Bulls to drive Footsie higher

After making a new 15-year high last month and charging above 7,000 for the first time on Friday, the FTSE 100 continues its record–breaking run. Up at a new high of 7,065, the blue chip index has now rocketed 5.5% since recording its worst day of the year a fortnight ago, yet investors are showing little fear and the rally rumbles on.

According to Lloyds Bank Private Banking's latest survey, net sentiment is strongest towards UK property at 43.4% and UK shares, up 7.4 percentage points on last month to 36.5% in March. "The positive sentiment towards UK shares is reflected in the pace of the UK economic recovery which remains solid," said Ashish Misra at Lloyds.

And demand for housebuilders shows little sign of slowing. Persimmon, Barratt Developments and Taylor Wimpey were all bid up Tuesday. Insurers Old Mutual, Standard Life, Friends Life (FLG) and Aviva were, too, although high-flying airline IAG is top of the risers.

"With talk of an imminent 'Grexit', investors are expected to lock in some profit and head for the sidelines. However, with deflation in the UK and the prospect of low interest rates for the foreseeable future, equities appear to be the only game worth playing and we should see some buying on the dips," said Mike McCudden, head of derivatives at Interactive Investor.

Annual inflation in the UK fell to 0% in February for the first time, according to the Office for National Statistics Tuesday, as lower energy and food costs continue to depress prices.

"Anything above 7047 now suggests an initial 7077 with secondary 7101," says Alistair Strang, a technical analyst at Trends & Targets. "Overall, it has now done sufficient to suggest a short position at 7444 should prove viable in the future... If they try a slowdown, it needs to fall below 7000 to signal an initial 6979 with secondary 6935."

Strang explains that the 7444 level is one of these calculated target levels which occasionally throws up against shares and indices. "The market has a problem getting past such a point unless either they opt to 'gap it up' at the open, or feed it some downward volatility. In theory, the 7444 level would be the ideal point to backtest my 6937 level, but I somehow doubt a 500 point gift can be expected."

That 6937 level is a point which the market "needed better to allow transit from 'Recovery Mode' to 'Growth Mode'. For some reason, it will doubtless give a gravitic attraction to the FTSE until such time the market now closes above 7444."

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