Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

FTSE 100 Index Crashes to 6250 - Whats Next ?

Stock-Markets / UK Stock Market Jul 26, 2007 - 10:31 PM GMT

By: Nadeem_Walayat

Stock-Markets The long awaited summer stock market correction finally kicked into gear this week. The FTSE fell sharply by its largest one day fall in some five years to 6250. Before I get to the current technical picture, the writing for the sell off has been on the walls ever since the warnings flashed to financial markets during the China initiated February 2007 sell offs.


There are many fundamental reasons for the sell off, as there always is in these cases. Many where highlighted in past articles over the last 5 months, so without repeating the usual suspects in depth such as the unraveling of the Yen carry trade, and UK inflation led interest rate hikes to 5.75%. I would just mention the most recent suspect, being assumed as the triggering influence to the current sell off in the stock markets around the globe. Which is the recent failure of the Bear Stearns Subprime mortgage debt ridden hedge funds, and the likely further fallout in the financial and banking sectors, which despite making record profits are expected to make significant provisions in the future for bad debts and similar failures in the mortgage and derivatives sectors. Enough of what is, and will be written about by many more authors in the coming weeks.

Technical Analysis of the FTSE 100 Index

My last analysis on the FTSE attempted to fix a market peak to occur sometime during May 07, however at the time there was no sign of an imminent peak given the technical picture, and instead the FTSE 100 has marched on for a further 2 more months delivering a new high for the year at 6754 just over a week ago!

1. Trend Analysis - The uptrend against expectations of correction during much of the summer, remained in an uptrend right up until this week. The minor initial trigger of a potential decline occurred on break of 6575. The stock market sell off gathered momentum and by Wednesday 25th gave the key secondary trigger occurred on the break of the two preceding lows - 6496 and 6451 as well as break of 6450 prev high. This immediately targeted a trend to the Key support trendline at 6300 and key support level of 6255. Which by today's close have both been breached. The next targeting level for the FTSE 100 Index is the ultimate target and major support level of 6000. Which is where the FTSE is expected to trend towards. However, I still view this as a summer stock market correction, and therefore am expecting 6000 to hold and a low to come in above 6000. If 6000 fails, well then I will have to dust down my FTSE charts to see what happens in that eventuality.

2. Time Analysis - The Sell off despite being pretty severe in price terms, has a lot of time on its hand to develop further, original analysis suggested a decline in the order of 2 months, which would take us into early September from the peak. Which suggests the pattern to develop may resemble a double bottom with a probable lower second bottom.

3. Elliott Wave Analysis - I have left the wave counts off the charts, because I fail to see any meaningful count in the current FTSE chart. Elliott wave sometimes works, sometime it doesn't, if you have to resort to complicated double zig zag's and complicated interpretations to try and get elliott waves to fit a chart, then that basically means that you should forget elliott waves on that particular market for the time being. Off course a correction should follow the basic simple pattern of an ABC, which confirms the slightly lower second bottom scenerio as alluded to above.

4. MACD Indicator - The MACD indicator is in full sell mode, and implies intra-day volatility. It also means we could see the first low pretty soon and therefore more FTSE selling in the near term on route towards 6000. After which the pattern may waste as much as 4 weeks on a counter trend rally before making the low.

Summary

The Summer FTSE 100 Index Stock Market Correction is in full swing, targeting a low above 6000 with pattern probability of a double bottom with a lower second bottom by early September. The scenerio is conditional on 6000 holding.

By Nadeem Walayat
(c) Marketoracle.co.uk 2005-07. All rights reserved.

The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

This article maybe reproduced if reprinted in its entirety with links to http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules