The FTSE 100 hits a new multi-year high but are these levels sustainable?

The FTSE 100 was on the rise during the current week and the main index has gained almost 100 points since the last time we discussed its outlook to come to striking distance from the 6,900 points. However, now that the target seems to have been reached and after a 400 points rise from the 6,500 points area to almost 6,900 points, which is the highest level since 1999, the question is: can the FTSE 100 really hold on these gains?

I am cautious over the FTSE’s outlook for the coming week and conservatively bearish over its coming sessions. It is obvious that the momentum that drove the index to these new multi-year highs has faded out and that’s only reasonable after such an extended run. For the short-term I believe that a retreat down to the 6,780 points area would be justified but the week ahead can be full of surprises.

Keep in mind that during the next 5 days of trading there are 3 extremely important reports scheduled for release for the UK economy and all of them can provide new data on the table: the inflation reading on Tuesday, the Bank of England’s minutes and Retail Sales on Wednesday and the Gross Domestic Product levels on Thursday.

So it will be a very interesting week for the UK benchmark index, technical indications are in favor of a retreat lower with the 6,780 and 6,660 points levels being the areas of focus but any of these reports can offer encouraging insight on the domestic economy that can allow the FTSE to remain afloat.

In my mind, the best approach would be a step-by-step selling mentality: if yesterday’s 6,820 points low is broken we’re looking towards the 6,770 points area, if that is taken out as well then we’ll focus on the 6,660 – 6,700 points area. However, always keep an eye on the aforementioned reports as they can turn the tables on the FTSE’s outlook very quickly.

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