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Sport News 24/7Did yesterday actually happen?
Daily Financial Analysis 
/ Simon Denham / 13 February 2009 / Leave a comment
Daily Comment Friday 13th February
Did yesterday actually happen?
I only ask as virtually every major market, having tried valiantly to break out of the current trading ranges, is now pretty much where they closed on Wednesday evening. Cable had a solid look at 1.4150 but has decided "nothing doing" and is back at 1.4450 300 points higher. The Dow had the most impressive try for freedom breaking through the support mentioned yesterday at 7850 to get as low as 7695, down over 200, before bouncing fully 270 pips in the last hour to close up on the day! Now at 7940 it is almost as if it never occurred. Ditto the S&P, FTSE, Gold, Euro etc
The activity yesterday may be very significant indeed for future direction as a rejection of a solid breakout in so many markets could very well have shown that the supports built up over the past month are strong enough to defeat even a dramatic attack. In yesterdays comment we were quite bearish on the Dow but made the point that it must CLOSE below the support not just trade under it.
As mentioned our clients were very nervous about buying the US markets yesterday morning but there is now a lot more confidence and we are seeing solid position building across the equity/indices spectrum. What we need now is to challenge the resistance to the upside, in the Dow there is minor resistance at around 8020 but a heavier barrier at 8135 which signifies the six month falling trendline. Throughout the action in the European session the FTSE seemed very reluctant indeed to move lower and while the Dax was plumbing the depths (almost 160 points down at one point) the FTSE was struggling to push even 60 to 70 points to the downside and closed just 30 off with the Dax down 120. If the market will not go down ... maybe..
Numbers coming out of China concerning economic growth (after the appalling export numbers last week) are actually quite hopeful as the state spends vast sums on infrastructure projects. Of course it helps a bit when the state has run a budget surplus for years and has the money to spend. Growth is expected to remain in the mid 6pc region 1H09, not brilliant (for a still emerging economy) but not disastrous either. As is usual in the UK, for all of the talk about big building projects to boost the economy, nothing appears to be going on, for one thing planning appeals will probably delay any possible spend for years(!) as everyone and his dog indulges in NIMBYism. The idea that in as structured an economy/democracy as the UK you can just turn on major building projects was probably always in the fantasy range. The requirements for new power sources over the next decade or so will be a tempting recipient but the problem here is that the money would be spent on something that we already have but just needs replacing (very urgent of course but not exactly a stimulus). New roads, rails, airports etc are the classic form of spending but when such a small item as a new bypass now takes more than 17 years from conception to delivery it is difficult to see how this can be achieved in the 'here and now'.
With very little room for manoeuvre over government spending the UK may well end up as a lagging recipient of other countries growth. As the US and Europe pull out of the downturn the UK will then (at a later date) be pulled along with them. This would be a truly dismal state of affairs as it would doom the domestic economy to low and delayed growth for a very, very, long time indeed. If this does occur then we will have endemic high levels of unemployment and tax burdens.
The markets as mentioned earlier in this comment are looking very perky and it is tempting to see a continued move higher through today's session. We have, of course been here before but this is the third reaction bounce from failed attempts to the down side in a month (26th Jan and 2nd Feb) and each try to push us lower is failing at higher levels. We are still in Bear territory but there might just be a map directing us towards the Bull compound.
Did yesterday actually happen?
I only ask as virtually every major market, having tried valiantly to break out of the current trading ranges, is now pretty much where they closed on Wednesday evening. Cable had a solid look at 1.4150 but has decided "nothing doing" and is back at 1.4450 300 points higher. The Dow had the most impressive try for freedom breaking through the support mentioned yesterday at 7850 to get as low as 7695, down over 200, before bouncing fully 270 pips in the last hour to close up on the day! Now at 7940 it is almost as if it never occurred. Ditto the S&P, FTSE, Gold, Euro etc
The activity yesterday may be very significant indeed for future direction as a rejection of a solid breakout in so many markets could very well have shown that the supports built up over the past month are strong enough to defeat even a dramatic attack. In yesterdays comment we were quite bearish on the Dow but made the point that it must CLOSE below the support not just trade under it.
As mentioned our clients were very nervous about buying the US markets yesterday morning but there is now a lot more confidence and we are seeing solid position building across the equity/indices spectrum. What we need now is to challenge the resistance to the upside, in the Dow there is minor resistance at around 8020 but a heavier barrier at 8135 which signifies the six month falling trendline. Throughout the action in the European session the FTSE seemed very reluctant indeed to move lower and while the Dax was plumbing the depths (almost 160 points down at one point) the FTSE was struggling to push even 60 to 70 points to the downside and closed just 30 off with the Dax down 120. If the market will not go down ... maybe..
Numbers coming out of China concerning economic growth (after the appalling export numbers last week) are actually quite hopeful as the state spends vast sums on infrastructure projects. Of course it helps a bit when the state has run a budget surplus for years and has the money to spend. Growth is expected to remain in the mid 6pc region 1H09, not brilliant (for a still emerging economy) but not disastrous either. As is usual in the UK, for all of the talk about big building projects to boost the economy, nothing appears to be going on, for one thing planning appeals will probably delay any possible spend for years(!) as everyone and his dog indulges in NIMBYism. The idea that in as structured an economy/democracy as the UK you can just turn on major building projects was probably always in the fantasy range. The requirements for new power sources over the next decade or so will be a tempting recipient but the problem here is that the money would be spent on something that we already have but just needs replacing (very urgent of course but not exactly a stimulus). New roads, rails, airports etc are the classic form of spending but when such a small item as a new bypass now takes more than 17 years from conception to delivery it is difficult to see how this can be achieved in the 'here and now'.
With very little room for manoeuvre over government spending the UK may well end up as a lagging recipient of other countries growth. As the US and Europe pull out of the downturn the UK will then (at a later date) be pulled along with them. This would be a truly dismal state of affairs as it would doom the domestic economy to low and delayed growth for a very, very, long time indeed. If this does occur then we will have endemic high levels of unemployment and tax burdens.
The markets as mentioned earlier in this comment are looking very perky and it is tempting to see a continued move higher through today's session. We have, of course been here before but this is the third reaction bounce from failed attempts to the down side in a month (26th Jan and 2nd Feb) and each try to push us lower is failing at higher levels. We are still in Bear territory but there might just be a map directing us towards the Bull compound.
