Market strategists warn of further FTSE pain to come
MARKET experts at the weekend issued dire warnings of a further downward trend in the FTSE, which was hammered last week on the back of a slew of weak economic data and continuing worries over fiscal tightening and the eurozone debt crisis.
The FTSE 100 index closed on Friday at 4,838 – a fall of 4.1 per cent during the week and over 17 per cent below its April high of 5,833.
Despite the sharp dive, many analysts believe the market will continue to fall over the coming weeks, with some predicting a loss of 500 points or more before it bottoms out.
Sandy Jadeja, chief technical analyst at spread betting firm City Index, said that technical indicators as well as economic concerns were pointing towards a further retrenchment. Two of the moving averages used by market participants – the 20-week and 50-week averages used by intermediate and long-term traders respectively – are close to a crossover, signalling weakness in the market.
“The last time this occurred in January 2008, the index lost 38 per cent of its value and we are in a similar position right now,” Jadeja said, warning that investors need to be “vigilant”.