Unlike the UK chart and Sterling my performance on the FTSE
all share ( note that predictions are for the all share and not the FTSE 100)
was mixed, though I correctly forecast the difficult start to the year as well
as the volatility around May /June, but I underestimated its resilience in the
autumn.
But I should give myself more credit really: although I
forecast big falls in early 2016, I specifically said they would not be like
those in 2008. Rather than try to expect perfection from what are very broad
forecasts ( as previously noted expected average accuracy is within 3 months) we should be building on the positives. So
where are we likely to go next?
The weakness of early 2016, based on global trade etc, is now history as we have other things to
worry about ( Brexit, Trump). Surprisingly the markets have reacted only positively
to the latter, normally such uncertainty ( and love or hate him you can’t deny
the uncertainty) would lead to stagnation or volatility.
2017
January and February 2016 aren’t therefore too bad at all,
there is support for prices and on balance I’d expect the markets as a whole
including the FTSE to be pretty flat at this time.
There will be lots of position readjustment going on in the
background.
March to May in the UK is obviously going to be
dominated by the Brexit trigger. Although
I don’t expect any significant falls at that time ( there is evidence for
optimistic buying as well as support on the downside ) I do think there could
be some surprises leading to significant volatility.
From June to August the picture is more mixed. I’m seeing a
similar picture to the US, where the focus is on detail and possibly glitches.
There may be some days when trade is restricted and question over the suitability
of the whole index.
September sees a continuance of the uncertain conditions.
However the index could receive a short term boost then as investors are seeing
relative value in the market.
October and November are much trickier. Investors are
questioning fundamentals. Despite there being a huge dollop of great
expectations perhaps stoked by the media
there are also some who are more than keen to sell.
On balance I expect rises now, but they aren’t without a lot
of questions about whether they are justified.
This mood continues into December and although the
early part of the month is positive, the
latter part may see a pull back.
January and February 2018 are similar to the end of 2017.
There is still some concern but for the most part this is a good time for the
index/market and I would expect increases in the level.
Similarly in March and April , when we could see a lot of
trading. There may be slightly more volatility than in the previous 2 months
but overall the direction seems to be up.
May to July is a trickier period. But a key one. The focus
though is on constituents rather than the whole.
I expect very little trend now.
In August to October things are more challenging. While
there is no sign of noticeable falls, there will be problems. I expect
technical of information type issues.
Then in November and December the mood shifts again.
Although there is less volatility than previously, there is more focus on the
market. Opposing forces seem balanced, hiding a fight between underlying
strength versus growth stocks so that a is lot going on with not too much
overall direction.
2019
Interestingly, although I don’t see much movement in the
overall index at this time, I think trade will be hefty as investors shift
their exposure.
The impact of this may lead to some dips but no substantive
falls.
If trade increased in the early part of the year, this is
nothing compared to March through June. Everything is magnified including
trading volumes. The big question is about inflation, ( including exchange
rates) and how this will impact the market. There are some pretty powerful
factors which suggest potential bubbles but there are also offsetting issues
pulling values down. Certainly a time
for trade, we’ll need to be closer to the date to be sure of the net direction.
July through to October sees more of the same, but now it is
clearer that it is volatility that will dominate.
There is certainly a lot of market excitement throughout the
whole period.
Then in the last 2 months of the year that seems to
increase, it looks like there is a lot of buying.
2020
While the mood of 2019 continues into the next year, 2020
starts with a slightly different tone. Events elsewhere are likely to be
determining trading . Still there is still an overall positive, if not entirely
rational, direction.
February and March are as much about the trading itself than
the value of the stocks. There may be questions about the technology.
April to June still looks positive. I am finding it hard to
believe that people will be buying stocks so consistently but at the moment I
am not seeing anything to suggest otherwise.
July to September is a tougher period. This time there may
actually be falls as the market is re-evaluated. This is an unstable time.
October and November are full of drama and volatility.
Questions about overvaluation remain, but some are still buying. Others,
however have doubts and are holding
back. The situation is filled with unexpected trades that will transform the
index and market.
The drama still hasn’t ended in December. Volatility
dominates and investors are all over the place. This is a double whammy effect.
There is a sharp shift in mood, though, which will not fully manifest
trend-wise until 2021.
Picture:By Thomas Rowlandson (1756–1827) and Augustus Charles Pugin (1762–1832) (after) John Bluck (fl. 1791–1819), Joseph Constantine Stadler (fl. 1780–1812), Thomas Sutherland (1785–1838), J. Hill, and Harraden (aquatint engravers)http://www.georgeglazer.com/prints/aanda/historic/londoninv/londoninv.html" rel="nofollow">[1]
- File:Microcosm of London Plate 075 - New Stock Exchange.jpg, Public Domain, Linkhttps://commons.wikimedia.org/w/index.php?curid=15826567">Link>
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