Markets continue to move higher on nothing very much except a lack of bad news and the continued drive for return.  This is not to say, in any way, that the move is not warranted as we may now be looking at cash rates down at sub 1pc for much longer than anticipated and bond yields similarly suppressed as rating agencies affirm Sovereign credit levels.  The bear moves have been increasingly built on weird fears and unless one of the myriad of doom laden prophesies actually comes true we may just find (in a few months times, as we look back) that the equity markets were in rare buying opportunity.  Unfortunately, of course, we still have the present to deal with and the tides of sentiment are still rising and falling on an almost daily basis.

The FTSE is now at 5380 as I write and bears are being squeezed in early action. As mentioned in comments past there was heavy resistance at 5340/50ish which had been the peak of the last two moves up and this may now prove to be resistance to any attempt to move back lower.  There has been the odd poor corporate announcement but in the main the numbers have been exceptionally good both in Europe and over the pond.  The Dow has rallied almost 500 points in just a week and it is tempting to say that the bulls have control.  Over and above everything is the undoubted fact that there is a huge amount of money looking for a home and not everyone wants to risk investing in the Middle/Far East.

BP have announced 17.1 bln loss (it sounds less if you say it quickly!) but this is pretty much in the numbers already and so the stock is unchanged on the day.  Unfortunately for investors once the immediate problem is out of the way the focus will then turn to ‘growth’.  The company is well used to dealing in the more unstable parts of the globe but has always backed this up with a strong presence in North America and the Middle East.  The future might have to be more focused on gaining income from the former which makes the revenue stream rather less certain so a return to the 600p level is probably not on the cards just yet.

The S&P and Dow are up at the highs for the month as July continues to turn June’s falls on their head. The highs of June were 1134 and 10600 respectively are still a small move higher away and they will no doubt exert something of a barrier to buyers.

On the currency front the Euro is back at 1.3000 this morning as the Dollar continues to take a bashing.  Goldman’s have come out on the Euro’s side and is now forecasting higher levels which has brought in buyers over the last session or so. 1.3000/20 is resistance which held us back through yesterday evening and all of this morning’s action over in Japan’s session but so far a breakout to the upside has proved elusive.  It is almost certain that an attempt will be made at some point to break into a new range and traders will be waiting to try to take advantage either by selling (in the hope of a failed move) or buying looking for continued progress higher.  Support is around 1.2950/55 and then down at 1.2845/65 but in the current sentiment this looks unlikely to be probed soon.

Sterling is likewise doing well against the Greenback but seems to be struggling at 1.55 with 1.5520/30 proving to be unassailable just for the time being.  Sterling/Euro had managed to get north of 1.2000 in yesterday’s session but while the Euro continued to move higher the Pound rather ground to a halt and has now slumped back to 1.1890.  Dealers are unlikely to get too excited at these levels as current prices can be seen to be pretty much the median level of recent times.

Gold retraced back (almost exactly) to the major support level (once again) in yesterday’s session and has bounced marginally from this point.  The current price of 1186 will be giving bulls hopes of a buying level as the support is holding but will also not be dismaying the bears too much either as the bounce from such a major level has not been exactly sparkling.  1175/78 remains crucial and should be watched by traders as any breach may be taken very poorly.  Whilst we remain above here, though, buyers will continue to pick up positions.