The storm clouds seem to be parting even as I write. The FTSE and Dow indices have managed to break to new highs although the S&P is still (just) under the highs of October and earlier this month and the Dax (suffering from the strong Euro) is 150 points from the peaks of last month.

Commodities are also attempting a surge in early action but Oil seems surprisingly resistant to the wiles of the market move especially considering the current weakness in the dollar. No such fears for Gold, which continues to rise as though the end of the world (or at least the dollar) was in sight.

As indicated the dollar continues to suffer as the global economies ‘recover’ and there may be some discussions going on in the corridors of the White House as to the sensibility of continuing the huge fiscal stimulus. Investors on Planet USA might like to imagine that the country is an island unto itself but the continued pounding being taken by the Greenback might have rather longer term consequences than forecast. The country still relies to a huge extent on external funding of its deficit but, as both the credit worthiness and the underlying currency value continue to weaken, the cost of supporting this may well become a heavy burden for the future. Of course you can take this number and square it for the position that the UK finds itself in at the moment and, while we are forgetting this in the surge away from the bear market, most longer term investors are aware that the piper will have to be paid at some point.

This morning sees the FTSE up at 5350 and, in truth, looking quite comfortable with the new highs. The ‘big beasts’ in the FTSE 100 are of course not exactly descriptive of the UK economy with most of their revenue earned far from these shores so the performance cannot be too closely allied. But the FTSE 250 (a much more UK based unit) has actually shown the senior index a clean pair of heels this year. The 250 is up over 45pc on the year to date versus ‘just’ 20pc for the 100 index. The low interest rate conditions seem to be assisting the large/medium sized companies rather than the giants. Of course the large preponderance of mining/oil in the 250 has not harmed it either.

Our clients (who have been selling from about the 5250 level) seem happy to hold onto their shorts and we are seeing increasing selling as the move higher holds steady. If this scenario is being mirrored across the dealing rooms of the city there is a good chance that we might see a spike higher as shorts get pressured to cover their positions. So clients should be cautious of getting too bearish up at these highs.

Having said this resistance is just above the current levels at 5365-5380 then at 5415. There is very heavy volume resistance from last year all the way from 5300 up to 5550 and 5650 which may well prove a bit of a barrier to any further advancement. On the downside there is obviously support at 5300 but there is also a target of 5150 from a gap in the futures market created on the weekend of the 7th/8th of this month. Markets tend to hate gaps and have an unnerving ability to close them out.

On the currency front the Pound is looking steady versus the dollar but is also, unfortunately, not following the Euro and Yen higher. If the weekend move in the Euro unwinds in later trade we may see some strong selling pressure arise for poor old Sterling. This morning we rallied to the resistance level at 1.6740 (previously mentioned in these comments) but have since drifted all the way back off to 1.6675 as I write. While we did peek above the range last week to hit 1.6840 the bands are still very much in evidence between 1.60 and 1.6740 (roughly). If we start to push to the downside then traders may well target the lower end of the band once again. In essence (aside from the odd very short term break) this range has been in evidence for six months now.

The reporting season is now drawing to a close without any really awful disasters to send us lower and conversely quite a few surprisingly robust numbers helping us higher. This commentator might ponder as to whether analysts had really considered the effects of the lower interest burdens on many of our over leveraged corporates. While there is evidence that lending is becoming more difficult for many smaller to medium sized units the same cannot be said for the components of the FTSE 350. Demand for corporate debt at (prior to 2009) unheard of levels is high. The search for some kind of return continues unabated and a major beneficiary has been this arena. The problem with this is the prognosis for the future, how long will rates stay this low and with the new domestic demand in the Far East for their manufactured product the spectre of inflation cannot be just wished away.

But this is a problem for the future. At the moment the markets are good and the sun is shinning between the showers.