Dow Jones Hits 5 Year High
Yesterday, the FTSE 100 saw both a new intraday and closing high for 2013, which was impressive to say the least.
Unfortunately, the move caught many Financial Spreads
clients off guard as they had been largely short of the stock market index
. In fact, some actually increased their sell positions as the day wore on, meaning that a few fingers were probably burnt on the way up.
The move higher indicates that there's life in the rally yet, despite some obvious political headwinds.
Fresh from the golf course with Tiger Woods, President Obama resumed his attempts to avoid the potentially catastrophic cuts to government spending due to kick in on 1 March.
Both US political parties refuse to budge and the Republicans are looking to force the President's hand after the can-kicking that happened over New Year.
With so much at stake, it's a little surprising to see the stock markets continuing higher, and this is probably the reason behind clients' willingness to maintain their bearish bias.
Yesterday, the Dow Jones rejoined us in fine form by rising to the highest level in more than five years, gaining 53 points to reach 14,035.
Back from holiday, US investors rushed into shares
, encouraged by the good news on the European economic front.
In addition, the fact that around 70% of the US companies that have released their corporate results have exceeded estimates continues to offer support for stocks.
Nevertheless, the strength in US indices has not led to another surge higher by their European counterparts as, at the time of writing, the FTSE 100 is just in the red at 6375.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Angus Campbell, 20 February 2013