Dear Financial Voice Reader,
I recently pointed out to people that if you simply bought the FTSE 100 at the start of the year, the Dow, Oil and US Dollar against Sterling, at even £10 profit for every point they rose you would have over £10,000 profit. Nevermind, if you added Google, Facebook or Sky!
Most people do not realise that the markets have been skyrocketing and how to profit from it. They don’t realise it has become as easy as clicking online to say I want to make £10 or £1 each penny Facebook goes up. And that from the same online account they can take a view on Google as they can on BP or Barclays. They don’t know that if the price falls they can profit by selling.
They don’t know brokers offer sometimes as much as £10,000 to sign up your account. For example you can sign up on the one I set up http://inter.tradermind.com .
Over the past week the FTSE has broken below the 7,000 points’ support area and looked to test the 6,900 floor. The London index saw fresh highs right after the General election results but it was pretty clear that they were just the aftermath of the surprisingly easy win for the Tories. So after breaking below the psychological support of the 7,000 points it was only natural for the FTSE to collapse.
The question is what do we expect for this week and at this point I think that all bets are off. The FTSE has consolidated between the 6,900 and 7,000 points levels over the past sessions and now the breakout from this formation will point the way.
Expectations are that the UK inflation levels will remain low suggesting a prolonged period of low interest rates and that could allow the FTSE to rally again and I think that this is the primary scenario we need to be prepared for. The key area to trigger this scenario lies just above the 7,000 points where fresh highs above this area would entice investors to join along. In this case my target would lie just shy of the 7,100 points.
Nevertheless we should also be prepared for the occasion that the FTSE will drop below the 6,900 points and we need to know what to look for in this case. I think that the target in case the FTSE loses this significant support level needs to be at the 6,800 point lows.
But if it does that I am not expecting any sudden crash – far from it. I fully expect the FTSE to close this year over 7,000. I am seeing falls as a buying opportunity.
But a word of warning: Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.
Alpesh Patel
