A bit hard to add anything to yesterday’s comment as virtually everything is exactly where it was.

Markets seem determined to talk themselves into a sense of panic and yields on ‘safe haven’ assets remain at all time (ever) lows.  It is rather curious that while things do seem a tad ‘low’ the types of doom laden prophesies that I am reading every day appear completely out of line with current reality.  Yes, things are tough and likely to get tougher but it could be argued that much of this is already written into valuations.

This said I am not exactly rushing out to by equities just yet!

The FTSE is opening at 5140 having chanced its arm to the down side late in the US session last night but eventually finding no follow through in the early European market.  As with yesterday’s comment there is support just below current levels at 5125/35 and then 5100/5110 and with resistance up above at 5165/75 we may have just as boring a day today as yesterday.  Corporate numbers out yesterday were almost universally good and so we may get a delayed reaction to the up side in early trade as the week winds to a close.  We also have the revised GDP numbers at 09.30 which will probably not do much but might have an effect on currencies.  This afternoon sees GDP data out of the States as well, with the Personal consumption data and the well watch University of Michigan Confidence survey.  As mentioned many times over the last few weeks markets are of a mind to look badly on any data so traders should beware getting too confident even if the numbers are better than expected.

Currencies seem to have hit a reasonably stable level around 1.27 for the Euro and 1.55 for the Pound.  The Yen cross is also battling a bit in the mid 84’s.  The currency is definitely overvalued but with the world and his seemingly battening down the hatches the attractions of the Yen and Swissy are driving them ever higher.  We may well find a situation where any good news drives the yen lower and any bad, higher.

Support in the Euro is at 1.2690/1.2700, 1.2665 and below here at 1.2590/1.2610.  Resistance to the upside 1.2735/45 and then 1.2790/1.2800.

In the pound the resistance is 1.5535/40 and then 1.5595/1.5610 and support at 1.5480/90 (quite strong) and then the 1.5390/1.5400 level

Gold continues to hold the high ground and one gets the feeling that it is either building its strength for a sharp move higher or is (possibly) building a second ‘shoulder’ in a head and shoulders formation which would see prices sharply lower in the longer term. Take your pick. We really need more bad news to keep the bull momentum going as more money pours into the perceived safe haven of the yellow metal. But the old argument that inflation is good for gold seems to have been forgotten as the forecasts for prices are hardly aggressive.  Support is at 1228/1232 and then 1220/1222 resistance is 1238/42 and obviously the recent highs of 1244 up to 1248

Last Updated: August 27th, 2010