The rise in the FTSE last week has taken the index to the same level that it was at 10 months ago. Nothing exceptional about that, you may say. But the point is that this is getting towards the end of the historical maximum period before the market ‘blows off’ – one way or the other.
Looking back over the last 9 years of the FTSE 100 index you can see from the chart below (click on it to enlarge it) that each time there has been a lengthy sideways period (of Consolidation or Distribution) it has been followed by a significant move -
It is during such follow-up moves, up or down, that significant profits can be made.
The current period is further enhanced by the extra compression that comes from the coming together of the two moving averages. These two are good trend identifiers but, when ‘mixing’ together they indicate a building compression which will, eventually, be released by a strong move. And, after 10 months of sidling along, such a move is due soon.
All of this tends to support our view that this Autumn will see the FTSE move decisively.
We are ready for it. Are you?
….but which way is it going to move….? When you say you are ready for it…in what way. Do you mean when you see a slide we short sell it all..? or if it chases up we buy buy buy…?
Sorry i am confused as there is no conclusion to your post – please clarify.
thanks
jonathan
Hi Jonathan,
Good question. I am sorry that we gave no firm conclusion but really no conclusion could be given as the signals are confused and not definitive enough at the moment for us to be able to say firmly that the index is about to travel in one direction or another. By being ‘ready for it’ we mean that we will not be surprised or caught out by a sudden collapse, should it occur. We will try to offer a little more definitive view in our next update although (sales pitch) more detail is always given in our weekly ‘FTSE Forecast’.