Footsie Fortunes

AS we remain transfixed by the price of oil, expecting any significant movement to be a catalyst of inverse relationship to the major stock indices, many people have failed to notice that something else has been happening – gold has been going through the roof.

Dust off your Krugerrands, polish your gold cufflinks – the price of the precious metal is up and is here to stay.

The dollar-sensitive gold price was propelled further this week after bearish comments on the US dollar by Federal Reserve chief Alan Greenspan. The gold price has risen from $400 dollars in September to $449 dollars in the past few days. In addition the price is up 40% from last year's low of $320 and about 70% over the past three years.

These are impressive prices rises in anybody's book, genuinely reflecting the level of uncertainty in Western economies.

Looking at the charts I have noticed one thing, there is no reason why the price rises should cease. The technical target is $500 exceeding the level last seen during the late 1980s.

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The FTSE 100 has experienced a minor pull back over the last few trading days as strong commodity prices come back into the fray.

Technically the FTSE 100 is still a buy and these pull backs in the index value only present further opportunities.

All markets move in a saw-tooth pattern and the pull-back during the past couple of days, appears to be typical.

The charts still say we will finish the year in excess of 5,000. The trend is still up - go with the trend and accumulate on any pull-backs. If the market breaks 4,600 on the downside, the uptrend is reversing and stops should be in place.

Footise Fortunes is written by Simon Brown of Quantigma - a firm specialising in tools for technical analysis. It is regulated by the Financial Services Authority. To learn more about trading strategies and psychology visit www.quantigma.net/seminar.

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