FTSE 100 still has a spring in its step

<p>After the excitement of breaking the 7000 barrier it ought to be no surprise that the market needs a rest. Momentum says the market could […]</p>

After the excitement of breaking the 7000 barrier it ought to be no surprise that the market needs a rest.

Momentum says the market could well go lower.

Because the FTSE 100 breached 6930.2, its longest-standing all-time high, trading is likely to keep veering in the same direction as momentum, which is pointing lower.

Proven support lies between 6702-6740.

My simple studies of momentum strongly suggest that once it returns to recent bounds, the market will regain support.

That’s why the FTSE 100 is likely to recoup all recent losses in April.

A chart of two-week intervals reveals further important underlying factors, both supporting and challenging.

Even with the latter in mind, my first target for the FTSE 100 between 1st April and the end of April is no lower than 6702.

A mixture of relief that six years of cheap money may not be ending soon after all and a partial reinstatement of the world’s net short government yield position should then reflate stocks.

In the UK we’re just a few weeks away from a general election, and we’re all supposed to be bearish in the run-up.

But I think recent weeks have shown that the threat of a hung Parliament is losing its power to scare, though not entirely — the FTSE is still likely to slow as 7th May approaches.

But I still expect the index to hit at least 7065 before that date.

FTSE 100 chart

 

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