The choice as to whether Wednesday was a one off panic or a sign of things to come has (for the FTSE at least) seemingly come down on the side of a welcome buying opportunity (gratefully taken by many of our clients as we mentioned yesterday).  The UK’s senior index has recovered much of its fall but…. oddly, this is not universal.  The Dow and S&P are definitely off their lows of yesterday but are still 350 and 40 points respectively off the highs of earlier in the week.  This can be explained by the fact that much of the bad news that kicked off the drop came out of the US and therefore it is not unreasonable to surmise that they should have been the heavier hit.  Unfortunately for this argument the US is still a major driver for Europe and the UK and, while the old saying that “when the US sneezes, Europe catches a cold” is not so relevant these days due to the opening of Eastern Europe and the maturing of the Far and Middle East into manufacturing power houses, it is still difficult to see the UK out-performing North America.

The FTSE is trading around 5300 with clients making the most of the choppy trading conditions.  While bear markets are generally bad for our traders small drops and recoveries are usually quite remunerative.

As we oscillate around 5300 clients seem to be getting into the swing of buying after any down days and selling after the ups.  Very frustrating for the market makers but, for a cautious player who picks his/her levels, not unrewarding.  Resistance remains at 5305/10 5350 and 5405/15 and support at 5265/70 (which held us back through yesterday’s session) and below here at 5200/10 and 5165/70.

The US markets as mentioned have recovered from their lows but the bounce seems less enthusiastic than in Europe with the Dow now just some 100 points from its lows.  If another general move to the downside starts once more it is likely that the trigger will be this afternoon’s session from over the water.  It has been a frustrating week for investors as we began on Monday hammering at the highs and looking likely to break higher but end it worrying about the strength of the last month’s rally.  We may well find that the Yanks decide that discretion is the better part of valour for the time being and a Friday after a mid week plummet is not a time to be getting too over optimistic.

On the Currency front the Euro has bounced slightly from the lows but it must be said that it is suddenly looking weaker virtually every other major.  We are looking at support around 1.2830 and 1.2760/80 as with yesterday.

Versus the Yen the Dollar did bounce off the 84.80/85.00 level as speculated and recovered to over 86 but selling this morning is building once again ad we are at 85.90 as I write.  The Yen is very strong in the face of rising confidence in the East versus the West and one does get the feeling that the Majors remain in a race to the bottom.  All OECD nations would (on the quiet) like to see their currencies lower to aid growth and so we find ourselves in a situation where politicians are actually dissing their own currency.

Gold has managed to, finally, get back above 1212/14 and hold there but does not seem to be making much of the break out.  Actual highs from July were around 1218 and so traders are probably waiting to see whether we can get over these before getting too enthusiastic but the woes from the equity markets and the possibility of further ‘printing of money’ from the US and Europe are causing some further speculative buying.  Bears will be hoping for s return below 1212 and then an attempt on 1202/04 bulls will naturally be hoping that we remain at these levels for a while an induce confidence for another shift higher.