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Animal spirits


S&P's sideways grind

Both on Wall Street and over here, I see the action as pointing to more gains. The sell-off has been inconsequential compared to the rally that went before it. Seasonality has turned positive, while the internals of the market, like breadth, are robust. In response to my column on breadth last week, James Goss emailed to ask whether breadth in London was in as good nick as in New York. The answer is yes: the latest high in our FTSE 100 was accompanied by a fresh peak in its advance-decline line.


FTSE's perky breadth

While all this bodes well for a good final few weeks to 2013, I'm a bit unsettled by how many other pundits are saying the same thing. The latest Investors Intelligence survey shows that 52.6 per cent of US tipsters are currently bullish with just 15.5 per cent bearish, a gap of 37.1 per cent. When the gap is above 30 per cent, it's often seen as a mark of over-enthusiasm, and supposedly heightens the risk of a pullback in the US market.


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