Zak’s Mir’s Xmas trio and FTSE direction for the New Year

And so, Santa delivered again this year, albeit somewhat belatedly for the FTSE relative to other markets and continuing the underperformance of the index seen for much of this year, in large part due to the underweighting of technology stocks – the go go sector this year and the large degree of mining plays in the index.

Nevertheless, we have the leading index back above 6600 and it may very well be the case that the delay in the rise of the FTSE100 as December drew to a close will actually pay off for bulls of blue chips as we go into the start of 2014 and commodity plays enjoy a rally. They are certainly due one and the recent rise in copper and also gold’s refusal to break the late June low may prove to be harbingers of much needed good news for commodity bulls.

Indeed, if you go by the trend lines drawn on the daily chart below of the UK index from November 2012, it can be seen that we have an implied break of 7000 coming up in a matter of just a few months or possibly even weeks. At this stage only sustained price action back below 6450 – site o the 2012 major uptrend line and where the 200 day simple moving average is would really upset the idea of a record-breaking run to start the New Year.

FTSE 350 Sizzlers

Moving onto individual stocks and I have chosen from the best of the recent risers in the FTSE 350 index, as these reflect my own current bullish tendencies and leaning to play momentum. For instance, at TalkTalk (TALK) it can be seen how we are being treated to a fresh break to the upside within a rising November 2012 price channel in the wake of the unfilled gap through the 50 day moving average (then below £2.60 at the beginning of November). The implication is that at least while there is no end of day close back below the 10 day moving average, trailing at £2.87 and backed by an uptrend line in the oscillator window from May running through RSI 50 measure, that we should see further significant gains. The favoured destination at this stage is the top of the 2012 rising trend channel as high as £3.65 and as soon as the end of February.

As far as the current charting configuration at Hiscox (HSX) is concerned, it can be seen how there has been a rising trend channel ruling the roost since January of this year with the other notable features being the way that support points have been entirely above the ten day moving average since the autumn of 2012, and there is also a multi-tested support line in the RSI window running through the 50 level. This would suggest that Friday’s key reversal to the upside is a technical event that we should follow and that while there is no end of day close back below the 50 day moving average at £6.69 that we should see further upside. The favoured destination at this point is the top of the 2013 price channel as high as £7.50, a level which could be reached as soon as the end of January.

Finally, we are looking at the daily chart of Balfour Beatty (BBY) & where it has been a rocky ride in recent months, especially the period of consolidation from April to August this year after the unfilled gap to the downside. However, the current situation where there has been a Bull flag consolidation/rectangle pattern since the end of September does suggest that we are looking for at least one fresh leg to the upside, and of a significant nature. Indeed, the idea here would be that while there is no end of day close back below Friday support at £2.79 we could see a top of April price channel target as high as £3.20 over the next 2 to 4 weeks.

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