Mid-Summer Rally Coming Amid Correction: Charts
Highly-correlated global markets will likely continue to correct until October, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC on Monday. But there is a very good chance of a mid-summer rally within the correction, he added.
The FTSE-100 index is likely to drop below the 5,000 level this week, according to Robin Griffiths.
"The correction that began in April is unlikely to complete the bottom until October-time," he told CNBC. "But, there's a very good chance of a mid-summer rally."
"The mid-summer rally is quite likely to be sustained for four weeks, possibly a little longer," Griffiths added. "But the final low will come in October."
Griffiths said he sees the UK index creating a base around the 4,800-4,900 level during June to support a mid-summer rally.
"It won't just be the FTSE doing it by itself," he said. "You'll find highly-correlated world markets all steadying up."
The DAX index is "the European market showing remarkable relative strength," Griffiths told CNBC.
"The euro is already under $1.20," he said. "The charts suggest it could go to $1.16 anyway. It might hold there. But under $1.20 German exports are incredibly competitive already and that is starting to show in the stocks."
Griffiths' "favorite long-term market" is India's Bombay Sensex index.
"Even India is not immune to what's going on elsewhere," he said.
The index might fall back to near 14,000, which would be a brilliant long-term entry point for investors looking to put their money in India, Griffiths predicted.