FTSE 100 Stocks Index Forecast 2011

By: Nadeem_Walayat

The following text is excerpted form the NEW The Stocks Stealth Bull Market Update 2011 70 page ebook is available for FREE Download. Whilst the US economy is expected to outperform the UK across most key measures for the whole of 2011 and probably several more years beyond, which on face value implies lack of performance for the FTSE. However the FTSE is not exactly an index that tracks the prospects for the British economy as over the years the FTSE has incorporated waves of foreign companies listed on the London Stock Exchange that have very little if any activity in the UK such as the big central asian, african and australian mining companies, much more so than any other leading country index such as the Dow, Dax or CAC.

This is further enhanced by the fact that most of the remaining UK based FTSE companies are multi-nationals, deriving a large part if not most of their revenues and profits from over seas activities which includes the likes of British Petroleum which is not really British when you consider that most of its trading activities take place over seas from the highly profitable and not so profitable (Gulf of Mexico). The net effect is that only an estimated 25% of FTSE 100 index companies earnings are derived from the domestic economy, which is why the FTSE is more sensitive to the exchange rate than other indices and also can be expected to track the Dow Jones 30 index more closely than other country indices which therefore means an in-depth analysis is not necessary, as the overall trend patterns should not be too dissimilar to that of the Dow. The only allowance to be made is in terms of the impact of currency trends between Dollar and British Pound which earlier analysis forecasts for a 17% appreciation against the dollar which therefore implies relative trend weakness against the dollar priced Dow Index.

Technical Analysis

• The FTSE is expected to continue to show under performance against the Dow both as a consequence of a stronger currency and weaker economy. This weaker trend is clearly manifesting itself by example of the FTSE falling well below the April 2010 high during mid month, which compares against the Dow that bottomed some 400 points above the April 2010 high.
• Key resistance lies at 6,100 which is expected to both act as current resistance and future support as well as the 6000 area around which the FTSE can be expected to gravitate.
• The Trend channels suggest an end 2011 range of between 6,400 to 6,800 - or a gain of between 8% and 15% on the last close of 5,908, actual performance can be expected to be nearer to 6,400 than 6,800.
• Long-term support and resistance comes in at 6,400 and then 6,750, which is supportive of the trading range analysis.

FTSE Forecast Trend Conclusion

The FTSE is expected to follow the Dow trend after spending substantial time during the year gravitating around the 6,000 level. The FTSE targets a trend towards an end year range of between 6,750 and 6,400 with the most probable year end high in the region of 6,500, thus a gain of 10% on the last close.  Immediate price action targets FTSE 6000 as we move into early April, then a correction that targets 5,800 as we move into early May, i.e. in line with the trend expectations for the Dow.

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                         CONTENTS

Recap of Stock Market Trend Forecast for 2010 - 02 Feb 2010 - Stocks Stealth Bull Market Trend Forecast For 2010

Dow 10,067 - Stocks Multi-year Bull Market that bottomed in March 2009 will trend Sideways during first half of 2010 attempting to break higher. The second half will see a strong rally to above 12,000 targeting 12,500 during late 2010.

Source and Comments: http://www.marketoracle.co.uk/Article27634.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 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

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.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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