UK market timing

FTSE Short Term Forecast

Thursday 29 January 2009

8.00am GMT

FTSE short term forecast: Down

A decline to 3600

Selling area: 4300 or higher

Stop loss: 4677

Model portfolio exposure: 80% short

BTI: Down

34-day BTI: Positive

13-day BTI: Neutral

Top 20 Differential: Overbought

The upward retracement has now reached 50% of the previous decline, the rally is in three legs [(a),(b),(c)], the BTI is declining (bearish divergence) and the Top 20 Differential is overbought. We can assume that a top is in place and wave iii (circle) down is about to start. An initial target is 3600. The only thing that does not fit with the overall position is the positive 34-day BTI. This indicator should be negative (bear market) however, it is a lagging indicator, it could become negative in the next few days.

What is the BTI (Bullish Trend Indicator)?

The BTI is a sentiment indicator used to assess the mood of investors. When the daily change in the BTI is down sentiment is bearish. When the daily change in the BTI is up sentiment is bullish. The BTI is used to assess the near term direction of the market and confirms the Elliott wave count.

The 34-day BTI is used to assess the main FTSE trend. When the 34-day BTI is positive we are in a bull market, when the 34-day BTI is negative we are in a bear market.

The 13-day BTI is used to identify intermediate FTSE tops/bottoms. When the 13-day BTI is overbought the FTSE is near a top. When the 13-day BTI is oversold the FTSE is near a bottom.

Bullish influence	Bearish influence
	Wave count
	BTI
	US markets
34-day BTI	Top 20 Differential

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