FTSE 100 turned to downside but strong Retail Sales kept it afloat

The FTSE 100 has come off its recent 6,900 points highs and last week we discussed that the outlook has been turning to the downside and that the index was looking poised for losses. However, I also mentioned that the FTSE’s outlook and how far down it will go depended on the way 3 important news releases would print.

Indeed the inflation report, the Retail Sales figures and the GDP estimate were key for the FTSE’s medium term outlook and even though the inflation and GDP numbers were released in line with expectations the Retail Sales significantly surprised to the upside. This along with the less bearish comments included in the Bank of England’s minutes also released this week allowed the FTSE to remain around the 6,800 points area after dropping as low as the 6,775 points support.

Now for the week ahead, the outlook remains bearish even though the last couple of sessions casted a shadow over the current downtrend’s continuation. As I suggested last week, a step-by-step shorting approach looks the best bet and at this time the key support level is the 6,775 points low. If this level gets broken I believe we will be looking towards the 6,700 points over the next week.

Keep in mind that over the next week there are a few significant events scheduled that could have an effect over the FTSE’s outlook: the German Retail Sales and the US Durable Goods Orders on Tuesday are the first and the US GDP revision on Thursday comes next. Unless something important pops up I am prepared for further losses in the FTSE 100 over the coming sessions and I am looking towards the 6,700 points as the first target.

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