The Overall Market Rating (‘OMR’), by which we measure the market’s strength and dominant trend, for the FTSE 350 has not changed much over the past few weeks except to slowly increase. However, there has, over the last two weeks, been a material change in the number of stocks that have moved from their Basing ‘Stage 1′ trends and matured into ‘Stage 2′ Uptrends. This confirms a strongly based general market Uptrend so, whilst we expect occasional retracements (one such is due soon) the general movement should continue upwards.
There is an interesting 9-week cycle that has been operating on the FTSE 100, 250 and SmCap indices. Looking at the FTSE 100 particularly, the index rallied to the Sept’08 high from which it then fell for 9 weeks until it made the Mar’09 Low from which it then rallied for 9 weeks; then it drifted sideways and down for another 9 weeks until mid 10th July since when it has rallied again. And this current rally is now 7 weeks old.
So, maybe, the market is going to squeeze upwards for another two weeks. But don’t put your shirt on it as the FTSE 250 (also in the 7th week of the rally) is hitting its head on potentially strong resistance at the 8888 level. It is the FTSE 250 that has led the way – into downtrend; out of downtrend into Accumulation and then in to Uptrend so it is worth watching closely. If it manages to keep to the 9-week cycle then it might rise to the 9150 level before dropping off.
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