The 10 biggest companies of the FTSE 100 represent about 40% of the index by weight. I’ve been following the trend of analyst earnings forecasts for these companies over the past year or so as a rough-and-ready indicator of where the FTSE 100 might be heading next.

Back in July, when the Footsie was at 6,673 — 6% down from its spring high of 7,104 — I suggested that the level of earnings downgrades over the first half of the year indicated “a healthy 10%-15% market correction for the FTSE 100 is in order,” (i.e. as low as 6,038).

In September, I wrote on the topic again, when the index had fallen to around 6,000. Further earnings downgrades since July suggested that a correction of “perhaps around 20% is now in order, which would put the Footsie at 5,680 points”.

Last Wednesday, the FTSE 100 closed at a new 52-week low of 5,674. So, I’ve been looking at my updated earnings forecast data to see where we might be going next.

The table below shows the latest earnings downgrades, as well as the downgrades at the time of my two previous articles.

  July 2015 (%) Sep. 2015 (%) Jan. 2016 (%)
Shell 23 14 7
HSBC 13 3 5
British American Tobacco 5 3 0
GlaxoSmithKline 9 4 0
BP 28 20 4
SABMiller 11 5 0
Vodafone 19 7 4
AstraZeneca +10 2 0
Lloyds 1 5 3
Diageo 6 7 0

As you can see, the rate of downgrades has decelerated markedly period-on-period. The modest deterioration since September now suggests a correction of around 22.5% from last year’s high, which would see the Footsie at 5,500.

However, as I said earlier, my tracking of the 10 heavyweight companies provides only a rough-and-ready guide — as it’s an imperfect proxy for the index as a whole. The trend of earnings downgrades does appear to be bottoming out though, and holding off investing in the hope that the Footsie will go as low as 5,500 could potentially be a missed opportunity.

Many blue-chip stocks appear well worth buying with the index at sub-6,000. It may not drop as low as 5,500, and certainly a new round of big earnings downgrades — against the rapidly moderating trend — would appear to be required for a fall heavily into bear market territory. Of course, that could happen (and it may be worth keeping some powder dry for such an eventuality), but the way earnings forecasts are trending, upgrades appear perhaps more likely to come on the horizon. In which case, the Footsie would probably head north and the opportunity to buy with the index at sub-6,000 would be gone.

There are plenty of blue chips around that look attractive right now — whether you’re after growth or income; recovery stocks or ‘Steady Eddies’; UK-focused firms or global businesses.

The shares of miners and oil companies, such as Rio Tinto, BHP Billiton, Shell and BP, are trading at multi-year lows (although dividends in these industries may not be safe in the near term). Reliable cash generators, such as utility National Grid and consumer goods giant Unilever, have been dragged down by the market and offer nice, secure-looking yields. Banks — from UK-centric Lloyds to global HSBC — are trading on eye-catching single-digit earnings multiples. Almost everywhere there are opportunities to satisfy the different appetites of different kinds of investor.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.