UK 100 Upside Breakthrough

Last week the UK 100 (UKX) broke above its 2022 high, becoming the first major national stock index to exceed its 2022 peak.  The UKX could help in detecting  a  global stock market top sometime in  early 2023.   

The 11/03/22 blog “Bullish Evidence From the United Kingdom Stock Market”  illustrated  that the UKX – daily MACD – Histogram could help estimate when the next UKX peak could happen and noted, “Assuming  that a maximum Histogram reading occurred on 11/01/22 the next UKX top could come sometime between mid-November and early December 2022.”

Subsequently the UKX formed a triple top on 11/30/22, 12/01/22, and 12/05/22.  The high point happened on 12/01/22.

There was also speculation on price level and noted, “It’s possible the next top could exceed the 02/10/22 peak.  If there’s no new 2022 high, the next peak could be in the area  of a  90 to 99.9% retracement of the 2022 decline.”

On the next peak – 12/01/22 the UKX had retraced 91% of its 2022 decline.

The daily UKX chart courtesy of Trading View illustrates the action from late 2021.

Subsequent to the UKX 12/01/22 top, the decline retraced less than 38% of the October to December rally.  The S&P 500 (SPX) retraced more than 50% of its October to December rise.

The UKX rally since the 12/20/22 bottom has not only exceeded its early December peak but has moved above its 2022 top.  If the UKX rally can continue there’s a good chance one of the  main U.S stock indices,  probably the Dow Jones Industrial Average  could exceed its 2022 high.

The UKX October to December rally could be the first wave of a developing Elliott impulse pattern.  Normally for stocks the third wave of an impulse pattern is the longest.  Considering the length of the  presumed first wave its possible it could be the longest.  In those situations, the third wave is usually slightly shorter than the first wave.  Assuming  the 12/20/22 bottom is wave “two”, a possible top for wave “three” – based on price is in the 8,180 area.  Based on the percentage growth of wave “one”, wave “three could reach  8,260.  These targets will be explained in greater detail assuming the UKX rally continues.

Note the UKX has still not exceeded its all-time high of 7,903.50 made in May 2018. Its possible the rally from October 2022 is an Elliott wave – Single Zigzag which is part of a larger complex corrective pattern of the initial post May 2018 decline.  If this scenario is correct the UKX would not exceed its May 2018 and the current rally could terminate at any point below 7,903.50.

The weekly UKX chart examines the long-term perspective.

This chart is mind boggling!  Trading View has a chart tool that can draw parallel channels which was used on this chart.  All four of the Elliott wave termination points fit perfectly in the parallel channel, this is extremely rare!  There’s a high probability that the UKX is forming a Primary degree Elliott Impulse wave up from the March 2020 bottom.  If so the UKX could now be in Minor wave “3” of Intermediate wave (5).  The termination point of Intermediate wave (5) could signal a global stock market top.

If the UKX continues to ascend at its current rate, the upper channel line could be reached by late February or early March 2023.

The UK 100 index is a must watch indicator for traders/investors worldwide!

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: