Wells Fargo Earnings Gives Shares An Easter Boost

Better than expected earnings from Wells Fargo (WFC) gave shares an Easter lift. The unwinding of risk aversion saw the S&P test 850 and gold drop below its key 100-day moving average.

It’s a right old Easter egg hunt out there today; little gifts appearing all over the place, but I’ve done my best to avoid them. Two trades I really should have bothered with were long bets in FTSE (^FTSE) and GBPUSD this afternoon; the only bet I did place was a £1 short in gold.

After carefully pointing out the short-term downtrend in FTSE yesterday (Lower highs And Lower Lows In Equities), today’s events ruined the pattern by posting a higher high and higher low.

This move was on the back of a better than expected earnings report from Wells Fargo, which gave a bid to equities and high-yielding currencies. And it feels like we could see a half-decent close in equities, but I’m looking to finish early for a welcome Easter break.

I spent the morning resisting the siren calls of the trading platform; luckily I had plenty to do so didn’t succumb to the dreaded boredom trade. But this afternoon was full of temptation with Sterling rallying against the Dollar, and recovering yesterday’s losses against the Euro. I nearly bought GBPUSD on the confirmed break above $1.47 and I nearly bought EURGBP at £0.90. Both trades would have made enough for a few Easter eggs, but I didn’t trust the markets.

Ironically, my sole trade is sitting just the wrong side of break even at the moment. This morning I posted a piece on gold (Is Gold Last Year’s Fashion?), concluding that although I’m bullish on gold over the longer term I’d be looking to sell on a break below the 100-day moving average at $880.

I hadn’t intended to trade ahead of the Easter break, but the reaction to rising equities gave me a hefty push. I’d seen that government bonds were falling as traders switched to higher-risk markets. Gold followed, dropping below $880 and carrying on down to $874. I used the bounce to sell a token £1 at $878 and was in the money for a while. But the gold bugs are trying to keep the price above support, this despite a further rise in equities.

As I’m typing the S&P has just poked its head above 850 and the Dax above 4500.

It’s interesting that the FTSE index isn’t looking too keen on testing 4000; is that a sell signal or just a sign that City traders have already left for the day? Certainly after the fall on Alcoa’s results, and subsequent rally on Wells Fargo, I feel justified in my short-term neutral stance on FTSE.

Right, I’m off to find my family, but will be back on Tuesday.

Happy Easter

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