FTSE 100 Heavyweight Stocks: Partying Like it’s 1999!

By Zak Mir

As most followers of leading UK stocks will be aware, they have woefully underperformed their US counterparts, weighed down by their coterie of mining and oil & gas plays. This state of affairs has been in place for 15 years, which was the last time that the FTSE 100 made a new high. Since then we have come very close on several occasions to breaking through the 7,000 barrier but it seems that destiny has so far been determined to make sure those looking for the big breakout remain disappointed.

Nevertheless, the latest peace initiative in the Ukraine, QE in the Eurozone, hopes that the Greece crisis will be resolved, and simply the ongoing rally for the likes of the NASDAQ and the S&P all seem to suggest that finally we will see the London market make a new record high over the next couple of months.

But what may be interesting to investigate is which of the heavyweight FTSE 100 stocks may be able to take it over the top over the next few weeks? Clearly the first port of call in this respect should be the largest oil and gas plays, BP (BP.) and Royal Dutch Shell (RDSB).

Looking at BP first, it can be seen how in the wake of the higher January support for the shares versus December above £3.75, we have been treated to a relatively swift rebound above the 50 day moving average now 417p in January, and then holding above the 20 day moving average at £4.37. The hope here would be that at least while there is no end of day close below the 20 day line a retest of the post August resistance at 480p could be on tap over the next 4 to 6 weeks.

For Royal Dutch Shell it is interesting that even though on a fundamental basis this company has appeared stronger than rival BP, over the past couple of months the price action has tended to be sideways rather than in rebound mode. Even so, we would consider that provided support continues to come in above the 50 day moving average at £21.92, the upside here could still be towards the 200 day moving average 2,386p over the next 2 to 4 weeks. The suggested upside for both BP and Royal Dutch Shell would of course be enough to take FTSE 100 through 7,000 on its own.

The last couple of FTSE 100 giants which could sway it in a positive way over the near term are from different sectors. The first is GlaxoSmithKline (GSK) where we have seen a recovery and then support coming in above the still falling 200 day moving average now at £14.74. This would suggest that we have a stock in progressively stronger buy mode. The suggestion currently is that while there is no end of day close back below the 200 day line, one should target at least the top of a rising August price channel at £16.50, something which would clearly be very helpful to the prospect of a 7,000+ handle on the UK index.

I finish this FTSE 100 heavyweights sweep with a stock which has put in no less than three support points in above the 200 day moving average of 210p since November – Vodafone (VOD). The overall trajectory here with a rising trend channel In May at £2.20, about which on a weekly close basis one could justify calling the shares up to £2.75 over the next 1 to 2 months. Given the weighting of the mobile communications giant amongst leading UK blue chips, it could take the bulls to record highs in its own right.