Geoff Cutmore - Morning Thoughts

Bear Market Rally or Bull Back in Charge?

Geoff Cutmore
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We had it all this morning, the bear case, the bull case and the sell into the rally story. For retail investors looking for guidance from the professionals these are frustrating times.

The polarity of views reflects the degree of fear and fracture there is in the market place. No matter that there are solutions on the table for most of the ills that haunt the market. The US has got serious about the growth outlook, the regulators know they can't afford to let the bond insurers fail, and the Fed - well I think we all understand now, that the fed will do whatever it takes.....

So what does that leave ... valuations. There seemed to be a meaningful examination of value on Friday - and not even the weak jobs number could head off the buyers. Does it have legs? It's the question of the moment.

The corporate newsflow was distracting and contradictory this morning. Ryanair saw a below expectations number on the company's 3rd quarter - Vestas wind systems wowed the market. Bids in the tech and mining sectors are keeping those themes well supported.

The supports for a tradeable rally appear to be in place, a view offered on the technicals by Robin Griffiths. Do you stay and play or stay away? That of course is down to risk tolerance and skill. Robin described the profile of a london rally as a bear market bounce to sell into - by his measure the market is below its 200 day moving average and therefore too weak to hold any gains for long.

Our guest from Citi wealth management called the market quite a bit higher by year end. Continued sub-prime problems may dog investor sentiment, but the power of easier money would generate an unstoppable wall of liquidity. By this logic, we are not experiencing a bear market, but rather a pause in the bull trend which will retrace the years losses.

Your feedback always welcome - here.