See our most recent blog on the FTSE. The argument was that 6000 would be critical. As it happens the index’s slide of almost 13% in a single month found a bottom and regained it regained its  composure, for the moment at least. The drop is a rather clear 5 wave move so a rebound is not that surprising. After an a-b-c wave 2 to about 6400/6500 the slide down should resume. The 5 wave initial move is clear in the FTSE but not in all indices so this interpretation could be incorrect. The DAX has an equally clear initial 5 waves down, but the DOW looks more like a corrective a-b-c! see below;

This is the Financial Times 100 index from Bigcharts. Recently it topped out for a third time at  6876, roughly at the same level  it had reached the previous two times. I do not understand EW well enough to make accurate pronouncement on what the ups and downs represent, but looking exclusively at the last up leg one can quite reliable conclude that it is a B-wave. The two perfectly equal legs with an expanding triangle intervening make that an almost certainty. In any event a drop now substantially below about 6000, we are presently at 6116,  would create overlap and limit most other alternatives (there are three possible triangle in the middle three years, an expanding one, a normal horizontal contracting one and a third one starting one phase later). Below is the more detailed picture;

Once overlap occurs the index is likely to drop to , at least, 4800 and probable all the way to the bottom.

The FTSE has a lot of similarities with oil below. Un till Dec. 2012 the series of 1-2s scenario was still valid (see previous blog) but quickly thereafter negated. Still all the other different possibilities that were mentioned in the context of oil apply here as well, perhaps because the Brits run such a well oiled economy.

    The story is essentially the same except that everything is playing out at a little higher level. We would concentrate on the top line, the triple top line to be exact which runs at about 6600 on a monthly basis (in black on the chart). This corresponds with similar points in the DAX (total return index!), S&P and NYSE. Canada is nowhere near here, nor are most all of the other countries.