FTSE short recommendation triggered

Price at time of writing – 6510.

In last week’s update I suggested selling the index short on an expected rally back to 6620.

With the intraweek high recorded at 6645, this recommendation has been comfortably triggered. By Friday’s close the FTSE 100 was again on the back foot, with my short recommendation very much intact.

Although Friday’s intraweek low was marked at 6421, the FTSE did manage to close the week in the midst of my former target band 6491-6556. This band is likely to continue to influence the index in the months ahead, and indeed provide some degree of short-term support. In my chart last week, I mentioned three Gann-theory percentages that would probably play a key role in the current correction. These three percentages measured falls of 6.25%, 8.33% and 12.5%, and were all derived from the recent high. Friday’s low at 6421 fulfilled the first of these percentages, and the fact that the index bounced from this level provides us with more insight into the future.

Ironically, the bounce from 6.25% lessens the chances of the next line (representing an 8.33% fall) providing much support. Instead, it increases the likelihood that the FTSE will ultimately fall by 12.5% from the recent high, to a level at 6008. Consequently, my target at 6293 is at risk of being lowered further. A break below 6437 is needed to trigger the next round of falls, however.

Recommendation: stay short. Target 6293 (with a bias to lower this to 6008, however).

FTSE 100 chart


IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.