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No one expects the Spanish Inquisition!

Wed, 28th May 2014 Leave a comment

Chart of FTSE-100 at 27th May 2014The FTSE has paused for breath just below its all-time high of 6,930 and I wouldn’t be surprised to see a break-out from its recent range very soon as the talk now is all of recovery and increasing economic growth. It baulked at 7,000 at the end of 1999 and again in 2007, so hopefully it will be third time lucky. If it could finally breach 7,000 this may well trigger a good surge and I believe that this would be the final blow-off phase of the five year bull market we are currently in. This Money Week article suggests that, although prices are high there is still scope for further gains and this article on FT.com suggests no one is expecting it. That is exactly when it is most likely to happen! The Dow looks like it is within reach of 20,000; a gain of 25% this year is perfectly feasible and that could take the FTSE straight to 8,000. It would also take the S&P500 Cyclically Adjusted P/E ratio to over 30 which is where, historically, we could see a major crash.

Categories: Stock Market