Markets continued in their volatile fashion yesterday as equities tried to recover from the heavy losses on Monday and did to a certain degree, but after the close the futures reversed and in the end the rally looked very meagre indeed. 

For equity indices the bulls are starting to look like they've really run out of steam, something that's been a bit of a recurring theme throughout the year.  On the daily charts a series of double tops, triple tops and what's looking dangerously like some head and shoulder patterns are preventing the FTSE, Dax, S&P and Dow from forging ahead to new highs.

Throughout 2011 we've seen repeated attempts by indices to break through to new highs only to have their parties ruined by another bomb shell from either Europe or now as is the case, the US.  At least there seems to be a glimmer of hope on the US debt ceiling front as it looks like a deal is almost done, but then the markets never really expected there not to be.

From a technical point of view these failures and chart pattern formations are really becoming a concern for the bulls and in order for things to swing back in their favour, more than anything else, we need to see a resolution to the European debt crisis.  That is supposed to come this week but considering that it has taken a year to get nowhere on the issue it would be amazing to see an agreement on who should pay the bill.  Germany's
Chancellor continues to stick to her guns in asking the banks and private investors to take the brunt of the write downs and haircuts to their loans whilst the ECB President wants the richer nations (er, make that just Germany) to pay.

For now at least European markets seem to be content with the gains over in the US and are bouncing from the lows once again as this morning is expected to add a little more to yesterday's gains.  At the time of writing we're back above 5800 at 5810 and resistance is seen at 5850 and then 5890/5900.

There's a little meat on the economic data front today with BOE minutes this morning and here the sentiment seems to have shifted.  Ever since arch hawk Andrew Sentance stepped down the MPC has become more dovish and now there's a distinct possibility we could see further QE in the UK when only a few months ago the talk was of interest rate rises.  The vote will be interesting and could lead to some volatility for sterling in the FX markets.  Even though growth looks decidedly dodgy for the UK, at some point the MPC will have to bite the bullet and raise rates from their all time low, but this will likely be well into next year.

Later we get EU consumer confidence and at the same time US existing home sales.  It was yesterday's better than expected housing starts that were one of the drivers behind yesterday's strength in the Dow and S&P so a better than expected number later might lead to a continuation of that strength.

Sterling is already seeing a little weakness ahead of the BOE minutes this morning with GBP/EUR dipping back below 1.1400 to 1.1360 at the time of writing.  This is due to a bit of cable weakness and euro strength which sees GBP/USD at 1.6100 and EUR/USD at 1.4175.  There isn't the usual strong sell off of the dollar that you'd expect to compliment this morning's equity strength and so one way either should give, be that the stock indices retracing a little or the dollar weakens some more.

A sharp snap back in the price of gold and silver yesterday caught a lot of bulls off guard.  As expectations of a deal on the US debt ceiling profit taking was quite aggressive and at the same time there could have been quite a bit of a squeeze on the bulls.  The yellow metal plunged back below 1600 while its white cousin dipped back below 40.  Both at 1591 and 39.25 respectively, the bulls could be quite excited and see yesterday's pull back as a buying opportunity.