2014 Outlook

I was asked to write an article for http://www.spreadbetmagazine.com with my outlook for 2014. An edited version of the below will appear in the next edition, but here is a sneak peak for readers of the blog.

—oOo—

I am writing this mid-way through December 2013 and it seems like we are just about to start the year-end rally. 2013 has been the year of the recovery that no one saw, if you believe the economic data that is being published. The US markets have made new record highs this year, before a sharp drop in early December. By the time this is published we might well have seen a rally and I am expecting a year end FTSE close around 6800, which leads onto 2014…

After a strong close to the year I expect that tapering of the QE program will start early this year, assuming that the economic data continues to paint an improving picture. I am expecting tapering to be announced during Q1 with a view to it start to wind down in Q2. I expect that this will weigh on markets and a dip to near 6000 will be seen this year, probably about the end of Q1.

I then think we will see an improving picture for the rest of the year to make new highs on the FTSE, probably around 7300 or more. I am basing these estimated figures on the weekly channels that you can see on the chart attached.  There seem to be a confluence of supports at around the 6000 area, as well as the 200ema. I expect the recovery in the UK to gather pace, in preparation for setting a better back drop to the 2015 election, where the Conservatives will be hoping to gain a sole party win rather than a coalition.

Once the tapering reaction is out of the way with the dip then we should climb to the 6750 area where I expect another stutter. This area is the declining trend line from the recent highs seen this year and I expect the third test to ultimately break, but after holding initially, hence the little dip back towards 6450/6500.  I have plotted arrows to indicate the possible route.

I won’t try and hazard a guess any geo political occurrences that might happen as that really is just guessing however that channel on the weekly chart does look favourable for further rises and a possibly fairly optimistic and upbeat 2014 (in the end!) closing around 7350.