieved - for now.

Remember, of course, the UK has a secret volatile weapon called Boris, capable of havoc.

Below 6,982 points risks reversal in the near term down to 6,950 points. If broken, secondary is at 6,900 but to be realistic, it could drop further to a "must bounce" bottom at 6,750 points.

On the chart, we've painted a red uptrend. In honesty, we doubt uptrends or downtrends for the near term hold any real meaning at present.

Source: TradingView Past performance is not a guide to future performance

Despite the nation being notorious cheats (at sport), Australia boasts a stock market which pretty well plays by the rules.

Unfortunately, the last few days saw the market's climb to 6,850 derailed - probably just delayed - as the rest of the world decided something had spooked the markets. We're not entirely confident the gates of hell actually have opened. 

At times, things felt like; "the Saudi Oil Panic didn't work, let's try something else to slow things down!" This, of course, would be utterly ridiculous, would it not?

In the case of Australia and its ASX200 index, the market need only exceed 6,555 points (6,502 at time of writing) to give the first suggestion of bottom being "in".

Such a miracle allows a surprise recovery cycle to an initial 6,697 points. If exceeded, secondary is at 6,800 but, the big picture almost demands the market top out at 6,850 points. 

This is why we like Australia, thanks to the usual integrity of movements. If the index ever closes above 6,850 points, a big picture cycle is expected to commence toward a long term 8,825 points!

For now, we shall not be entirely aghast if it finds an excuse to bottom around the 6,443 point.

Source: TradingView 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.