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FTSE 100: Planning for the worst, hoping for the best

Last updated: 19:00 28 Aug 2015 BST, First published: 09:00 29 Aug 2015 BST

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Firstly, thanks for the emails regarding last week’s article. I wish I could write every week about near 500 point movements but alas, this week I’m only able to speculate on 165 point rise.
At time of writing, the market has not triggered my final criteria for a rise.


The FTSE 100 is fumbling along at 6,178 and needs trade above 6,195 to tick the final box for a rise to 6,337, with secondary 6,363. Hopefully by the time this is published, it will indeed have achieved such a trigger level.
But, be warned Footsie is in really dangerous territory and unless it manages to better the red line, I’ve little choice but to assume future weakness below 5,766 will lead to an initial 5,624 with secondary a probable 5,253.

Every now and then, someone asks me about my obsession with the 5,157 level. It’s painfully simple, since 1997 the market seems to have used this level as a pivot point on a weakening cycle.

If the FTSE 100 closed below it, we’re probably about to experience dentistry without anaesthetic.  Or a drop to around the 3500 level!

However, on the basis I’m simply being grumpy about the UK’s lazy behaviour in not following the rest of the major markets, something quite impressive is available in the event the market manages to climb back above

RED – currently 6,485. This will represent a true miracle as it carries the promise of longer term growth to 6,907 as a major point of interest.

If I’d to guess, I suspect the FTSE 100 will follow the rest of the world’s markets and experience a miracle abovered, turning the China Crisis into a bad memory. Or a warning of bad times ahead.

Experience with shares has taught a break of a major trend followed by panic recovery is a good thing. But if that trend is broken again, generally investing in running shoes is advised.

Alistair
Alistair Strang is founder of www.trendsandtargets.com and an all-round grump about the Footsie.

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