Sometimes the start of a new year and a new decade foreshadows significant changes on the stock markets; 1999/2000 being a relatively recent example of the causation of marked directional change. But the 2009/2010 year and decade change looks to signal no such dramatic changes; the signals all seem to suggest that it is a case of ‘more of the same’.
Somewhat boringly, therefore, we continue to draw attention to the 1122 level on the S&P 500 index as being the major indicator likely to affect not just the US market movements but also the future direction of the UK’s FTSE indices.
If the 1122 level is exceeded then the US and UK stock markets are likely to power ahead. In turn this could take the FTSE 100 index up to the 5750 level very quickly. On the other hand if 1122 continues as a source of resistance the indices will become increasingly tired and will start to decline. Should that coincide with any significantly bad news (e.g. a national credit rating downgrade or a poor general election result) then the UK stock market could drop like a stone.
In a recent article the Daily Telegraph Business News referred to “The FTSE 100’s lost decade” highlighting how the last 10 years had failed to produce any growth. The FTSE 100 closed at 6930.2 on the 31/12/1999 and, 10 years later, on the 31/12/2009, it closed at 5412.9. But we know different. The last decade was a decade of opportunity for profit – as will be the coming year and decade. As ever, timing is and will be the significantly important influence but when share prices move up or down there is the opportunity to make profits when using the spread betting or CFD derivative contracts. And the coming year, let alone the coming decade, will present us all with fantastic opportunities for profit generation. As now, timing and management and curtailment of losses will be the keys to success.
So, what do we expect the stock market to do in 2010? We provide two illustrative charts.
That of the FTSE 100 shows that we rate a 65% chance that the index will move up to, and through, the 5750 level by the year end. In fact 5750 could be achieved by the early Spring (if the 1122 level on the S&P 500 is broken to the upside). This chart also highlights the point made by the Daily Telegraph of a useless decade for those who just ‘buy and hold’ shares irrespective of the main trend of the market).
(Click on the chart to expand it)
We provide a seprate chart for the FTSE 250 as this index is more representative of ‘UK Plc’ than the more internationally based FTSE 100 index. Here you can see how much more dynamic the last decade has been. Closing at 6444.9 on the 31/12/1999 the FTSE 250 closed at 9306.9 on the 31/12/2009. Our analysis suggests that this index faces more of a challenge to get back up to its peak (at 12210) but we are still able, currently at least, to rate the chance of so doing at 60%.
(Click on the chart to expand it)
We use 8 indicators when assessing and identifying the dominant trend of the market (or of any individual share). Currently –
FTSE 100 shows 6 of 8 as positive – giving potential for a rise to the 5750 level
FTSE 250 shows 5 of 8 as positive – the index will struggle to get to 9610 level
And, for the determining S&P 500 index we have 6 out of 8 indicators – with the index battling with resistance at the 1122 level. A rise as far as 1290 is possible if/when 1122 is overcome. Note: our ‘Momentum Indicator’ which was so positive during December has stalled and is showing slighly negative – but that is likely to be a cause of the lower trading over the holiday period. We hope so as the Indicator needs to show positive if there is to be any chance of an upwards breakout.
Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/
Recent Comments