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Last Updated: Monday, 3 November, 2003, 08:43 GMT
Gazing into the stock market crystal ball
By Myles Neligan
BBC News Online business reporter

stock market trader
Where next for the FTSE?

October was the FTSE 100's best month since April, but concerns over rising interest rates are starting to weigh on investor optimism.

BBC News Online asked four forecasters - from widely different professional backgrounds - how they rate the prospects for share prices over the next six months.

The historian

Veteran stockwatcher David Schwartz gauges how the market is likely to move in the months ahead by analysing its past behaviour.

In December 2000, he correctly forecast that the Nasdaq index of technology shares, then at about 4,000, would eventually dip below 1,500.

David Schwartz
David Schwartz sees more pain ahead for investors
And after the 11 September attacks, he predicted - again correctly - that the US market would fall by about 15% before starting to recover.

Mr Schwartz sees the current global share price rally as a short-lived blip in a wider downward trend as the market continues to surrender the gains it notched up during the 1980s and 1990s.

"I honestly believe that there's a lot more downside to come," he says.

"I think history teaches us that for every major price run-up over the last two centuries, there has always been a return to the long-term trend line."

He believes that efforts by the US government to stimulate the economy ahead of next year's presidential elections could help sustain Wall Street for a few months yet.

But he expects share prices to start heading south again at some point next year.

"As we near the end of December we could have a Father Christmas rally, and we could well go up again in the first quarter."

"But some time in 2004, it will be payback time."

The chartist

Chartists, or technical analysts, try to forecast stock market movements by spotting and extrapolating trends using graphs and charts.

Nigel Blake of City brokers Blue Index expects steady if unspectacular progress on the UK stock market over the next six months.

The FTSE has been heading higher, slipping, taking a breath, and then moving on
Nigel Blake, Blue Index
He predicts that the FTSE 100 will close at about 4,380 on New Year's Eve, 300 points higher than at the start of the year, and up by a third on the low of 3,300 recorded in mid-March.

After marking time early in the New Year, it will then head higher again, moving towards 4,500 by the beginning of April.

"This fits the pattern the FTSE has been moving in recently," Mr Blake says.

"It's been heading higher, slipping, taking a breath, retracing, and then moving on."

Mr Blake also expects the FTSE to move far more steadily in the months ahead, in contrast to the wild fluctuations seen earlier this year.

This would be good news for private investors, who tend to be put off by excessive volatility.

The physicist

Professor Didier Sornette of the University of California has built up a sideline as a stocks pundit since realising that a method of predicting when engineering materials will rupture under strain could be adapted to stock market analysis.

His approach is based on the theory that stock market bubbles are influenced in part by "cooperative herding" among investors.

Didier Sornette
Didier Sornette: S&P 'heading for a fall'
He believes that forces of this kind are in play at the moment, and predicts that the S&P 500 index - the broadest measure of US share prices - will reach the peak of its current rally by the end of this year before falling back again.

He is unsure over the severity of the decline, and acknowledges that tax cuts and low interest rates could prop up the US market into early 2004.

But Professor Sornette is confident that there is a sustained downturn in the pipeline, estimating the probability of his forecast being proved wrong at no more than 30%.

"When artificially held up by strong incentives, the rally can keep going for a while. But in that scenario, the collapse, when it comes, will be even greater," he says.

Professor Sornette also has bad news for British homeowners.

He has applied his forecasting model to the UK property market, and has concluded that it too will start to turn sour at the end of 2003.

The astrologer

Few investors will admit to consulting astrologers.

But it is by no means unknown for traders to use astrological analysis alongside more conventional forecasting techniques for guidance.

Christeen Skinner
Christeen Skinner: Bullish on gold
Christeen Skinner, a London-based astrologer who regularly shares information with City figures, says the stars paint a mixed picture for investors in the months ahead.

The big winner will be gold, which she expects to break through the $400 an ounce barrier before the end of the year.

She also believes that the technology sector - including "third generation" mobile phone operators - could get a New Year boost thanks to a rare alignment between Pisces and Uranus on 30 December.

This is because Uranus is associated with technology, while Pisces is linked to visual entertainment.

On the downside, Ms Skinner believes the current decline in the value of dollar could accelerate sharply in late November.

And the malign influence of Saturn on Cancer - the star sign of the US, which celebrates its national day on 4 July - hints at tough times ahead on Wall Street.

"It doesn't look as though the US market will have a very jolly ride next year," she says.

The views expressed are solely those of the interviewees and are not those of the BBC. They are for general information only and do not constitute financial or investment advice. The information is not intended to be relied upon for the purposes of making an investment decision. Always obtain independent advice from a qualified, registered financial adviser before making any investment decisions.


MARKET DATA - 11:37 UK

FTSE 100
5428.78up
22.84 0.42%
Dax
5732.06up
18.55 0.32%
Cac 40
3783.91up
14.37 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
Data delayed by at least 15 minutes

SEE ALSO:
US growth in the spotlight
26 Oct 03  |  Business
US earnings take centre stage
19 Oct 03  |  Business
FTSE 100 steadies
23 Oct 03  |  Business
D-day for Safeway?
21 Sep 03  |  Business
Investors tune in to ITV merger
05 Oct 03  |  Business
Investors search for positive signs
15 Sep 03  |  Business
Dow Jones hits 14-month high
19 Aug 03  |  Business
UK shares hit 12-month high
14 Aug 03  |  Business


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