FT350 Industrial Transportation index makes interesting moves

Price at time of writing - 2909

In a slight departure from my normal take on global indices, today I look at the state of global equities through the UK Industrial Transportation index.

A rising Industrial Transportation index is often considered a good bellwether in measuring the health of the economy, and indeed the broader stock market. For the record, the Dow Jones Industrials index remains in rude health and on track to achieve my long-term target of 16,175.

In line with other leading share indices, the UK Industrial Transportation sector index established a unique low in early 2009, having hit its last line of support at the crucial G3 level (calculated as a decline of 75% from its all-time high). The index then rallied to meet standard resistance that follows a 100% advance, and duly entered a six-month period of consolidation (at a level just shy of its important G1 level). After breaking above this resistance in March 2010, the sector galloped ahead to its next band of resistance centred around 2650. This resistance contained the advance for the next two years.

In an important recent development, the sector index has broken above these containment lines, allowing a refreshed index to complete some minor upside targets. The main targets, however, lie in a band of resistance defined as 3138-3188. This 50-point band now becomes the new upside target, whereupon a 200% advance from the major low in 2009 will be completed.

This sector index is readily tradeable, and you can find it on our platform in the Indices section, under UK Sectors I-Z.

Recommendation: buy. Target 3140. Stop-losses can be set to trigger on any surprise weakness beneath 2650.

Industrial Transportation index chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.