Capital Spreads boss ponders whether it is time to warn clients of a possible retracement.

The FTSE 100 (INDEXFTSE:.FTSE) is 0.36% lower at 5,756.73.

Simon Denham at Capital Spreads offers the following advice to those pondering a spread bet on the FTSE 100:

"The indices markets are definitely tired but are they tired enough for us to caution traders on the possibility of a retracement?

"While we continue to hit new highs in the markets the trading ranges are contracting considerably with the FTSE managing just 40 points range in open action through yesterday’s session and the Dow just 60 points (if we are generous!). It appears that we are piling up just under resistance levels across the board with the FTSE 100 bashing at the 5775/5800 and the Dax struggling at 6300 the S&P at 1200 and the Dow at 11000 all nice round numbers.

"A break out in one would probably trigger a move in all so the chances must continue to favour the upside for the moment but I have to admit that while ‘fortune may favour the brave’ caution would appear to be the watchword for the moment.

"Retail sales in the UK went off the scale in March as everyone appeared to put their shopping shoes on pushing sales up over 6pc. The high street continues to be where the UK population gets its kicks and one supposes that for the good of the economy as a whole in the short term this is essential. Unfortunately, of course, we continue to spend as a nation much more that we earn and a some point one assumes that this will have to be addressed (just not right now).

"UK retailers seem to have gone off the scale in the last few sessions but one does wonder whether they will be able to maintain the momentum once the squeeze starts in earnest from late 2010 onwards. At some point the government will have to stop ‘taxing the rich’ (as this is generally not just a zero sum gain but actually an exercise in ever decreasing circles) and start to either cut back in state expenditure or raise the overall tax burden (Income tax, VAT, fuel etc etc). This must inevitably lead to lower disposable incomes.

"On the currency front the euro continues to hold reasonably steady versus the dollar but the Greek induced rally seems to be petering out. Traders are wondering as to the ongoing strength of the rally but are conversely not keen on selling much below 1.3570. A break under this might bring out short sellers again, it is a truism that ‘gaps’ in the market tend to be filled and there is a gap from Friday’s close at 1.3495 and the current level."