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FTSE 100 5,773

A quarter-point interest rate cut to 5.25% by the Bank of England did not impress the market last week (Thursday 7 February), as many hoped the watchdog would act more aggressively to stimulate an economy with clear bearish sings.

Policymakers are clear that, while the 2.1% inflation figure for December is near the 2% target, high energy and food prices are expected to raise the figure.

Investors are responding by slashing equity holdings and the blue-chip index lost all the gains it made in the late January. It seems to be heading towards its lowest level for a year, below 5,600.

In the absence of reassuring news about the economy, the fall could continue. The 5,725 level - important support, according to Warren Firth, investment consultant at IG Index - was broken last week and we see this as a bearish sign. Go short on the index, possibly targeting a move below 5,500, but place a stop loss before the topical 6,000 level.

ACTION: SELL FTSE 100 • Target 5,480 • Stop loss 5,980

TIME TARGET: 4 WEEKS