Market indices 20/50 dma - QE3 and beyond - update 24

Well, the Fed did more or less what was expected of it by the markets yesterday and it looks like the market is finally beginning to believe that the central banks will act and deliver what they want to hear. Whether what they are delivering will be successful is still to be determined, but it's clear the markets would rather have stimulus than no stimulus and inflation rather than deflation.

We can see by the market action today that risk is back.  Under-performing shares in the more risky sectors like mining have been on a roll today, while more defensive stocks have either failed to join the QE3 party or even fallen, Vodafone mentioned here yesterday being one of the few out of favour stocks.  On the other hand, FTSE miners have been partying like its 2007.  

Here are the top 20 FTSE100 and 250 winners for today;


FTSE 100 - Risers 

Kazakhmys (KAZ) 773.00p +13.68% 
Vedanta Resources (VED) 1,090.00p +13.36% 
Evraz (EVR) 293.70p +13.22% 
Eurasian Natural Resources Corp. (ENRC) 363.20p +10.90% 
Fresnillo (FRES) 1,870.00p +9.81% 
Anglo American (AAL) 2,084.00p +9.17% 
Antofagasta (ANTO) 1,334.00p +7.84% 
Randgold Resources Ltd. (RRS) 7,420.00p +7.38% 
Glencore International (GLEN) 378.85p +7.23% 
Polymetal International (POLY) 1,081.00p +7.03% 

FTSE 250 - Risers 

Aquarius Platinum Ltd. (AQP) 48.80p +18.73% 
Ferrexpo (FXPO) 225.00p +14.80% 
Essar Energy (ESSR) 131.50p +14.65% 
Petropavlovsk (POG) 433.90p +14.64% 
Fenner (FENR) 419.10p +9.86% 
Hochschild Mining (HOC) 490.70p +9.04% 
New World Resources A Shares (NWR) 313.00p +8.08% 
Talvivaara Mining Company (TALV) 169.00p +7.78% 
Man Group (EMG) 88.50p +7.66% 
Centamin (DI) (CEY) 89.70p +7.43% 

So, miners, energy and commodity plays (I've included industrial manufacture Fenner as it mostly supplies the power/energy industry with equipment) 19 - The rest 1.  Even worse, leading the charge for the rest was bombed out hedge fund manager Man Group. 

Why bother with a 5% dividend in a year from boring old Vodafone, when you can get 5-10% in a day from a mining company, provided you don't get on the wrong side of the volatility.  Risk seems to be back on the table and to a degree that is what the central banks want and why savings IR's will be kept low for a long time, they want people back in the markets. 

We are slowly turning Japanese, but with a difference.  The Japanese stock market and housing market bubbles were much bigger than those in the UK and US.  Japan stocks at the height of the 1989 bubble stood at around 39,000 with an average P/E of 60.  By the beginning of 1989, Japanese share markets accounted for more than 42 percent of the value of all markets worldwide. The UK FTSE and US Dow and S&P have been positively depressed by comparison.  Bears who seem to think that turning Japanese should mean big falls in the US, UK and European stock markets to come need to think again.  Something would need to hit company earnings really big and so far since 2007 despite austerity and banks reluctance to lend, many companies have continued to do well on the earnings front both in the UK and USA. To put it simply, the fundamentals are not anywhere near as stretched for UK and US companies as they were in Japan in 89, but there is still the little matter of debt to overcome in the West.

For now, the FTSE chart still looks quite bullish and the basic 20/50 dma crossover is still holding good.  The MACD indicator is also signalling potentially more upside. We have seen a significant brake above previous resistance at 5800, an attempt on 6000 is now on again.