Was in discussion with a top analyst from one of the major investment banks and the general thrust of the conversation was how fairly valued everything was at the moment. Aside from individual stocks which an argument could be made for one direction or the other he was rather stumped to come up with any overriding argument for overvaluation or otherwise in any of the major markets. As the provider of a trading platform for retail traders this is obviously not the kind of thing we like to hear as uncertainty and opportunity are grist to the mill for speculative dealing but I have to admit the last few days have rather settled markets in a particular grove from which it is quite hard to adopt a view.
Today sees the Non-Farm Payroll number at 13.30 which is expected to come in at minus 85k, it must be remembered that ‘growth’ is generally seen as a positive number north of 150k, and this shows how far we are from a genuine solid return from the recession of last year. The market has built in quite a bit of negativity over this data so there might be a small relief rally in the Dollar if the number is not too far away from the forecast.
On the index front the FTSE continues to flirt with 5400/15 but with the best will in the world it is difficult to see the momentum to get much above here just at the moment….of course the opposite could also be said. We have returned to the mid to low 5300’s. Since returning to plus 5300 level we have seen no appetite for prices under this mark nor for above 5400 and this morning shows no signs of this trend changing. Support is at 5350/60 and 5300/15 and then down at 5250. Resistance is 5400/15, 5450 and 5490/5500.
For the Dow we can almost say the same thing since finally getting over 10600 there has been no follow through above 10700 but no return into the 10400/10600 range. Dealers seem almost somnolent and trade volumes on the exchanges are historically very low indeed. July and August are always supposed to be the quiet months but we have become used, over the last five years, to dramatic events unfolding over the holiday period. This year the summer seems to be returning to its historical low levels.
Currency markets have spent the last month smashing the Dollar ever lower versus the Euro, Pound and Yen. The Dollar Index is now 10pc below its highs of spring. While this is a natural rebound from the bull market move of earlier in the year each move higher will presumably get harder and harder as valuations tip towards Greenback undervaluation. This said, if the Fed really does go down the route of even more stimulus packages after the Europeans have bitten the bullet over budget deficit issues then the Dollar may fall considerably further. Oddly enough the US administration is now fiscally significantly more interventionist than Europe (even though the US is still given to statements over the Socialist policies of the Old World).
Gold is still just under 1200 having had one of its quietest days for a while yesterday. Today does not look at the moment to be any different either and we can speculate on a continuation of the 1190-1199 range for early trading as well. 1190/1192 is support and below here is 1186 on the up side 1202/04 is close resistance and then 1212/14 from the last attempt to move higher.
Oil is clinging onto the 82 level after one of the quietest sessions this year yesterday left us perched at the top of the ranges. Trading is slowing up here as well as dealers await either a definite break higher above $83 or a return into the sub $80 buck range which has dominated for the last few months.