The FTSE 100 pulled back a bit during the trading session on Tuesday, breaking below the 7700 level, albeit only just slightly. I think that the market will eventually go higher, reaching towards the 7900 level, and then possibly even the 8000 level after that based upon the longer-term charts. I believe that the FTSE 100 should have plenty of support underneath, extending down to at least the 7600 level, if not the 7500 level. Below the 7500 level, then I think the market breaks down rather significantly. At that point, I would become a net seller of the FTSE 100, as I think it would unwind quite drastically.
In general, I believe the buyers will continue to be attracted to value, but keep in mind that there are a lot of geopolitical issues that could move the stock markets worldwide, as they are so highly correlated. I believe that the overall attitude of the market is going to be volatile yet positive. I think that at this point, it’s likely that the position size should be small, and then added to as we continue to break to the upside. Overall, I think that the patients needed to trade this market will be difficult for some people, but eventually I think that the buyers will be rewarded. Again though, if we were to break down below the 7500 level, the market could unwind rather drastically.