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The FTSE 100 Is In a Dangerous Place

We countenance several reasons why and which indicate the fragility of the FTSE’s current position:

1. It is not managing to reach up to test the 6055/6100 resistance area. Whilst it hangs below it is displaying weakness and a vulnerability to a sudden downturn.

2.If/once the level selling should outweigh the level of buying, causing the index to fall even just slightly, that fall is likely to quicken in pace and extent as selling orders are progressively triggered on the way down.

3.It is approaching its 5th attempt at the 6055 resistance area. 5th attempts are usually followed by fast, sometimes excessive, moves whether it is a successful breakout or a failure to breakout. In the present case, a failure to breakout above 6055/6100 would reflect the current weakness and so exacerbate the resulting adverse reaction.

Click on chart to enlarge

On a brighter note the FTSE did manage a small increase last week (just +30 points). It continues to hang around the 5900 area as the market makers wait for some good news as a reason mark up prices to get the ‘bulls’ to buy (with the ‘bears’ waiting for bad news as they wait to sell).

Volumes last week were at, or even slightly above, the average level and with little gain or loss over the week it shows how evenly divided are the bulls and bears. It also suggests that some of them are betting quite heavily – so ‘something’ is likely to happen soon.

Given that what happens on Wall Street largely dictates how the FTSE will react we should now add a 4th reason to our ‘dangerous place for the FTSE to be’ list -

4. The major US indices (DJIA and S&P 500) have not yet managed to overcome overhead resistance and, if they fail so to do, they will fall back and take the FTSE down with them.

Full details and analysis of other markets (Germany, France, China, India, Russia,Brazil etc) are available from ShareHunter’ s latest ‘ FTSE Forecast’ report.

FTSE 100 – Current Analysis

The FTSE 100 is continuing to hold around the 5900 level. The positive take on that is that there is no increase in selling – so investors and the ‘professional money’ are calculating that the FTSE should go higher. And it must – at least to the 6055 area – as a failure so to do would indicate an underlying weakness in the market which would hint at the possibility of a sizeable retracement – certainly back to 5700 and possibly lower.

Click on the chart to enlarge

A big problem could arise if the FTSE falls below 5800 as that could see the start of a spiraling decline to much lower levels.

The picture presented by the daily price chart (above) is that the FTSE wants to rise but, currently, just cannot find the oomph (buying activity) needed to achieve it.

We need to be Long of the market in order to take advantage of the prospective rise in value but, at the same time, we must keep the Stops close in order to protect existing profits and our capital base. The clue is the 5800 level – to fall below that will encourage a more extensive decline; to hold above it keeps alive the prospect of a test of the 6055/90 area resistance (and the hope of a climb up through it).

(Good) Timing is Vital; Don’t play the Waiting Game

Timing is the vital ingredient when investing on the stock Market – and, yet, it is so often left as just a matter of luck (both good and bad).

A common example of bad timing is the investor who “waits until the market is more settled”. The problem with that is that once the market has “settled” it is usually too late as the main, profit producing, rally (which the investor has waited for to confirm that the market has “settled”) will be over.

Investors who have held back waiting to see that a good rally has taken place misconstrue that as likely to continue. They believe that the market has “settled”. What generally happens then is that the market retraces back and the late-entry investor loses money (again).

There is always risk associated with stock market investments and losses are part of the scene but good timing – i.e getting into the market in advance of a possible strong rally – is vital to making money on the stock market.

With this in mind you might like to request our latest ‘FTSE Forecast’ report as this highlights the possible, profit producing, rally that could be just ahead (go to the Home page).

The ShareHunter FTSE 350 Alerts service is second-to none for identifying potentially profitable share ‘buys’ and ‘sells’ and for investing in sympathy with the main trend of the market.

Join us and take advantage of our years of experience and the award winning technical research that we offer our members. Go to www.sharehunter.com to sign up for the Free Trial.

The Wide Boys are out in force..

The Stock Market is a tough place to be right now  - with the UK’s, if not the World’s, economy in the worst condition seen in our lifetime.

And out from the woodwork, almost daily, come the wide-boy and hucksters’ emails offering to sell us their latest “secret” formula for instant success and riches on the stock market!

But the real “secret” of successful stock market investment is to understand that there is no secret –

You simply need the right tools and the right approach.

And these are available from ShareHunter.com

ShareHunter is not new; nor are we wide-boys or hucksters. Our service is genuine and successful – and has been so for the last 10 years.

Our award-winning technical research will not produce instant riches but it will guide you towards making the right investment decisions and help you to protect yourself from the “RBS syndrome” (i.e the 90% losers club).

