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Ahead of this week’s key Budget speech which may have particular ramifications for the Fixed Interest Markets rather than the Equities markets, we none the less thought it appropriate to review the last 9 months market behaviour of the Ftse 100 Index of shares and expand on our Tweet of 14 March as Ftse approached 6,000.

We identify price trends on a weekly basis, scored (-6) to (6) depending on their direction and strength. The following snapshot of closing FTSE prices and respective trends gives you an idea of how our methodology is applied.

Ftse 100

28 July 2011  Last 5,846        Sinergi HeatMap Index score  (-3).  Sinergi TACT Index score “Underweight”

9 Aug 2011     Last  4701        Sinergi HeatMap Index score  (-3).  Sinergi TACT Index score “Underweight”

2 Sept  2011   Last  5058       Sinergi HeatMap Index score  (1).  Sinergi TACT Index score “Benchmark”

4 Jan 2012    Last  5575       Sinergi HeatMap Index score  (3).  Sinergi TACT Index score “Overweight”

13 Mar 2012   Last 5952       Sinergi HeatMap Index score  (1)  Sinergi TACT Index score “Benchmark”

Crucially, we are not involved in forecasting and have no “view” on the market. The Sinergi HeatMap and TACT indices have been created as an evidenced based statistical framework that allow the user to gauge market behaviour.

As you can see, despite prices rising above 5,900 last week, interestingly the HeatMap Score actually came down from 3 to 1 and Sinergi TACT returned to “Benchmark” from “Overweight” . This change in stance would lead us to being more cautious at the moment, either by reducing our FTSE 100 exposure or at least not increasing exposure to the FTSE 100.

For us, it is worth noting that more importantly, by being “Underweight” in quarter 3 of 2011 we might have limited our exposure to the 15% fall in the FTSE 100 at that time.

 

 

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Keith Reid
Keith Reid
Keith’s training as an accountant and auditor has emphasized the importance of evidence in all good decision making process. The ability to monitor management processes effectively is a key to making the most of business opportunities. Both Keith and Gerry believe that this priority for capital preservation is the common principle that sets the framework for any sound investment strategy or business model.