How much further will equities travel before they arrive? The ‘Big Bad Bank’ talk has worked wonders for ailing banks around the world, but how will equities react when the facts are announced?

The rally’s a bit perplexing (what with short bets on FTSE and a couple of banks), but there are several factors driving the move. The obvious one is the ‘Bad Bank’ talk and, in percentage terms, it’s given one helluva kicker to the banking sector. Also, speculation over what could come out of tonight’s FOMC meeting is adding to the purple haze.

Given that the Fed hasn’t got any interest rates worth talking about, it’s thought they might announce details of their Quantitative Easing plan. And if you’re wondering what the hell that’s all about, Moley wrote a great piece about it in December.

And to finish off the bull casserole add a sprinkle of month-end adjustments. But, especially in the US, the January month-end is more peso sauce than a touch of basil. The S&P provides added interest as US folk-lore has it that January’s performance determines life for the rest of the year; if January’s up, it’s a bull year; if it’s down, put on your bearskins.

At the moment the S&P is fast-tracking at 866; it’s target to break-even is around 894 and I reckon there are plenty with a vested interest in seeing the market above there.

But what of next week? With the month-end out of the way and Obama unwrapping the nation’s present to itself, what’s there to look forward to? Yeah, it might be the start of the brave new world, but we’ve seen that a few times before over the past year.

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This morning George Soros lent an uncharacteristic helping hand to Sterling. Having presumably made another fortune selling Sterling he reckoned that the risk of shorting below $1.40 was too great. Cheers George.

I’ve made 4 bets on Sterling today; all long, and guess what? If I’d run my first trade of the day with a wider stop then the others wouldn’t have been necessary. But each trade was a winner, and I quite like the practise of spotting entry levels. My gains were a modest £200, but so long as the numbers are in black, not red, I’m happy. Sterling could have a testing few days; the GBPUSD rate is approaching resistance in the $1.44-1.4450 area.

Quite a few of the clever guys are marking this as the end of Sterling’s glorious run and a return to the serious business of disappearing down the toilet. But, if this level is broken and held then (Wahey) up we go to the 50-day mav at $1.4750.

No surprises, my gift to the trading gods ran to form. My gold trade was stopped out this morning for a £160 loss. If ever I trade in gold again, take notice. Trading against me is the safest bet you’ll get!

Happy Trading