Relief that the supports all held yesterday has given a boost to traders this morning and buyers are continuing to fill up on stock.
Early calls in the FTSE were for a move 50 higher but this was swiftly smacked back down on the open and we are currently sitting at around 3950 on the FTSE up 25 on yesterday’s close.
Once again the news all appears to be grim but not quite as grim as expected. Dealers can be forgiven for taking anything that is not actually a disaster as good news, as investors and analysts try to pick through today to estimate tomorrow. It would be nice to believe that the huge impetus from the various central banks across the globe both from the lower rates and the massive cash injections will generate the recovery required but it is a leap of faith, just yet, to imagine that the worst is now over. There will be no prizes for getting heavily long now only to see another bear leg develop over the coming months. There is a smidgeon of truth in the old saying ‘sell in May and go away” although we still have a few weeks before then.
Punters are still trading the ranges and this morning we are seeing selling on the move higher in the indices as the ‘contra move’ trading strategy continues to pay good dividends. The markets are looking to confirm their comfort with the 3700 to 4150 range and, intraday, punters are taking good advantage of markets inability to break out.
Barclays is up 10p again as expectations of an imminent announcement over the Ishares unit continued to circulate and the rally in the Far East on the bounce in US and European equity yesterday is boosting the other banking stocks. The play on banking stock is definitely a knife edge for serious players. Either they are dirt cheap or a second round of bad and doubtful debt through 2009 and 2010 will smash them down into the dust once again. In the current environment there does not seem to be a middle ground at all. Having called Barclays at below 100p as virtually the buy of the century, given the clean bill of health from their auditors (and before the FSA’s seal of approval) it is now rather more difficult at 170p to recommend new entrants. On the other hand neither would I recommend shorting and it must be of some comfort to regulators that those who did sell short over the last few months have come such an evident cropper.
With a four day break now upon us it is difficult to estimate what the reaction to the enforced inactivity will be. With no major evidence that the market is either overbought or oversold there would appear to be no pressure on direction and so activity will probably continue to be muted in the run up in today’s sessions.
On the currency front the Euro is making up some of the recently lost ground but is struggling to make headway above minor resistance at 1.3325. Again the cross (like the indices) is struggling to make much of a move in either direction and we are sitting at pretty much the median point for the last six months (albeit with quite a wide divergence). At 1.3303-1.3305 our clients are very much two way with buyers matching sellers and in truth it is difficult to argue that this is not a valid situation. There is strong resistance way up between 1.3450 and 1.3550 and good support at 1.3100 to 1.3150 but in the middle you might as well toss a coin.
Gold also continues to trade in the range mentioned over the last few days between 870 and 890. An attempt to the upside yesterday failed bang on 890 which caused a swift sell off back to 880 and this morning we are drifting around these levels with little to indicate any impetus in either direction.
Overall today looks to be a write off for exciting trading conditions (famous last words) but pips trading could prove to be nicely lucrative
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