The Bank holiday break has seen no pull-back in the markets and the FTSE is actually called up 40 at 5790 in early trade (although I will be stunned if this does actually happen). Every asset class seems to be taking comfort from a range of news bulletins, although some of them are necessarily contradictory from an investment point of view.

With growth triggered by continued infusions of Government largesse, we are still treading a very narrow tightrope between an ignition of inflation or (when the tap of public money is turned off) a return into recession. With the UK Government still the crutch to which virtually the whole economy depends, Gordon Brown is correct to worry that any Tory cuts in public sector spending might send us back into recession. The problem with this argument is that a) he got us into this situation in the first place and b) the longer we delay the greater the problem will become. Politicians seem to thing that virtually any route is better than grasping the nettle, continually pushing problems further and further into the future, unfortunately ‘the future’ now seems to have just about arrived.

As mentioned, the FTSE was being called 40 up, but as I am writing the market has actually opened and (unsurprisingly) the anticipated surge has completely failed to materialise and the market actually came in almost unchanged. Our clients have been quick to count their shekels, as the massive preponderance of business was to sell through yesterday and this morning and this has been almost immediately reversed, with buying through on the official market open.

We have broken above resistance for the FTSE as in ‘real’ time the markets had not actually traded higher than 5755, so the bank holiday prices may not form a barrier to future business. Much higher than here and we will be talking about 6000 as the next target for the bulls, and it must be said that if we do peek above 5800 in the near term, then analysts and commentators will start to focus on the level.

In all the excitement over the FTSE, the Dow seems to have run into something of a brick wall, with 10950/11000 blocking the way to higher prices. We have now spent some twelve trading sessions between 10830 and 10980 and the effort of reaching higher is getting ever more difficult. This said, the more representative S&P 500 is showing no such signs of fatigue, with new highs being created on a weekly basis. As with the Dow at 11000, the S&P also has a psychological resistance looming into view at 1200 and it is this area which may prove crucial in times to come. Back in October ‘08 it, was the breaching of 1200, which triggered the huge fall down to 830 in just a couple of weeks trading (most of the rally of the last year has just served to recoup this two-week period of chaos).

On the currency front, the Dollar has regained some of it strength after last weeks late fall out. Cable is back below 1.52, having made it up to the resistance levels around 1.5300/1.5320 over the Easter break. The Euro is also looking a tad weak in early action, falling to 1.3400 after 1.3600 was briefly flirted with on Thursday night. The continued weakness in the Euro will be worrying the ECB, but aside from platitudes, there appears little that they can do. Greece et al have fallen into problems at the worst possible moment, when most of the potential ‘saviours’ have themselves fallen on hard times and with the Greek largesse over a wide range of areas now under the spotlight, you do not have to be a raving reactionary right-winger to understand that the average German (with retirement at 67) does not take kindly to the idea that they must subsidise the Greeks with their retirement age at 60! This is a problem that will run and run.

The Euro has some support at 1.3400/1.3410, and Cable has support at 1.5170/85, but it would be a brave man to stand in the way of dollar strength at the moment. The numbers out of the States over the weekend were not particularly wonderful but … in comparison to Europe and the UK … on another planet. For all the problems over in the US, they are still a huge country with a comparatively small population and vast resources. Not only this, but their currency is still the main player on the board.

Gold has run up against the resistance at 1132/34, which has seen the end of several bull runs of the past. Bulls will be hoping that we do not slip back below 1118/1122, which has proved pivotal on many occasions. Odd to say for a market that has been so exciting over the last few years, but Gold is becoming almost predictable (on an overall scale), with supports and resistances either holding steady or giving way in a classic manner leading to the next price shift. We are stuck between 1080/85 and 1145/50, and it is really hard to be confident of either direction.

Oil, on the other hand, is showing no such signs of worry powering higher on an almost daily basis. We have put on some four bucks in the last week, breaking above the 82/83 resistance that has proved so tough in the past. We are in clear air here and bulls will be looking at 90.50 and then (obviously 100) for their inspiration. Bears are clinging on for dear life and are pinning their hopes on weaker economic data and stronger inventory numbers. It must be said though that for the moment ‘the force is with’ the upside, and while I am not a particular Oil bull, it is difficult to justify standing in the way of the current move.