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OPINION

Money gushing in

Money gushing in
January 14, 2013
Money gushing in

Money is pouring into equities. This could represent a long overdue realisation of the futility of investment in government bonds at current levels, alongside recognition of the relative and absolute undervaluation of many stock markets around the world. However, before getting carried away with “wall-of-money” type arguments, we should recall that shifting levels of commitment such of this can be a mixed blessing. The recent net inflow into shares was the highest since September 2007. That was, of course, just weeks ahead of the major top in stocks that gave way to the devastating bear market of 2007-09.

For now, I am looking for further gains in both the DAX and the FTSE, despite the latter’s intraday and daily overboughtness.

for analysis of some leading European markets.

COMMODITIES OUTLOOK

09.51

Don’t expect much in the way of sparkle from gold this year. That’s the message of an important survey of expert opinion compiled by the London Bullion Market Association. While the average price in 2013 is forecasted to be $1753 - above last year’s level – few seem to be expecting a really big increase. The highest estimate was $1913, which is below the record highs of around $1925 achieved in late 2011.

Even if these forecasts are right, I do not believe that gold’s bull market has ended. And I do believe there’s a decent chance that the major uptrend will actually resume at some point this year. However, I have no particular insight as to when the move might begin. The key level to watch is $1800. A big move through there would likely demonstrate we were back at the races.

for analysis of some leading commodities and EURUSD.

WALL STREET OUTLOOK

12.35

If anything, I see the US indices as having more upside potential than the European markets right now. While Wall Street is in an uptrend too, its 3 main indices are less stretched than, say, the FTSE 100. This leaves more room for them to push higher, especially the Nasdaq 100 and the Dow. One caveat remains that the 17-week cycle in the S&P could be about to turn. However, I am minded to ignore its message at this time. Neither sentiment, momentum nor breadth are endorsing this bearish view. I continue to seek buying opportunities, therefore.

for analysis of the US indices.

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