I am getting back into the daily news and trying to get my focus back on the markets. It’s another earnings season and with that we can expect some good beats and some scary misses. The interesting thing will be if we can push the markets higher or sink back lower when all is said and done. Personally I think we will escape flat to slightly higher once the earnings are over and this will leave us time for a nice Christmas rally. Yeah I’m already thinking of the Christmas rally. Every year it has taken me for a ride but maybe this year I should sit it out and save some cash.

The rally so far has taken on many new subscribers with me included. Many of the perma-bears have shed their coat and are now wearing a nice new
bull skin. I had thought that the fundamentals would have put the breaks on the markets but then lots of little things kept improving. This morning is a case in point as UK house prices rise for the first time in 16 months. All this little signs have fed the most amazing and unprecedented rally in recent history. Hindsight has clearly shown us that the March lows were very oversold but the current pricing in of growth is in my humble opinion overly exuberant. Somewhere in between these two extremes lies the perfect market price. However that’s not my concern, in the past this would have swayed my view but now I’m just watching the trend and not questioning the greed.

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With volume low today on the Dow the push lower was more a case of no buyers rather that lots of sellers. The panic selling that was expected never occurred and the Dow was simply pushed lower on weak volume.

The FTSE held well at 4000 and briefly scouted below before coming back to settle at 4025. Tomorrow Obama outlines his housing solution and we will see how markets react. I’m confident of a return to 4200 on the FTSE as I think this current drop lacks the real conviction to drive us lower. It’s going to be a testing week but unless someone releases dire news I see us heading back into the trading range.