The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

o'bought in the current climate, r u having a giraffe?? Look at the PE's!!

Fste going higher (than it is now) by the new year imho, doesnt mean it not go down a little first, in fact i think it probably will.

PEs have little to do with it .... markets on both sides of the Atlantic are reaching key and tough chart resistance levels which, when hit, are extremely likely to give rise to quite a sharp correction .... ignore them if you wish, but at your peril

PE's are also retrospective, past performance etc, looks overbought to me now, have also opened a short, surely this turn around wont last. If it does then my long positions will benefit more.

exactly my logic ..... good hedging

There's nothing more retrospective than "key and tough chart resistance levels".

not really true ...... though the starting point is indeed retrospective, the forward view is exactly that! - i.e. the more sophisticated charts tend to be drawn on angles or % from a given point

Dilemma today, wanted to get into a couple of shares that seem to be in flavour at the moment, but for sure the FTSE is due a sharp correction, ended up impatiently buying said shares, but whats the betting they will be 10% cheaper next week, trouble is you always want to be in them too afraid of missing potential profit, heres hoping they climb enough on current news and excitement and dont drop in the event of a FTSE sell off...

There will be a fall in the markets tomorrow. Dow gone up too fast and this is a unsubstantiated market. Economy is looking gloomy and housing in US is in dire straits and people are playing the Dow to sky high levels. A correction is due with a massive sell-off.

easy call that! ..... you already know that Dow was +125 earlier and has finished -50!

Dow volumes are not running with the numbers - in any other market than this it would be a significant warning

OBV has however rolled over

there are assorted economy figures coming out of US later today and for the nimble there will almost certainly be good money to be made in either or even both directions ..... unfortunately i shall be out of touch at the critical time, so have decided to be prudent and closed complete Dow short with a very healthy profit and a portion of FTSE short with small profit

i enjoy reading your reasoning Cynic, im afraid i take a different view and think PE's have EVERYTHING to do with it! As i have said I think the fste will have a slow upward chart until the new year imho you (and others) think otherwise, i will re-evaluate my thinking if im wrong. 6681 now

ah, but then i banked a very nice profit indeed on the short tack, though i still hold a (smaller) short on FTSE

FTSE future closed at year high, closed my short out at 1pm as was away from screen, did ok in retrospect.

short term profit takers will come in (ftse down) then slowly up she goes. The ftse 350 is still reasonably (not cheap) priced for the expected outcomes.

i will own up to nursing a loss on the remainder of my FTSE short but will almost certainly let it run

http://www.ft.com/cms/s/0/374c30de-792a-11dc-aaf2-0000779fd2ac.html

London's bull market sourced abroad

By Neil Hume

Published: October 13 2007 03:00 | Last updated: October 13 2007 03:00

House prices falling at the fastest pace in two years, the chancellor lowering growth forecasts for the UK economy, the Treasury guaranteeing new deposits at Northern Rock, and big clearing banks still reluctant to lend to one another.

This is not usually a backdrop associated with rising share prices.

Yet, the FTSE 100 came within two points of reaching a fresh seven-year high yesterday and is now less than 200 points from a record high.

From its summer low - the index hit 5858.9 on August 16 - it has risen 15 per cent, or 872 points.

How can share prices be rising when the outlook appears so gloomy in the UK and the US? Is it possible to be bearish about the UK economy but bullish on the UK market? The simple answer appears to be, yes.

Equity strategists and City traders believe one main factor lies behind the market's sharp rebound.

It is called decoupling. This is the idea that the economies of the developed and developing economies are no longer closely correlated. Therefore, a slowdown in the US or Europe, for example, can be offset by strong growth in the so-called Bric countries of Brazil, Russia, India and China.

"As opposed to equity markets taking a lead from the US, the baton has been passed to Asia and China at least temporarily," says Graham Secker, equity strategist at Morgan Stanley. "Investors are really buying into the decoupling argument."

Morgan Stanley forecasts that the global economy will grow at 5 per cent this year and 4.5 per cent next.

Global growth is good for the UK market, according to Darren Winder, head of macro and strategy research at Cazenove. "The largest 10 stocks account for 50 per cent of the UK market. Yet the percentage of profits these companies make from the UK is very modest," Mr Winder says.

Vodafone, for ex-ample, makes just a small proportion of its profits from the UK.

The same is true of oil companies BP and Royal Dutch Shell while, in the mining sector, it is even more extreme.

"The mining sector accounts for 12 per cent of the FTSE 100's profits. And their earnings are entirely from overseas," Mr Winder says.

