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Markets approach resistance

18.04.08

Last week we looked at the arguments for and against an extension of the recent rally on the FTSE 100 index, and because the trend was still just about up we remained slightly biased to the bull side. It has therefore been pleasing to see an excellent week for many of our long side positions (we’ve done pretty well on our shorts as well), and the reasons for the rally have been twofold.

Firstly, it looks as though we have reached the point where most of the first wave of sub-prime bad news is out of the way, and the latest season of US reports is showing that write downs are not rising to the extent they did in previous quarters. It also seems likely that in his panic to avoid being seen as the worst Prime Minister in decades, Mr. Brown is working behind the scenes with the so-called ‘independent’ Bank of England to prop up the UK housing market by preparing to lend more funds to the banks.

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