Why Friday the thirteenth could be unlucky for the FTSE 100

“Keen observers of financial charts will note that the FTSE 100 is hovering around the 6,084 mark, a potentially important threshold,” comments Russ Mould, AJ Bell Investment Director. 

“If the index fails to hold its ground here, then there is a risk the UK’s leading benchmark could slide back toward its February closing low of 5,537, if history is any guide.

“The FTSE 100 flirted with bear market territory in the winter, when it briefly fell below 5,698, or a mark some 20% below its spring 2015 high of 7,123.

“Despite rallying since then, the index has so far failed to conclusively break free from a classic “bear market” trend – namely a series of lower highs and lower lows on the chart (see below).

“Spring’s 16% surge to 6,410 looked promising but the index failed to decisively move beyond the October closing high of 6,444 or the 6,315 mark at which December’s upward move petered out. 

“Worse, the benchmark is now trading just below the high of 6,084 reached in January. A sudden move below this level could be serious as there is little support on the chart until that February bottom of 5,537 – and if that were the give way then the bears could be well and truly in charge.”

Source: Thomson Reuters Datastream
NOTE: Past performance is not a guide to future performance and some investments need to be held for the long term

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