How low could the FTSE go?

If the recent jump in stocks is just a bear-market rally, then how much lower can stock markets go? Full Circle Asset Management look at what the charts are saying.

On Tuesday 10th March, stock markets had a great day, with the Dow storming ahead by 379 points. The consensus immediately opted for the beginning of the long-term recovery or, if not that, a major bear market rally.

The reason proffered for the market enthusiasm was the publication of an internal memo by the Chief Executive of Citigroup, Vikram Pandit, saying that in the first two months of the year the bank had been profitable. Citi stock rose 35%. The memo was not in depth and mostly concentrated on revenue, ignoring costs and writedowns. But the big rise in percentage terms, when examined on the chart, (see below) from such a catastrophic depressed level is hardly of consequence.

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