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FTSE 100 Stock Market Seasonal Trend Analysis into End 2008

Stock-Markets / UK Stock Market Jul 28, 2008 - 01:02 AM GMT

By: Nadeem_Walayat

Stock-Markets Best Financial Markets Analysis ArticleGlobal stock markets have performed abysmally during the year to date, with many of the worlds stock markets having triggered technical bear markets on falls of more than 20% from their 2007 peaks. The FTSE 100 index is no exception, which triggered a bear market just over a week ago. However a bounce ensued from the oversold state which was anticipated in the analysis for the Dow Jones on 14th of July which called for an imminent bottom for the stock markets and a volatile trend higher into September 2008 for an advance of approx 10%.


This analysis looks at the various seasonal tendencies that may influence the FTSE 100 stock market index's trend into year end. The following graphs show the seasonal month to month changes as well as this years performance to date (red bars).

FTSE 100 Seasonal Trend During All Years

The year to date shows a 42% correlation to the seasonal trend. The forward pattern suggests a rally during August, dip in September and a strong run into the end of the year.

FTSE 100 Seasonal Trend During US Election Years

The year to date shows a 85% correlation to the seasonal trend. The forward pattern suggests a strong rally into year end to be punctuated by a weak November to coincide with a post election correction followed by a santa rally.

FTSE 100 Seasonal Trend During UK Economy Slowdown Years

The year to date shows a 42% correction to the seasonal trend. The forward pattern suggests weakness for August and Sept with a strong year end rally.

FTSE 100 Seasonal trend for bearish years.

The year to date shows a 42% correlation to the seasonal trend. The forward pattern suggests weakness into end of November followed by a strong December,

Seasonal Trend Conclusion and the Obama Factor.

The strongest observed seasonal tendencies thus far this year are inline with the US Presidential year cycle pattern, this is therefore the dominant pattern for the rest of the year.Key contributions from other seasonal patterns are to confirm the likelihood for a strong December, and a contra seasonal trend for a weak September. Therefore the seasonal trend conclusion is for the FTSE to rally at least into end August and then experience a down month for September, followed by a resumption of the uptrend into year end which includes a weak November. This suggest a FTSE trend which appears to be against the prevailing consensus view of a stocks bear market and against the deteriorating fundamental picture both economic and on the earnings front, therefore implying we could be in for either some good fundamental / earnings news or economic pessimism to be replaced by Obama election victory optimism, the potential for which was clearly evident during Obama's tour of old Europe last week.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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