FTSE 100 Forecast for 2005

By: Nadeem_Walayat

29th 12 2004 FTSE 100 Forecast for 2005

A Quick Review of 2004

2004 Was a volatile year for the stock market, where the market moved between 4300 to 4600 for much of the year. The market ended the year at 4814, which represents a relatively poor gain of about 7.5%, Now for the good news ! - The FTSE ended the year near its highs with the bull market that began in March 2003, INTACT ! Which suggests more gains for the FTSE during 2005.

FTSE Outlook for 2005

The Market is clearly in an uptrend, a continuation of which at least suggests an upside target of 7.5% i.e. as per 2004, so 5176 as a minimum target. The Channel lines projected forward through-out 2005, suggest a market range by year end of between 5200 and 6000, therefore a mid channel peak suggests the FTSE is likely to hit 5600 at some point late during 2005, which would represent a 16% gain ! Another positive for the FTSE during 2005 is that years ending in 5's generally tend to be strong bullish years i.e. 1965, 1985, 1995, 2005. Support at 4600 and if breached 4280, which if breached would mark the end of the bull market.

In summary the target high for the FTSE in 2005 is 5600, as long as the key support of 4600 holds. If 4600 breaks than 4280 must hold for the bull market to stay intact.

Which Sectors to be in during 2005 ?

OILS !, With crude oil trading at $40 the Oil Majors are raking it in, with crude oil trading at $35 the oil majors are raking it in !. So you get the picture ;). Even if crude oil falls towards $35, (which is a major support zone), then the oil majors will still report large profits, which is not reflected in PE ratios ! They look like a strong one way bet ! i.e. the likes of BP and Shell etc..

Other sectors that look interesting are the far east namely Japan and India, which are probably best invested in through funds rather than individual stocks.

Nadeem Walayat

(c) MarketOracle.co.uk 2005

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