Markets are in turmoil. But maybe you have some savings that you want to invest. When you are living in the UK you may favour some FTSE index funds for example. However, is it now a good time to invest these savings?

Last week I got a question from a reader on what I thought about investing in the FTSE at this moment. I’ll come back on that later in this blog post. Let me first comment a little on last week. That was a week full of turmoil; not only in the financial markets but also in Bangkok, where I am living at this moment. Because of the unrest in Bangkok and the forced closing of the schools, we decided to go for a week to the beach on Koh Samui; great decision and great week.

Many other investors would not like to be away during a week like last week. Financial markets plummeted and moved like crazy. Of course I followed the news. But as a stock trend investor, it does not really bother me when markets move like this. We review our investments just once per month and we are confident that we are following a solid approach that delivers us the best results with the markets as unpredictable as they are, especially in the short term.

In the near future I will publish some of my thoughts on how the current movements in the market could be seen as a correction or more as the start of a longer down-turn. Movements in the Dow, like yesterday, where it dropped for a while below the 10,000 mark, also reminded me of the dangers of stop-loss orders. We’ll come back to that in the coming weeks as well.

FTSE Index

Let’s now today address the question of our reader on the FTSE.

Every month we update the trend trading history charts for a number of stock market indices and publish them in the Gold Member section of our website (claim now a risk-free trial membership). The FTSE is one of the indices that are covered.

These trend-trading history charts show for each index for the last 13 years what the closing price was for that index every month. For each month, they also show if our Initial Trend Expectation for that index is up and if this expectation is down or if there is another warning for investors related to this index.

For the FTSE, the chart shows that the initial trend expectation has been mostly upwards between April 2009 and March 2010.  After the closing of April 2010, there is no clear initial trend indication at this moment for the FTSE.

Looking at the bigger picture, not at just the FTSE

But the FTSE and the UK market are not standing on its own. We could not expect that the FTSE is moving longer term in one direction while the US markets and continental European markets are moving in a different direction.

The situation now is that the continental European and US markets are showing different trend indications. After the closing of April, the US markets still indicate an upwards trend for the coming 3 to 6 months. When the markets are now falling during May, we will to wait till end of June to see if this positive trend continues.

For the continental European markets, a further fall of the markets during May could signal the start of a longer down-turn in these markets. We will publish more on this next week.

Summary

In summary, there is a lot of uncertainty at this moment. There is no clear initial trend indication for the FTSE and the trend for the continental European markets could turn down soon. And if that is the case, would the FTSE move in the opposite direction? Maybe, if the US markets would do so. But we will have more indications for that in a month or so.

Therefore, responding to the question of our reader, I personally would not put any more money at this moment into an FTSE index fund. I’d rather wait till after June to see how the situation develops.

This post was from May 2010.

Your current views on investing in the FTSE at this moment are welcome. Please submit your comments to this blog post.

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