With ShareHunter you get –

ü  Detailed trading and money management strategies

ü  Top share picks (liquid stocks – no 1p shares)

ü  Daily trailing Stops updates

ü  The chance to follow the professional (big) money investors

ü  A weekly review of where the FTSE is heading

And all for a peppercorn monthly subscription

Sign up for the 1 month Free Trial

Our Special Offer to you:

Even if you cancel after your 1 month Free Trial we undertake to provide you with

our ‘FTSE Forecast’ Reports every week for the next 6 months, completely free of charge.

We cannot make you instant riches but we can help to put you on the path towards a careful and steady accumulation of wealth, without gimmicks or smoke and mirrors and without big up-front or back-end fees.

Come, Join Us, at ShareHunter….NOW, before the next big move on the stock market, and let’s make money together …. www.sharehunter.com

Is the FTSE 100 heading for 6000 again – or onto the Rocks?

There is a positive element at work on the markets which is driving prices slowly upwards and this suggests that the FTSE could, soon, break above 5700 and move, possibly quite speedily, up towards the 6000 area.

BUT

There is not a lot of conviction in the current rallies and there remains the (still real) possibility of a sudden crash. We will not repeat here all of the charts but our warning of a possible collapse in share prices as outlined in our 8th January ‘FTSE Forecast’ report does remain a distinct and dangerous possibility.

UK Small Cap Shares – Best to wait before buying

We have seen  some press comment and the occasional article suggesting that now may be a good time to be snapping up small cap stocks. Well, it may be – but at risk of losing a shirt or two if it all goes pear shaped, as it might. The FTSE Small Cap index is in a Downtrend as its dominant trend (which, of itself, portends lower prices to follow) -

(Click on chart to enlarge)

The important support level at 1910 has failed and the index is now below it which is a signal of weakness but it is about to test for support at the 2700 area (the level of the Dec’09 and Feb’10 lows) and it is important that that area holds by providing support. If it doesn’t then there is potential for the index to fall towards the 2050 level before sufficient support may be found – and, if that were to happen, some large losses would be incurred.

Best stay out of this market until the picture of a final low is clearer.


This is Where the FTSE is Heading…

The FTSE straddled the 5440 support level last week and closed below it. If it stays below it next week then it is on its way down towards the 5000 area again.

(Click on chart to enlarge)

The levels to watch for on the FTSE 100 area -

1. 5760 – if the FTSE closes above this level then continuation of the rally is confirmed and will likely take the index up to the 6090 level area or

2.5440 – if the index closes below this then the Downtrend continues and will likely drag it down towards the 5000 level area (and then lower).

The wider UK market, as evidenced by the FTSE 250 index is still showing a whole lot weaker than the FTSE 100 and is much further away from confirming any continuation of its, so far, short and half hearted rally -

The FTSE 250 -

The levels to watch for on the FTSE 250 are -

1. 10710 – if it closes above 10710 AND above the level of its 30 wk MA then it will rally up to the 11360 area or

2.9420 – a close below 9420 will see the index at 8850 very quickly thereafter.

When you recall the 3500 level that the FTSE 100 reached in 2002/3 and 2009 (Lehman!) one has to wonder why it is still some 1800 points higher today despite all of the doom and gloom of dire consequences being peddled so vociferously over recent weeks.

One can only assume that the markets must be supremely confident that the politicians will devise a satisfactory answer (and, in which case, we are running the risk of being too aggressively short).

But, against that, we need to highlight the potential effect on the market, and to the FTSE 100 in particular, if the politicos  do not get it right; that is represented by the potential for the S&P to crash to 750 and the DJIA to 7000 and for the FTSE to crash to the 3500 area (in which case we might not be short enough!) – as illustrated by the monthly price chart -

The FTSE 100 (monthly) -

Every day last week was a down day. This indicates that the market is getting weaker and makes the idea of a recovery rally that little bit more difficult. However, we must not underestimate the potential for an engineered year-end rally on the markets.

What a 1930’s Style Crash Might Mean

There has been much talk of late, in the press, on television and by the Governor of the Bank of England no less, to the effect that the current World economic crisis could be as potentially as bad as, if not worse than, the Great Depression of the 1930’s.

Well, if that is true and if the stock markets follow a 1930’s pattern then we are all in for a torrid time  -

Here is the DJIA from the 1929 crash thru’ to 1933 (weekly prices) -

(Click on chart to enlarge)

But we have to observe that the markets have, over the last few months (of dire and worsening predictions), held up remarkably well and, so far at least, show little sign of the calamity of a 1930’s style crash and attrition period.

Here is the Current DJIA from 2007 to date -

For the present Dow to mirror the 1930’s Dow it would first have to fall below the 7000 level and then drift down over the succeeding two to three years towards the 1470 area (-89% from the 13362 October 2007 high). That hardly looks likely! Even a collapse to the 7000 level, although not impossible to consider, does not look very likely.

