US Equities Move Higher on Hopes that Bernanke Will Introduce More QE
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 24 August 2011
The FTSE is well off the highs of last night but still up on the close yesterday with our current quote at around 5140/41.
Sellers seem to creep out of the woodwork above 5185/90 but our spread betting account holders are still, in the main, looking to bottom pick on any further falls. This is obviously a dangerous game but seems to have served relatively well over the last few sessions. There is particular interest at anything approaching the 5100 mark and lower.
Resistance for the FTSE 100 is at 5175/80 and 5210/15 with support at 5100/10 and 5080/85.
The Dax is continuing to be particularly explosive with hundred point ranges seemly two a penny; we have already had one since the 08:00 open.
There is reasonable resistance at 5625/35 and 5680/90 but it is fair to say that with such violent activity no levels can be considered particularly solid. Support is at 5495/5505 and 5430/40.
The US equities markets rallied on the hopes for Bernanke to 'do something' later in the week but this seems to have played out to a certain extent this morning.
Whilst confidence is an import factor in market direction, clients should beware a classic case of buying the rumour selling the fact. If Bernanke fails to impress we could be in for another wild ride.
Currency spread betting markets seem to be almost somnolent at the moment with the Dollar slowly drifting lower against nearly all comers in recent days but nothing too aggressive.
We are at the top end of the recent ranges for the Euro and Pound, and the bottom for the Yen, which in the past have generally led to a swift reversal back down.
If the Fed does go with QE III then the Dollar may well have a bit of a nervous time of it as the printing presses set off once again. However, as this is the 'fear' then what will happen if it becomes the 'actuality'.
The Pound is looking strong but, as mentioned frequently, Sterling does tend to struggle at any price above $1.6480. The momentum looks favourable for further rallies but then they have looked similarly bullish in the past, continuously from May'09 to November'09 and then May'11, only for the runners to fall at the last.
Resistance is pretty much continuous all the way up to $1.6660 and then $1.6750 and $1.69. Support is at $1.4475/85, $1.4430/40 and then $1.6350/60.
The Euro is continuing to narrow the trading ranges, with the markets forming a technical analysis pennant formation on the weekly charts. We are nearer the top of the pennant at the moment, at about $1.4500, with the bottom being currently at around $1.4050. Within this formation, range trading seems to be the current plan of our clients.
Gold finally had a bit of a mare yesterday, falling almost $100 from its previous day's high. It has bounced this morning but this is a timely reminder that gold is actually a pretty valueless product of only real consideration as an indication of confidence.
If the world decides that spending a fortune for zero yield, the only realistic potential capital appreciation is built on a fear of everything else, then the bottom could be a long way down.
As we have mentioned over and over though, the bulls still have the upper hand and trying to actually stand in the way is a dangerous game. Yes the shorts had their day in the sun yesterday but it takes more than one session to turn a spread betting market.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'US Equities Move Higher on Hopes that Bernanke Will Introduce More QE' edited by SD, updated 24-Aug-11
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