Chart of the week

The last few years in the UK stockmarket has been fairly straight forward from a Technical Analyst’s perspective. You just bough the market every time the price came back to the support trend line. But summer 2007 has killed that strategy now that support has been broken. So is this the beginning of a new downtrend? Unlikely. Lovely straight trend lines cannot keep going on forever and as we go up the trend we have to expect increasing volatility and therefore less predictability.

The bull trends in the US market are all still intact and if London is to sneeze, Wall Street will need to catch a cold by falling below the key levels. For now the UK stockmarket still looks ok long term, but knowing when to buy and sell the market as a shorter term trader just got a little more tricky!

David Linton CFTe, MSTA

David is Chief Executive of Updata plc (www.updata.co.uk) and editor of Tipstracker.com