As mentioned in yesterday’s comment virtually every market was sitting just under the resistance levels with Indices, Gold and Oil all pressing to move higher. By the close most markets had drifted away from the top of the ranges but had definitely stayed within reasonable touching distance of making another attempt.

This morning has seen the currency markets take a break to the upside with resistance versus the dollar giving way in early European action and dealers will be aware that over the past months dollar weakness has tended to be (though not always) a trigger for higher prices. Bulls will be hoping for more of the same.

In pre market action Commerzbank has announced worse numbers than forecast but this has, yet again, failed to bother the equity markets one jot. The constant ability of the markets to ignore poor data (mentioned here several times over the last couple of weeks) is definitely encouraging for those looking for a continuation of the recent bounce. And, although we must be very wary of a sudden shift in sentiment into bearish territory, our clients seem to be picking up on the feeling. Normally at the highs or lows we see quite a bit of client ‘contra trading’ as they try to call tops or bottoms but this time dealers seem content to ‘go with the flow’.

This said, resistance in the FTSE remains exactly as we said yesterday at 5370-5385 (funnily enough the high was 5384 so I win the fluffy bunny) and we must break through here soon otherwise the level will gain confirmation status encouraging heavier selling pressure. The S&P likewise followed the pattern mentioned yesterday of trading above 1110/1112 only to fade by the close. This morning we are at 1113.5 so we might almost be talking about déjà vu once more. The major western indices are bullish (no doubt about it) but….. as mentioned we must break soon.

Currencies traded in a very restricted range yesterday but have already broken out in early European action with the Cable cross now up at 1.5560. There is big resistance at 1.5570 to 1.5585 and 1.5615/1.5625 which may well cap us for the time being. We have seen so many attempts to try to reverse the dollar rally over the last few months, all of which have come to nothing in the end, so it is difficult to get too excited just yet. But it must be noted that the Euro and Yen are also probing the up side so perhaps today is going to be a bad day for the greenback; definitely a case for waiting on events.

On the commodities front Gold seems strangely muted having attempted (yet again) to break above 1127 only to fail once more and drift later in the session. For the bulls the fact that the pull backs are getting weaker and weaker is definitely something to cling to. Since the lows on the 5th Feb every rally has peaked at a higher price and every sell off has given up, again, at higher levels than the last. This is generally seen as a classic example of a bull market and while money can be made on the short side (many of our clients took the resistance level at 1127 as a good point to sell) dealers should beware of getting too aggressive on the bear front. If we manage to trade below 1108 (and more especially 1098) then we may agree that the momentum for the bulls will have gone.

Oil seems to be contemplating life around the 80 buck level again with no current appetite to take us above 81 and similarly 79.50/79.60 looking too much of an effort for the sellers. More solid news on Far Eastern growth would no doubt pressure the up side but for the moment we seem quite comfortable. Dealers will be watching the aforementioned levels for evidence of a break (or for range trading opportunities) but with the price currently at 80.30 there appears little for new position takers to get their teeth into.