Markets are all back where they were before Tuesday’s late sell off and it must be said that (at the moment) everything feels very comfortable at these levels.

The FTSE is being called at 5250 up 40 points (where we closed the evening session yesterday) and the bulls will be eyeing the 5300 level and the bears will be wondering a) what went wrong and b) whether the highs of the last seven sessions from where we are now up to 5300 will hold firm and keep us offered.

Oddly enough the indices markets seem to be following the fortunes of the Dollar at the moment (on a micro analysis) with weakness in the Greenback causing rallies in the Dow, Dax etc and strength causing falls. The same phenomenon seems to be showing through in Oil and Gold. We are in the situation once again where every asset class is acting in parallel, all very nice in a bull phase but a tad worrying if things start to get a bit smelly.

As mentioned the FTSE has quite a bit of resistance above 5250 with investors quick to reject these higher levels but also unwilling to sell below 5165. Our clients were confident enough to buy into yesterday’s early weakness and the medium trend line support at 5160 (also focussed on in the comment) held steady and brought in further buying. Since we broke and closed above 5200 on the 14th of this month there has been no real follow through even though much of the corporate news (since the reporting season got under way) has been well above expectations. Each piece of good news has given rise to a spike higher but the optimism seems to dry up in subsequent sessions.

The official data has been quite bumpy as well which has not helped. If the economy really turned a corner over the last quarter we might be expecting every piece of news to be better than the last. Unfortunately this has been patchy at best. In the US the housing numbers this week were much worse than forecast (especially on the mortgage applications number, down over 13pc) although leading indicators were better. Likewise US PPI showed a sharp drop and Retail Sales in the UK were flat on the month.

Trading continues to be very contained in the Eur/Usd cross with the 1.49 level seeming to hold an irresistible attraction. Last night it seemed that we might have finally broken away from the mark with the close at around 1.5025 and early morning action today pushing us up to 1.5060 but subsequent offloading in the early European session has taken us back to 1.5000 and traders will be watching for evidence of a return to below the old 1.4965 support/resistance level.

Oddly enough the big mover at the moment seems to be the Pound with continued buying taking us significantly higher versus both the Yen and the Dollar. The Euro seems to be taking some strength from Sterling and European leaders are probably a tad frustrated that the Euro seems to take strength both in times of Yen and Sterling potency but following neither when they are weak. Eur/Jpy is now pressing towards the highs for the year with the price at 137.90. We have seen three peaks this year already in the cross all at around this price area. In April we ran out of steam at 137.45, in Jun at 139.15 and in August at 138.70. In all three occasions the reaction sell-off took us at least 9 cents lower to below 130.00. Long term traders will be well aware of this and will be wanting to see a solid close above 138 before getting too excited about further moves higher.

Oil is pushing towards the recent highs again after the very short term profit taking of recent sessions. While we have traded higher than the current price of 81.50 in the December Nymex we have not actually closed up here yet so bull traders will be hoping for some traction this evening to give an indication that the target levels at $85 and $90 are achievable in the short term.