Two big rules for FTSE 100 tipsters
14th December 2018 09:05
by Alistair Strang from Trends and Targets
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With Brexit sending the blue-chip index lower, chartist Alistair Strang shares some tips for predicting where stocks might go next.
FTSE for FRIDAY (FTSE:UKX)
To suggest the FTSE 100 is nervous at present would be a gross understatement.
On Wednesday this week, the market repeatedly illustrated highs at 6,902 points for four hours.
Generally speaking, when this sort of thing happens, any break beyond such a level will "always" provoke some sharp upward travel.
From our perspective, it's one of the big rules.
Unfortunately, we've another big rule; beware of opening spikes!
The FTSE indeed bettered 6,902 points, precisely 60 seconds after the index opened for trading. It almost felt the market had conspired against us.
The index spiked above the trigger level to 6,908.48 points for a second, then spent the rest of the day wasting everybody's time. Our inclination is to review what occurred a week ago in the hope of spotting where the trend changed.
This has created an interesting situation, one where we dare not express hope in FTSE moves upward until it now exceeds 6,920 points.
Such a miracle allows travel to an initial 6,960 points. If exceeded, secondary calculates at 6,982 points allegedly. We say "allegedly" as this would propel the UK index into a region where 7,166 and beyond is possible longer-term.
The other side of the coin looks like weakness continuing below 6,810.
At present, this allows travel down to an initial 6,785 points where some sort of bounce can be hoped.
But if broken, our secondary calculates at 6,740 points. This would take the market dangerously close to red on the chart as closure below will make an excursion down to the 5,800's hard to avoid.
Quite curiously, this matches the lows of the FTSE, the morning after 2016's Brexit vote...
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.
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