Interactive Investor

Where is FTSE 100 heading?

26th March 2015 16:10

Lee Wild from interactive investor

An impressive 5.5% rally over nine days this month has come apart at the seams and the FTSE 100 is down 2.5% since Tuesday. The latest heavy fall is a rather broad-based sell-off, which smacks of profit-taking rather than anything more fundamental. But it's still interesting to know what technical levels are worth keeping an eye on.

Alistair Strang, a technical analyst at Trends & Targets and regular Interactive Investor contributor, has run his software and come up with some suggestions.

"Anything now below 6,960 suggests 6,935 with secondary 6,918," said last night. "It needs better than 7,015 to suggest a miracle as a stunning 7,020 is possible with secondary at a more useful 7,078." Well, the market is down, so what next?

"Overall, the Footsie is still viewed as heading to around 7,440, needing below 6,815 to spoil the potential on the immediate trend," says Strang.

And it's that 6,815 number investors should keep an eye on. The leading index today kissed significant technical support (previously stiff resistance) at around 6,888, which has held up well, so far. Closing below that would be significant.

"European markets have opened lower tracking extended losses in the US overnight as investor confidence diminishes amid weak US economic data, escalating tensions in the Middle East and continued concerns over the Greek debt crisis," said Andy McLevey, Interactive Investor's head of dealing, earlier today.

"Although many are heading for the sidelines, those investors who have banked recent profits may take the opportunity to buy on the dips however the potential for short term volatility remains."

Today's biggest fallers include British Airways owner IAG, London Stock Exchange, EasyJet, Hargreaves Lansdown, St James's Place and ARM Holdings. All are up sharply over the past six month, from 18% (ARM) to as much as 58% (stand up IAG).

Forecast downgrades for the smartphone sector by Citigroup will not have helped ARM. “We are now modeling total smartphone shipment growth of 15.5% in ’15 down from prior of 19% on China smartphone growth of just 12% in 2015 vs prior of 21%,” said the broker.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.