Into the lull between xmas and the new year and index markets are all sitting above resistance levels and in potential ‘new high’ clean air. This having been said it must be admitted that there has been a limited reaction to all the indices finally breaking clear much of this might be a consequence of the time of year of the event but it must be admitted that buyers seem few and far between just now.

The potential huge cost of any agreement at Copenhagen has been seen off as self interest (naturally) came to the fore at the end. In reality the chances of the West cutting back to the emission levels suggested was quite limited as (no matter what our politicians agree to) any signature would have possibly sent us into a thirty year industrial decline and the idea that the emerging nations would serve their citizens so badly as to restrict economic growth to such an extent by agreeing to the limitations was always fanciful. For all of the woes ‘possibly’ waiting to happen due to climate change it is unlikely that economic straitjackets will ever achieve more than a lip-service following.

On the other hand the news of a lunatic trying to blow up an Amsterdam/Detroit flight might have sent the markets sharply lower as paranoia spreads once more across the globe but, for once, traders seem to have held steady. This might be the best indicator for immediate directional impetus as the failure of the sellers of US index futures on Sunday night/early Monday morning to get any traction at all was illuminating.

The Dow, oddly enough, is still actually below the intraday high hit on the 14th Dec (10570) while the resistance levels were mainly between 10470 and 10520 and we are now above these the little niggle in the brain that the big rally has not clicked in index above 10570 yet seems to be holding off too much enthusiasm. The Dow is now at 10560 and traders will be eying any attempt to get back under the aforementioned 10520 resistance (now support). In the FTSE the 5400 barrier has definitely gone and initial action on the off this morning saw a spike in the FTSE futures pushing the index up to 5450 as weak shorts were squeezed. But, post this event, there has been precious little to excite us and dealers are (in the main) keeping their powder dry awaiting events.

Currency markets have seen a small pull back in the Dollar over the Christmas period with the Cable cross currently back above 1.60 and the Euro struggling over 1.44. This said the Yen is not following suit and seems unable to get back under 91 having failed to hold the 88 break back at the end of November. On the other hand 91.80 looks to be very good resistance on the upside for the Dollar versus the Yen and we might be looking at some constrained activity in the next few weeks/months.

The pound (while recovering slightly against the dollar) still seems to be the general whipping boy when there is nothing else to do and, looking forward, it is rather too easy to speculate that a bitter election battle will not exactly improve things.

Cable reached 1.6070 this morning, pushing above the 1.6030 resistances but the effort appears to have been too much and we have slowly sunk back down again to the 1.6010 level, pretty much where we closed yesterday. 1.5930 looks hard to penetrate on the downside as well so dealers will probably attempt to play the ranges until a confirmed break out is achieved.

On the Oil front we have now managed a solid 2 week rally from 69 bucks all the way up to $79 and we are now back in the trading range which dominated October through November ($76 to $81). Clients played the rally well but now seem to have had enough and we are seeing net sellers for the first time in a while. There is solid resistance from 79 dollars all the way to 81.50 and it might take some effort to break above this but (if you can extrapolate long term aims with short term movements) the failure of Copenhagen will not have done the prospects for higher oil prices any harm at all.

Gold seems to have lost its allure for the moment even though we have managed to bounce from the lows in recent sessions. The short term trend line higher which we breached on the 21st Dec seems to have now become a rising resistance level. If this is the case then we can see heavy resistance at 1112 but support some way further away at 1070 and the critical long term rising support at 1050.