Is the FTSE 100 on a roller-coaster ride lately and if so, what’s the next turn ahead?

It seems like the FTSE 100 is trading in circles for the past couple of months, running impressive rallies higher only to reverse course and give up all of its gains. It’s no wonder then what we saw last week when the London main index lost all the gains it made the week before.

Last time I wrote to you the FTSE was trading near its previous highs at the 6,850 points area following an impressive run higher starting from the 6,700 points. But for yet another time the British index stalled ahead of this medium-term resistance and when the previous

week began it thought “hell let’s turn around and go the other way now”!

It’s true that it was a difficult week for the stock markets in general and it’s evident that after

the initial surprise caused by the spectacular US jobs report investors realized that nothing changed. Even though the report revealed an impressive performance in the labour market in the US that initially drove the US indices to new highs the investment consensus is that this development does nothing to alter the Fed’s timetable to raise rates late in 2015 or

early in 2016.

And right after the rally cooled off it was the disappointing results from the UK economy that threw the FTSE off the cliff. The slowdown in both the Manufacturing and the Industrial

Production reports caught investors off guard especially when the estimates made word for further growth. Add to this disappointment the miss in the German Trade data that confirmed the fears that Euro-zone’s steam engine is slowing down and there you have it: the FTSE 100 was back down at the 6,700 points support.

The final leg of the retreat came on Thursday when Portugal’s second biggest bank delayed coupon payments on a short-term debt and brought back memories from the recent banking crisis. The European stock markets extended their losses and the FTSE 100 traded down to 6

,650 points losing more than 200 points over a week.

Now for the week ahead I am optimistic over the FTSE’s outlook and here are the reasons: regarding the miss in the Manufacturing and the Industrial reports, even though they both

missed by a wide margin their three-month average growth rate remains impressive so I am expecting a bounce higher next month and the market also knows that. Furthermore, I don’t think that the temporary glitch in Portugal will be more than just that, a blip on the radar.

I am looking for a reversal in the FTSE 100 and an attempt to regain the lost ground, my pivot point for this scenario is the 6,700 points. A clear break above this barrier will signal

that the market is back on a positive territory and my first target in this scenario lies in the 6,750 points area. However, in case any surprises come our way and the FTSE turns negative again the key support is the 6,650 points and any penetration below that should drive the FTSE towards the 6,600 points.

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