Short term FTSE bottom soon?


Established member
Whist we all seem to be wedded to the concept that this market is going down in the medium term, we should not be blind to possible turning points in the short term which may be helpful from the point of view of timing short entry and exit points.

And the FTSE seems to be indicating that a short term bottom may be in place soon. There is divergence between 4 market breadth indicators and the market timing price chart. This is an unweighted composite chart of the shares that have reliable volume and approximates to the shares that make up the
FTSE all share index. These indicators can sometimes diverge to indicate a turn rather early, so it always pays to wait until price confirms the divergence, and this has not yet happened. Never-the-less, in the past it would rarely have been profitable to take a contrary view to the indication provided by this set of indicators, particularly when they are all pointing in the same direction, as now. We are very close to the Jan (cash) low of
3492 which may provide short term support.

We need to see a higher close to confirm the signal!!!!!!

Whether any bounce will be meaningful or tradeable in anything other than the very short term (intraday) there is no way of telling. Given that it has kicked in early in the past, whether it has any relevance for the March futures/options expiry is also debateable, but I merely draw it to your attention!


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Here's the FTSE100 cash chart with arrows showing where the signals from the market timing chart (above) are on the actual index.


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Well, this has all been jolly interesting hasn't it boys and girls! I was expecting a rally, but not quite like this - largest one day rally (in percentage terms) for 15 years. How far is it likely to go?

Looking at the market timing charts, I have unweighted composite charts for the Techmark, all-share, and Ftse 100 - as shown from L-R. The Techmark has had an inside day, and shows divergence on 3 of the 4 market breadth indicators. The UK Market chart has also had an inside day, and the same 3 of 4 indicators with divergence. Only the UK100 market timing chart (an unweighted composite of the ftse100 constituents) shows a new high with the same 3 divergent indicators. Whilst the ftse100 was up 6.1%, the mid250 could only manage a measly 0.5%, having fallen 1.17% yesterday - so the advance seems to be quite narrow?

Of the previous declines since Sept 2000, 3 have rallied 50%, 3 by just about 62%, and one just over 38%. None rallied above the start of the previous high, but then few of the previous bottoms showed market breadth indicator divergence at the bottoms either, so could this one have more "legs" to it, and be more than just short covering? There is a cluster of fib levels around 3570, 3700 and 3800. Also 3729.5 (the highest close of the Feb rally) should be a critical level.

Another interesting day tomorrow?


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Thanks for you input on FTSE,follow what you say and am pleased to see your points of view on th UK markets.
I agree about the Feb high points at about 3750 .Thanks for pointing this out will keep an eye on this.

Keep it coming.
Regards Fluke
PS. Just noticed the the 3 rallies since Sept 2000 are fibb numbers 50%.62%.and 38%.
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I had recalled that in 2006, I gave this piece of advice to a friend, Mike. I told him that he should get some money ( preferably GBP 50,00 - GBP 100,00 ) and get into futures for FTSE or even spreadbetting.

I told him that the FTSE 100 would rise 1,000 over ticks into the now 5,500 mark!
Of course, I normally charge a small fee if I were to invest on his behalf .......
Now, coming to think of it, the rally is losing steam, figures from sectors of banking, construction, property ( including worldwide figures ), retail and also other figures of CPI and inflation/ interest rates suggests that the economy is heading straight downwards.

So, a piece of advice that I would now give to anyone would either dump certain shares or keep 'em ( not for too long ) and get into the short-selling strategy!


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