Greater London, England -- (SBWIRE) -- 09/25/2010 -- Joshua Raymond, Market Strategist, City Index (http://www.cityindex.co.uk) commented:

“The stock rally continued on Tuesday helping the FTSE to trade above key resistance levels with buying in the heavyweight energy and mining sectors yet again leading the charge higher for EU Indices.

However, volumes in the market are not huge and therefore I would not see the recent buying as a clear indication that investors are betting on masse on there being extra stimulus measures announced in tonight’s Fed meeting.

I feel that we are at a bit of a crossroads in sentiment with tonight’s Fed decision. Increase asset purchases and the markets could welcome the proactive stance of the Fed whilst those sceptics amongst us will draw concerns on what may be around the corner if there is a need to stimulate yet again. On the other hand however, do nothing and the market may take this as a weak stance by the Fed.

The FTSE 100 has now rallied over 8% this month and we are on course for our best monthly rally since July last year, which considering how historically poor September usually is for trading, should breed confidence into the markets. We have the third quarter earnings season approaching too and they are coming in on the back of largely outperforming first and second quarter numbers, whilst mergers and acquisition activity continues to come through. Taking a step back there are lots of positive aspects for stocks.

Yet I must admit there are investors out there who are not getting too drawn in yet and do not trust the sentiment behind the moves higher and this increases the potential for profit taking the higher we go. As the Dow Jones and S+P approach the 10900 and 1150 levels respectively, we could be at a point where the true strength behind the recent Index gains is found out.

Cairn Energy rises on Greenland oil find
Shares in Cairn Energy rallied over 2.8% in early trading after the oil firm said that they had found evidence of oil in an exploratory well in Greenland. The moves in today’s shares are not massive however and investors are holding back somewhat until there are more clues as to whether a reservoir of oil can be found. Certainly though we have received a number of speculative buys in Cairn Energy today on hopes that they may be onto a significant new find in their offshore operations near Greenland.”

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