The FTSE continues to be undecided despite a last minute rally in US stocks last night. Other indices continue to catch up with the FTSE, which breached its 2010 high last week, whereas the likes of the Dow and German Dax are still lagging below their 2010 highs. Even if we see gains from other markets, then the FTSE could quite easily continue to trend sideways.
This is the sort of price action we’d expect during a period of little news flow, economic data and earnings. On top of this, investors will be aware that the end of the first quarter coincides with Easter, so many may already be winding down or getting into holiday mood ahead of this break. The lack of any push higher is starting to run a little doubt in the minds of bulls, so it will come as little surprise to investors if we see a move to the downside.
Next week too, there is little to shout about on the economic data front, but at least today we’ll end the week with something to get our teeth into. At lunchtime we see US retail sales, which are expected to decline, but again mainly down to the adverse weather. Recent Beige Books have indicated a gradual improvement in conditions, so the risk to the downside for the figure should be limited. Therefore a negative figure might be interpreted as being bad initially, but it certainly doesn’t mean a change in the trend.
This afternoon the University of Michigan confidence is released, and the expectations are very mixed. These other confidence numbers have not complimented the dire consumer confidence at the beginning of March, so further prove that those numbers were an anomaly, but we shouldn’t be surprised to see a worse than expected figure.
Cable staged another mini recovery yesterday, capturing the 1.50 level again and this morning is continuing its rally sitting at 1.5110 at the time of writing. This is the fourth time this month that cable has found support below the 1.50 level and a few “hammer” candlesticks on the daily chart are indicating that a bottom may have formed for now. The strength is surprising too since today’s daily You Gov poll puts the Tory lead at just 3 points, however that’s in stark contrast to the Angus Reid poll, which showed the gap between Con and Lab as 13 points. The market will most likely be discounting the polls now as each one uses different methods to collect their data and the polls are never 100% accurate anyway.
Gold tested some stops around the 1100 figure yesterday and bulls were quick to push the precious metal back, and now we’re 14 bucks better off around 1115. It’s been a bad week for gold, which is on course to post its biggest weekly fall in nearly two months. The news flow has been supportive of the Greeks actions to address their fiscal woes and as a result that’s meant gold hasn’t had its allure as a safe haven. Gold seems to be coming to a crossroad having largely drifted sideways so far in 2010 and many technical analysts are pointing out that the metal’s price action is forming a “flag”. This basically means they are expected a break out to the upside and our clients are certainly positioning themselves for such a move with the majority of gold positions being long ones. One gets the feeling though that something pretty dire will need to happen in order to cause a spike to the upside for gold.
Oil has grinded higher for the last couple of days and is back above $82 in what’s been a very quiet session so far this morning. There’s a danger that the market is forming a bit of a head and shoulders pattern, and if we don’t take out the highs around $84 formed in early January, we could see a sharp move to the downside.