FTSE’s outlook hinges on the upcoming PMI reports and I am conservatively bullish

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The FTSE 100 didn’t offer us much in terms of thrills and excitement the week that passed and instead preferred to consolidate its previous gains around the 6,750 points area. The really impressive rally that we witnessed during January turned into a sideways, non-directional pattern throughout the previous days and this morning the UK index is still looking for momentum with limited price action.

As I mentioned to you in my last note the investment consensus among traders was that the FTSE 100 couldn’t sustain its current levels and that the index would have to give up the gains it recorded during the first month of the year. However I also explained why I thought that this is the perfect environment for the FTSE to move even higher, should it find the necessary spark.

I continue to be of this view and this week I am looking towards the PMI reports from the UK that have the potential to provide the essential fundamental spark to send the FTSE higher again. This is not to say that I have any kind of “inside information” that the reports will beat expectations, I am just saying that if we see robust readings in the Manufacturing and Services’ sectors then the excitement could send the FTSE above the 6,800 points again with a view to climb towards the 6,900 barrier.

The important pivot point for me this week is the 6,800 points area, if the FTSE finds its footing and climbs above that level with momentum then I think that we’re going to see it reaching at least its previous highs just shy of the 6,900 points. That’s my game plan for the week ahead and I am hoping to see it materialize.

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