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Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Has the FTSE Stock Market Index Put in a Major Top?

Stock-Markets / UK Stock Market Jun 30, 2013 - 03:10 PM GMT

By: WavePatternTraders

Stock-Markets

The case for a long term major top looks very compelling.

The advance from the March 2009 lows has a 3 wave look and to an Elliottician that's significant as it only suggests a corrective advance.


I strongly suspect the FTSE has indeed put in a major top, the subsequent decline off the 6876 high is impulsive and argues for a trend change.

I suggest traders that are holding stocks in the FTSE use the next bounce to sell into and off load all stocks and investment's, as if a major high is in place, then you may live to regret not talking prudent action.

So if the advance from the 2009 lows is finished, the question Elliotticians are asking themselves is where does it fit in on the macro wave count? Whilst I am not a fan of trading daily or weekly time scales, I suspect what we have seen is a large [B] wave as part of a lager flat pattern.

Wave [A] appears to be a 3 wave flat; [B] I suspect is a simple Zig Zag, which is a 3 wave pattern.

So the piece we are missing is wave [C], which is likely to be a 5 wave decline, back to test the March 2009 lows.

So if the FTSE has indeed put in a major high, I am looking for a price target under 3400.

The idea is invalidated above 6876.

I am watching 2 stocks that are heavily weighted in the FTSE; well in fact they are the 1st and 2nd holdings according to this data http://en.wikipedia.org/wiki/FTSE_100_Index

The first is Royal Dutch Shell.

RSDA

It looks like a 5 wave decline, from the same time the FTSE put in its yearly high, so with a 5 wave decline appearing to be locked in place, I am looking for a 3 wave bounce, once any correction is completed we should see more downside.

The other stock is HSBC.

HSBA

The same idea, a 5 wave decline that appears to have started from the high on the FTSE.

So if we see a 3 wave correction, I suspect it will setup more downside much similar to RSDA.

I am sure its obvious what should happen to the FTSE should both HSBA and RSDA follow the script I have shown.

Until next time

Have a profitable week ahead

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By Jason Soni AKA Nouf

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