FTSE 100 set for 'exuberant' Friday?

Friday, 26 August, 12:03am

As always, please remember our Friday FTSE relates to the market during trading hours, not before- or after-hours futures. We'd hoped this, effectively the last week of August, would continue the month's flamboyant behaviour, but instead, the market has tended to mimic Scotland's weather.

We're inclined to take some hope from the plunge during the morning of the 25th, as the market didn't drop far enough to indicate trouble. We spend our time constantly calibrating up and down movements in an attempt to gauge true direction and this resulted in the situation where the FTSE 100 needed below 6,760 to indicate panic, whereas the morning low was "only" 6,779 points.

On the basis this indicates hidden strength, we're taking the stance the final Friday of the month could experience some exuberance.

Near-term, in the event of the FTSE bettering just 6,827 points, we'd hope for movement toward an initial 6,849 with secondary, if bettered, at 6,860 points. If triggered, stop needs to be around 6,795 points, judging by the microtrend which developed during the session.

Such a stop level is not actually particularly enticing, as below only indicates reversal toward 6,788 initially - not really a problem. We would have issues if 6,788 were now to break, as our 6,760 bottom from Thursday once again becomes a viable doom.

We notice the rather neat 100-point variance between our "up" and "down" scenario. It's really strange how often this sort of thing happens. The German market tends to experience this sort of ordered movement literally on a daily basis.

Sirius Minerals

Thanks for the emails regarding our "Dr Who" grouch. Nice to know other folk share our sense of humour (and reality).

We had yet another giggle at Sirius, due to the share price actually moving to initial target just after 1:07pm, before once again retreating to the 44s. Perhaps we were indeed witnessing an accurate near-term trend. The proof will come should it now better 45.75p, as growth to 48.85p is supposed to be possible.

However, we'd recommend against betting the farm, simply due to the plethora of daft minute-by-minute movements this share experiences.And anyway, below 44.3p will tend to foul up the upward arithmetic royally, so there's a potential stop-loss point.

Ferrari

Ferrari, on the other hand, is a bit more interesting (while the FTSE was a bit less interesting).

As the Formula One teams took a break for August, we lost interest in covering Ferrari but, with Belgium's SPA Grand Prix approaching, perhaps Ferrari is worth inclusion.

Our last update a month ago had proposed a rise toward $48.5. To our surprise, the share managed it without covering itself in glory or winners podium champagne - or perhaps due to actual race performance not messing with RACE's share price?

The situation now is that we believe any moves now above $49.15 should prove capable of a change in gear, allowing $52.2 initially with secondary, if bettered, a longer-term $53.5. Importantly, we suspect $52.2 - if achieved - will prove capable of some stutters in the search for a new gear.

As always, we've a big "however". The share price has performed quite nicely in the last month and re-enters the Grand Prix season in a position where, should podium finishes now prove capable of generating up-force, we'd expect an initial $56.75, perhaps even $65. The price now needs below $42.5 to get into position for pit lane worries.

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.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.