rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

After FTSE 100 breakout, where next?




By Alistair Strang | Thu, 18th February 2016 - 09:35

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After FTSE 100 breakout, where next?

We keep promising ourselves only to discuss the FTSE 100 (UKX) a couple of times a week, but recent shambolic moves require coverage. Hopefully, just hopefully, the movements experienced on the 17th actually have some real implications.

There was a strange phenomena with the shares we cover daily, and on the 16th we discovered only three that actually needed an update. While we padded our output with a few more, we gave the caveat of "this sort of thing often being a precursor to a change in market direction".

It appears we were correct.

The market had been trading in a region where the logical bottom was 4,950 with the result of us frantically looking for valid escape attempts. Our Wednesday lunchtime calculation for clients highlighted something exceedingly strange and it's reproduced below:


UK FTSE: Price at time 11:23AM of production 5957 Trade Type: LONG . Entry: 5960 Exit: Safe exit at 5981 or longer term secondary at 6199 Minimum Stop (in our opinion): 5922 Number of Points in Trade: 21 Secondary looks a bit unlikely

The reason for the 218-point gap between the primary target and the secondary was simple. Once the market started trading above 5,981, it officially broke trend - essentially moving from a near-term perspective to a Big Picture perspective. We'd require clown suits and red noses to accept 6,199 is expected anytime soon, experience teaching us that when something breaks trend, a new trend develops.

FTSE 100

Don't get us wrong, the market has moved from "going down" territory into "not going down" territory, so optimism is permitted. The FTSE Futures market has, at the time of writing [23:12 Wednesday], bettered 6,040 and we're tending to suspect that the initial breakout ambition might be 6,080 points. If above such a level, we're probably going to need the drool wiped off our keyboards as even our 6,199 calculates as slightly conservative!

Importantly, in this week, we've seen the first signals the market has actually bottomed with retail banking exhibiting what passes for integrity with recent rises, along with the food retailers showing surprising strength. The builders seem a bit dodgy still and the oil sector seems only to be favoured amongst a few companies. And of course, the miners appear to have stopped digging holes for their victims' investments.

All this leads us to one conclusion and it's of the UK needing a Valentine's Day every week to drive optimism... Or maybe not. But the market would now need below 5,890 to scare us silly again!

Update:

The Futures suggestion against the FTSE 100 in the Futures Section is insane, but there are currently no sensible target levels between 6,080 and 6,275. If we switch to the 'actual' FTSE itself, the 6,199 thing intrudes, but it is still one heck of a jump.

The problem comes from the large drop on February 8th as it tossed an extra 220 points into the arguments. We'll hopefully be able to make more sense by lunchtime.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. 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.

don't know when that article was dated/timed, but SOUTH is the order of the day, and probably even more heavily tomorrow

my money and mouth are already married and may extend

That article is just opinion cynic, I'm still bearish.

as i just wrote on advfn re eu negotiations....

it most certainly worries me that i cannot see uk regaining any meaningful rights to block legislation and similar that are not in the country's interest - interestingly, germany seems to have such a safeguard via its constitution; nuts!

nothing to do with trust, but a view of what might be achievable - or indeed might have been achievable by anyone

just shorted DOW 16454

limit up at 16,405 b4 bedtime :-)

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amazed that markets are positive this morning given the news (nonsense) coming out of brussels

Yes me to, but early days so to speak.

50DMA was about the hıgh of the rally for now.

shorted DOW at 16,378 but as i can't be glued to the screen, have set limit at 16,305

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missed making a small profit on DOW but got out at b/e

Fts come up trumps again for me today.

on short tack i presume ..... not at all sure what monday will bring ..... modest applause i'ld guess though it may not have longevity

Presumption correct, in and out has been working well for me since Dec.

your prediction for the direction on monday?
shan't hold you to it, i promise :-)

I don't do predictions these days (got it wrong to often in the past) so I now tend to like to know what has happened O/night from the far east. Only then does it give me some room for consideration.

Between now and June the EU carve up ıs not goıng to help FTSE ıf we get a few polls showıng Leave!!!!!!!!!!!!

what about monday morning? :-)

By the close I reckon we wıll be lower.

and to open or say within first 30 minutes?

Down after 30 mıns.

i'm getting to that conclusion myself not least because uncertainty continues and could even become more acute