Difficult to get too excited about things today, although yesterday’s index action was certainly contradictory, with the Dow initially dropping 1pc, rallying 1pc, falling 2pc, then rallying back up the same amount to close; virtually unchanged!

The FTSE pretty much followed suit, but this morning is looking much perkier, threatening the highs of yesterday, with a rally on the off at around 5310 up 45 points. The reason for this is because ummm … errr … more buyers than sellers!? Markets seem, once again, to be trading on the absence of bad news rather than good. Everyone is mindful of the problems ahead, but are less concerned than the headlines would indicate (reading the press sometimes, one would be excused for believing that the end of the world is imminent). Support below 5200 held well, but 5325 seemed to be level too far. Today we are pressing at 5320 and the bulls are in control in early action. The momentum is in their favour and it would be brave to stand in their way just at the moment (although, of course, the failure to break above here yesterday has created a resistance, therefore a selling, level).

The S&P, which yesterday dipped to below par for the year (very briefly), seems to have found good support at that level (around 1117) and for all of the violence of the last few weeks, has only managed one close below this mark. Holders will be hoping that the blow out of early May will prove to be the release valve move that all bull markets need on occasion. The signs for the moment are that everything is slowly stabilising, especially as central banks/governments spend another great wad of cash to keep it all on an even keel. There is a possibility that the entire equity market rally has been driven by the various injections of QE around the globe and it was the knowledge that these had now ended that was one of the major triggers to the big drops. With the IMF/ECB southern European bailout now in place, we can probably see the merry-go-round travel on for a couple more circuits at least.

Vodafone’s numbers were just slightly under expectations, but the company is targeting a divvy increase over the next few years of 7pc, which has been taken well by the markets. Operating Profits were marginally higher, but mainly on cost-cutting, which does not bode quite so well for future growth in such a fierce market.

Currency markets have pulled away from the brink, but the abyss remains very much in sight. The Euro has rallied from a low of close to 1.2200 and is now at 1.2400 this morning. As mentioned previously the 1.2350/1.2450 range was the initial target for the bears and now that this has been achieved the support may well turn into resistance. Rallies above 1.24 look to be attracting sellers as I write, which may well turn into a bonus for the beleaguered currency. Late-comers to the bear party may well be considered weak shorts looking to get in on any bounces. If the Euro/Dollar cross can claw its way above 1.2420 (or even better 1.2450) then there is a much better chance of a serious bear squeeze.

Sterling almost appears the forgotten little brother in all this, even though we are still very much on the down swing versus the dollar and yen (although generally holding its own with the Euro). Sterling/Yen is back at the major support level at 133.30 belo,w which we have traded many times in the last three months, but have never yet managed a closing print. At 134.25 (currently), the buyers are out this morning looking for a similar reaction to the bear move failure, as in times past.

Gold (as we feared last Thursday’s comment) seems to have run out of friends. All the news should have sent it higher, but 1250 may now prove to be the high for a while. As mentioned states across the World are now moving into fiscal contraction and while there is obviously a lot more dollars/yen/pounds and euros around these days, this has to be equated with the fact that gold has now almost quintupled since ‘Our Gordon’ sold off the UK’s reserves. Every defunct gold mine on the planet has been reopened and the flow of Yellow metal is increasing well beyond retail demand and is now only fulfilling ‘investor demand’.