Despite all the little signs of weakness the FTSE and indices in general are showing remarkable resilience.  US economic data yesterday showed durable goods much stronger than expected, with orders higher in many sectors.  This data gives a very important indication about the US economy showing that production is remaining strong and the fact that June's figure was upwardly revised as well lead to a relatively strong day for US stocks.  We are calling the FTSE to open just a few points lower (7 to be exact) at 5521 as the futures indicate early signs of a little profit taking.  As mentioned yesterday a key level for the FTSE is 5500 and any move towards that level will probably attract clients to sell into the strength as overall they remain bearish.  5500 was rejected earlier in August, so resistance is seen around there and a break higher will come only with impetus.  Looking at yesterday's news flow it's difficult to see where that impetus will come from since many of the sort of cyclical stocks you'd expect in a poor economic environment drifted lower yesterday.  Enterprise Inns was downgraded by Cazenove, John Lewis announced spending cuts and car dealerships Lookers and Pendragon have announced poor numbers recently.  These are the sort of companies that get effected most when the consumer is tightening its belt meaning corporate profits don't have a great outlook.  It's looks like trading ranges could remain narrow for the rest of the week and possibly into next week as we have a US bank holiday on Monday (Labor Day), but looking further ahead it could end with a bang as US non-farm payroll are released.

Diageo reported their full year figures this morning and have disappointed a little as they announced more caution about their outlook.  For a stock that has been relatively resilient in the recent fall in equity prices this is yet another of those cyclical stocks that point to tough times ahead.

We have preliminary GDP released in the US later today which investors will be interested to see as the Y on Y figure is due to post a rise on 2.9%, up from 1.9% previously.  This would make sense following yesterday's durable goods data, but will it be enough to push equities higher in the face of rising oil prices?

Oil rallied again yesterday.  As mentioned in yesterday's comment any evidence of a drawdown in oil stocks would lead to bulls pushing prices higher and when the inventory data was released we saw a 100,000 barrel decline in stocks when a 1,000,000 barrel rise was expected.  Crude is another $1 higher this morning too as it looks like we're going to test the $122 level again.