As the FTSE 100 approaches the 7000 mark, Ill take a look at where it could go from here. Will it push on to 7500? Or correct to 6500?
Cutting Through The Noise
As I write, the index is steady at 6927, just off its high of 6949, which it achieved last month. I find this strength interesting given all of the geo-political goings-on around the world: Greek indebtedness, the crash in the price of oil and unrest in several countries across the world to name but a few it makes me wonder where the FTSE 100 would be currently if none of the above-mentioned events had come to the fore.
Not Too Expensive
I think the reason that the FTSE 100 has held up so well recently is the fact that it isnt too expensive. Indeed, with a forward P/E of around 16 and yielding 3%, the market doesnt strike me as being expensive. Compare this to a P/E of around 30 when it peaked in 1999 and I think youll agree that it has a long way to go before it becomes as expensive as that.
Add pensions freedom and the ability of parents to transfer child trust funds from 6 April 2015 and I dont think that it would be out of the question for us to see the FTSE 100 rise to 7500 this year.
Fools Rush In
Now for the bad news.
Whilst it is quite possible for the FTSE 100 to push on from here, there are a number of factors that could combine to give investors a rather rude awakening:
- Political uncertainty with just 62 days to go until we go to the polls and another hung parliament predicted, investors could be in for a shock if this major political event creates uncertainty. As we all know, markets hate uncertainty. With the FTSE 100 floating around 7000, we could see some steep falls;
- Financial uncertainty Greece recently bought itself a few more months, but there are a number of commentators questioning how far the can will be kicked down the road before they have to admit defeat and leave the Eurozone. Whilst Greece on its own wouldnt be the end of the world, I think that the uncertainty of other countries also deciding to default on their debt and leave could cause market-wide panic.
These are just two of a number of known issues. There are also unknown events that can derail markets and cause widespread panic.
Take It Steady
For me, I would be very hesitant about putting a lump sum into the market at these levels. I would, however, have no issue feeding money into the market on a monthly basis. It is true that you would buy high on occasion, but you will also see some lows and be more aggressive with your dry powder when you feel that the market is cheaper.
If timing the market is not your thing and you would like to get a glimpse of1 Stock that our analysts believe could be Poised For Global Domination, then you can find out more details in our latest report:The Hidden Story Behind One Of The Most Daring E-commerce Plays Of 2015.
Within this FREE report, you will see3 Hidden Factors that give this FTSE 100 company the edge over its competitors — but are not currently appreciated by the market. But don’t miss out — this report is only available for a limited time.
To learn more about the report for free, simply click here.
Do NOT buy this stock
Theres lots of opportunity out there in todays market but theres also PLENTY of danger.
In anticipation of Champion Shares PROs brief opening to new membership a few short weeks from now, the analyst team behind the Motley Fools most exclusive service has agreed to share 1 stock they believe YOU would do best to avoid.
PRO research is rarely made available to the general public. To find out the name of this “don’t buy” company — and to claim your 100% FREE copy of Steer Clear Stocks right away — simply click here.