Things a re a tad dull in FTSE land with tiny trading ranges yesterday for the index and today is not exactly gearing up to be much different. The continued weakness in sterling coupled with strength in Commodities is helping the index versus the Dax and the US markets but with both these markets struggling at the new highs we are seeing continued selling from clients.

For the first time in over six months our clients are no longer at our company’s maximum permitted long level in UK equities which indicates that (for many) the markets have rallied enough and profits are being quietly snaffled away. Our client equity traders have seemingly played a masterful hand since March ’09 and I, for one, am not about to say that they are wrong this time.

While there is significant room for a bear squeeze to the upside it must be recognised that the possibilities for a pull back are getting stronger.

The Great Leader survived a sort of slight nudge towards the exit door yesterday after his cabinet colleagues failed to back the putsch although their support was rather less than exuberant. The difficulty for the plotters is that there is no real identifiable replacement. Mr Brown has managed to surround himself with such mediocrity that any revolt would struggle to find a figurehead behind which to group.

Not surprisingly the retail numbers were not so universally received as some in the financial sector seemed to expect. Last Christmas was really dire with many people believing that their jobs were seriously under threat and with the spectre of many of our Banks going to the wall. This Christmas most of these fears have been removed so the announcement that sales were around 1 to 2 pc better did not go down well with investors. With the second half of 2010 likely to be dominated by a lowering of net spare cash for consumers the outlook for retailers for the year is not exactly rosy. M&S managed to give up much of the autumn/winter rally in one disastrous session and this morning is not looking like reversing the move. The FTSE was a tail of Banking, Oil and Mining versus the rest. Anything exposed to the UK economy looks fragile especially after the December consumer confidence numbers from Nationwide took such a pounding.

Obviously the Gold market read my comment yesterday as it proceeded to rally to the exact resistance level mentioned (1141) before taking a breather overnight. So in the spirit of open-handedness I shall talk about the downside today! The markets are now at $1132 and we have support at 1130 then 1127/1128 and below here at 1116/1118. Sellers seem to be in evidence since the high was reached at 20.00 last night but they must get some momentum going soon otherwise the push to the upside might take the reins once more. Long term the target appears to be 1019 for the bears but this does take a deal of believing in just now. To the upside the sky remains the limit but with the US and UK reported to be about to rein in QE and with the ECB taking a hard line with Greece the days of easy liquidity may be limited. In this case we might find that Money Supply starts to contract which could well leave Gold rather high and dry.

Oil stormed all over the place on the Inventory numbers (as warned in our comment) For the very quick there were opportunities on both the up and down side of the market as the immediate reaction took the price 60 cents higher immediately and then a dollar and a half lower in the next few minutes only to reverse once again and rally 250 cents over the rest of the session. Nymex is now at a new, front month, high since the falls form 147 dollars in July through December ’07. For the Bulls the immediate target is 86.30 but for the bears the only desire is for some relief. We have now had 10 straight up days and 15 in the last 17 sessions. This is impressive even for this, famously directional, commodity. Even the May rally of $46 to $73 was a bit more even handed. There is reasonable resistance at 84.80 which might prove difficult to breach just for now but the resistance at 80-82 which had proved so hard to overcome over the last few months has now been defeated and we must therefore speculate that this will turn to support against any pull back.