It is, therefore, unsurprising that the mining sector has spearheaded the recovery of the FTSE 100 from its August lows.

The sector has risen 49 per cent since August 16 and, in the year to date, it is up 58 per cent.

Indeed, the four top performing stocks in the FTSE 100 this year are all from the mining sector. They are BHP Billiton (up 101 per cent), Vedanta Resources (85.7 per cent), Antofagasta (71.7 per cent) and Rio Tinto (68.4 per cent).

Those strong performances have offset big losses in other sectors such as housebuilding, banking and property.

"The index may be back where it was in June but the complexion is quite different," says Mr Winder. Mortgage bank Alliance & Leicester, for example, is still 30 per cent below its post credit squeeze levels. Of course, global growth has helped not only the UK market. The reason the Dow Jones Industrial Average and the S&P 500 have recently hit record highs is the strong performance of multinational corporations whose businesses are global. Asian markets have also been hitting record highs. The outlook for interest rates has also helped London's recent strong run. The US Federal Reserve has already cut rates by 50 basis points to 4.75 per cent in an effort to stop the credit squeeze affecting the wider economy and most analysts expect it to repeat the trick if necessary.

In the UK rates look to have peaked at 5.75 per cent and could even be reduced by the end of the year.

Also, companies have been buying back big blocks of their own shares. In the third quarter a record 11.25bn worth of stock was repurchased by UK companies, according to Gareth Evans, UK equity strategist at UBS. He estimates that the number of companies actively buying shares each day rose to nearly double the level experienced in the first half of this year.

The key question now is whether the FTSE 100 can push on and reach the record high of 6,930.2 set at the height of the dotcom boom in 1999.

Most equity strategists believe it can.

"Despite the recent rally, European equities still trade on less than 13 times prospective earnings. Valuations do not look stretched unless profits collapse, which is unlikely," says Jonathan Stubbs, head of European equity strategy at Citigroup.

Mr Winder agrees: "Equity valuations, in our view, continue to discount a harsher operating environment than we believe is likely to mat-erialise over the next 12-18 months. At current levels, the FTSE 100 is still trading in the lower half of the potential trading range, identified by our market arithmetic, of 6,200 to 7,800."

Moreover, the outlook for UK corporate earnings re-mains good.

Mr Secker believes there will be something of a panic to get back into the market before the end of the year.

"Two months ago a large proportion of the investment community was bearish," he says.

"They had a US recession as a base case. As the market has ground higher, the bears on the sidelines, who thought there would be a better opportunity to buy, are having to reappraise that view."

Not everyone is as positive. Mr Evans, at UBS, says: "We are concerned that the new-found enthusiasm could peter out. Implied volatility is higher and bond yields are still falling. In the past this has given rise to a weak equity market." His year-end target for the FTSE 100 is 6,600 - 130 points below yesterday's close.

Over the medium term, the key to the performance of the London market may be determined by the outlook for the Bric economies.

Teun Draaisma, the Morgan Stanley strategist who told clients to start buying at the height of the August sell-off, believes China is the key.

"This bull market is made in China, and will probably end in China too, through the next Chinese crisis," he says.

will be interesting to see whether or not Dow now extends today's weakness, currently -169 ...... logic will not have any bearing, but merely sentiment and whether peeps reckon a pull-back is overdue and/or it's time to take some profits.

for myself, i have done and taken very tasty profits in TIO and PFC though i fully expect to buy back in due course ...... my FTSE short is also still in place and now only showing a failry modest loss

have also shown myself to be a total arsehole and opened a short in NRK at 214. albeit with a guaranteed stop

Have had good day today shorted ftse on fri evening at all time high, closed sharply lower, also shorted BLT, risky but paying off so far and SAB last week just below its high, raw material costs and slowing economy will hurt it in due course. have given up on nrk too difficult to predict where it's going and not able to watch all day.

Luck on my side, however on flip side did close gold last week and immediately after it rocketed, so luck on my side but not with everything as usual. look to get back in on any weakness.

Economic data due in US tommorrow.. house builders survey and septembers housing starts, have also opened a short on dow even though it has plunged today, it narrowly missed being opened today by order to fill, gutted. In profit as we speak, nervous day tommorrow for the US bulls. IMHO

Wall street picks up on technology results has minor jitter over housing starts tries to shrug it off and then loses all gains on opening.

Looking increasingly bearish at these levels, will Bernanke drop rates again next week, allowing inflation to get a grip on things. I am betting on further weakness this week, then will sit and wait for rate drop and minor more short lived bull run and resume for a retracement over the next two months as results continue to show weakening.