Turning to the FTSE 100, the effect of a 1930’s style collapse and attrition period would involve first a crash to the 3475 level (which will happen if the 4782 support level is broken!) and then a drift down towards the 750 area! -

Again, that hardly looks likely given the degree of support that the 5000 level has been providing for the FTSE let alone the 4782 level which would have to be pierced by a strong down move.

In fact, what seems to be happening currently is that the FTSE 100 is preparing for a sizeable jump. It has been receiving good support and is now in process of breaking out above the 5400 level (which we reported previously it was likely to reach). And now we find that it may be able to gain ground above the higher level of 5650 that we also highlighted earlier; there is now good prospect that the FTSE could jump to the 5770 level before falling back again.

The FTSE 100 (weekly prices) -

But, just so that we don’t entirely lose our ‘jeremiah’ reputation – a rise to 5600 or even 5770 would not preclude the possibility of a subsequent collapse. And any such collapse would have an even bigger impact coming, as it would, from an higher level and perhaps when expectation of it had lessened – there is nothing that old Damocles likes to do more than to swing that great sword of his when we mere mortals least expect it!

Alan Saunders           Chief Analyst,  ShareHunter

ShareHunter – Winning With REALLY Successful Stock Market Analysis

We have been looking back over the last 9 months issues of our ‘FTSE Forecast’ Reports and feel very proud of the way in which we have accurately forecast what would happen to the FTSE.

It is this sort of practical and straight forward analysis that has helped us and the ShareHunter subscribers not just to position themselves correctly and to make money by trading with the dominant trend but also, and so importantly, to avoid losing large chunks of their investment capital by avoiding the sudden downturns in share prices.

Here, by way of example, area  few extracts from The ‘FTSE Forecast’ during 2011 so far -

1. 31st Jan  – “…if the 5770 level holds then the FTSE will rise to 6055 again but if it fails then the FTSE will fall to 5000…”

2. 13th Feb – “…Our special ‘Momentum Indicator’ is continuing to point towards a coming sharp fall on the markets…”

3. 13th Mar – “…The signals presented bu our ‘Momentum Indicator’ show a disturbing divergence for the FTSE (even more pronounced for the S&P 500); something just isn’t right and we all need to be watchful (for a crash)!…”

4. 25th Apr – “…A triple Top is forming – this could lead to a sharp downturn in the FTSE….”

5. 2nd May – “…The FTSE is at an important ‘Either/Or’ juncture – Either it is going to break upwards OR it is going to crash…”

6. 5th Jun – “…The FTSE is finely balanced and could soon start an extensive decline…”

7. 19th Jul – “…Do not be tempted to buy shares now. A Painful time is now due to follow. A fall is approaching and it could be fast and furious….”

8. 15th Aug – “…The markets are building towards a decisive downmove…”

9. 4th Sep – “…Share prices are likely to fall again – and will take the FTSE down to the 4782 area…” (NB. the FTSE fell to 4791 on the 8th Sept!!!)

And, for Autumn/Winter 2011 – “…The FTSE will fall again to the 4782 area and then likely crash as far as the 3500 level”

ShareHunter’s ‘Trend Analysis’ is unique and our forecasts have a high degree of accuracy allowing our subscribers to enjoy successful investment opportunities – in falling as well as rising markets.

Join us!

The Stock Market Turmoil – All our Subscribers Were Warned Well in Advance

Even by current volatility standards today (Thursday 22 Sept) was some day!

But we anticipate (expect!) that not one of ShareHunter’s subscribers  (well, those of you who read the ‘FTSE Forecast’ each week anyway) got caught holding Long trades in such a dire crash.

We have been consistent over many months now in identifying the dominant trend of the markets and of the FTSE 100 and S&P 500 in particular and warning of the likely falls to follow as the trend strengthened and we have been consistently accurate with our forecasts of the levels that the FTSE is likely to reach.

We would, of course, deny that this is a “We told you so” blog …(but you ‘re right. It is).

Today the FTSE has reached the 5000 level that we mentioned in Sunday’s ‘FTSE Forecast’ report – but it hasn’t closed below it, yet! Should it do so then it will certainly fall to test the 4782 level and, should it then close below 4782 (for two consecutive days) then its next major low is likely to be the in the area of 3500!

So, it could be a case of…”a 5% in-a-day crash to 5000?…you ain’t seen nothing yet”!! We wouldn’t mind being wrong but the analysis shows that if 4782 fails as a support level then that is what is going to happen.

We are all due for some exciting times in the coming weeks. And, one day there is, of course, going to be a turning point when an investment into shares is going to create huge wealth over the longer term.

It would pay you to get the support of ShareHunter’s consistently accurate analysis as your guide. Visit www.sharehunter.com and subscribe for just about the best  stock market and share analysis that there is.