Yesterday was Martin Luther King Jr. day which saw the American stock markets remain closed whilst stock markets across the rest of the world suffered sharp losses. The FTSE 100 index (FTSE) fell 6.17% to close at 5578.2, the Dax 30 index (DAX) fell 7.16% to close at 6790.19, and the Nikkei 225 (NIKKEI) fell 3.86% to close at 13325.94. According to the Market Information Machine (MIM), when world stock markets decline on a day when the American stock markets are closed, the FTSE typically continues to decline across the following week.
Q: What happens to the FTSE after the algebraic average of the one-day decline in the FTSE, DAX and NIKKEI is more than 0.8% on a day when the American stock markets are on holiday?
A: According to the six previous occurrences of this event, EventEdge indicates that FTSE has shown a very strong bearish edge that peaks three trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the most recent occurrence of the event (Monday, Jan. 21, 2008) is Thursday, Jan. 24, 2008. FTSE declines in 100% of the cases (6 of 6) by an average of -2.7% relative to the close on the event date. The overall return of the six cases is -2.7%, which, based on the close of FTSE on the event date (5578.2), provides a target price of 5427.59.
If you would like to see more details of this historical edge, go to www.markethistory.com
See another story on the FTSE by Ryan Soudan this morning with a similar event and outlook.
HYPERLINK "http://www.markethistory.com/staff/detail.html?s=murani" Scott Murani covers European energy and commodity markets from London.
Related Ideas:
FTSE 100 - Holiday Plunge - January 22, 2008
