Newspapers seem obsessed with bank remuneration packages as the bail out of a few of the UK banks is used as a whip to flog them all. The vast majority of the City saw no real problems at all (aside from the temporary credit crunch period) and has used the gyrations of the markets over the last few years (and the increased margins available) as an opportunity to make money. As with all financial crises ‘cash is king’ and those with the financial resources to survive without explicit state aid have done very well indeed. The numbers being thrown around by the National Audit Office are of the ‘put a finger in the air’ and guess variety. To suggest that the UK tax payer has ‘spent’ 850 billion propping up the financial sector is just inflammatory nonsense. Yes they gave guarantees and added liquidity where needed but 90pc of this was never required. The state has been lending to financial institutions at penal rates (12pc if you all remember) and been paid for it. They have bought into rights issues which may or may not produce a profit BUT (and it is a big BUT) there have been no blank cheque written to UK institutions only bloody big IOUs in the form of share capital and interest income.

Compare this to the Icelandic banks where UK depositors (in the search for just a little bit more interest income) have lost their all and the State is actually compensating investors in real cash with nothing to show for it!

Non-Farm payroll day today so things will probably be quite muted in the early session.

Yesterday saw our clients (as mentioned) selling in the mid to high 5300’s on the quite reasonable basis that the market had failed up there a few times already so why not give it another go?

Ranges are becoming so constrained that both short and long client positions have no time at all to warm their seats before being closed out on marginal price action. This is a long way of saying that while clients were heavy sellers up at 5350 and above they have already become strong buyers at the small pull back to just under the 5300 mark. The 5300 to 5305 support/resistance level seems to be a trigger for both stop sells on the way down and buys on the way up so day traders will be eying the range in early morning action on the off.

Virtually every market had a look at the recent highs before deciding that the effort was not worth it and drifting lower in late action. The Euro even managed to exactly match our commented range (1.5140 to 1.5040/60) in yesterday’s session printing 1.5141 and 1.5061 during the day session and getting down to 1.5035 late in the evening. The Euro is now at 1.5075 and looking comfortable but traders may be concerned that the news of the slow down in liquidity provision for EuroZone banks did not lead to a Euro rally. With US banks busily paying back the Treasury the States may be closer to a tightening of money supply than is expected. If this happens the dollar (which has been the whipping boy for years) may suddenly become a tad more attractive. Quite a few ‘mights’ and ‘maybes’ in that last sentence but these are the type of signals that traders must be at least aware of.

Oil also helped clients out as our commentary dwelt on the weakness that seems to be pervading the commodity at the moment but also stating that anything below 75.75 seems to bring out the buyers. The Nymex January contract neatly obliged with a drop to 75.60 before managing some support and is now holding at around $76. We are still a bit nervous for the Black Stuff as it seems unable to regain the bullishness of October and earlier in the year but (while we remain above $75.50 on a closing price basis) it is also difficult to be too negative either. Traders will probably continue to play from the long side at these prices (76.05) but must beware a break lower.

Gold continues to make new highs although the early morning peak yesterday at $1226 was never seriously challenged through the rest of the session. For the moment we are seeing selling from clients at prices north of $1215 but punters appear nervous of a sell off taking us under the 1200 mark. Unlike the 800, 900 and 1000 talismanic levels 1100 and 1200 seem to have been passed without any real problems. The acceleration over the last few months in the Gold markets is remarkably similar to the Mar/may move of 06 and Oct/Mar 07/08 both of these saw sharp pull backs before regaining the upward momentum and there seems a slight feeling from our longer term ‘longs’ that they do not want to add to positions above here.

Resistance and support is now necessarily quite wide (as the market has moved so much) but we are seeing minor support at 1201/1204 and 1195 and resistance at 1214 and 1220.

Non Farms will no doubt give the markets a shove in one direction or the other but traders should always be aware of the overall fundamental directions. While data has been good or bad over the last six months the market direction has eventually overcome fears to reach new highs. It would be odd if this trend was to be broken now. This does not mean that the markets will not fall on bad news but that they will possibly rally further on good.