The FTSE 100’s outlook is mixed and focus should be on the short term

After a long time spent on Government missions and a little bit of holidays I write this note to you being back in London and looking at the FTSE 100 doing its usual “no direction” pattern. The London index had seen quite a drop at the late days of August but for the most part of September its trading has been mostly sideways.
The reason for that is no other than the uncertainty around the global financial outlook which translates into an uncertainty on the question of the 3rd quarter of 2015: when will the Fed raise its key interest rate and how will this affect the global stock markets. Now we’ve heard from Fed boss Janet Yellen recently and she said that she was pleased with how the domestic market is going and hinted that a rate hike in the next couple of months is a very realistic possibility.
However the fact that on a global scale the economy is not doing as well as it does in the States and at the same time the Eurozone is still struggling with very low inflation is keeping investors cautious. With the ECB discussing the possibility of even more easing the FTSE 100 is at a crossroads since there is a lot of correlation between the London index and the European markets and that shows on the trading on the index.
So for this week my intention is to play the ranges in the FTSE 100 and see how the index will react to the upcoming NFP report on Friday. If we see any trading action above the 6,100 points then I will be inclined to go long and try to hunt the previous highs of 6,250 points. Otherwise, the support level of 5,900 points needs to be penetrated in order to consider shorting the index and look for the 5,800 points’ lows of August. In any case, any trading actions should be fast and focused on the short term as the FTSE tends to get a bit volatile ahead and after significant news releases.
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