Equities Update

FOMC failed to stir much action in equity markets, which has often been the case. Investors widely expected the pause to continue accompanied by a dovish statement. That's what we got but S&P 500 still couldn't close above it's five year high 1326. We see this as a sign of weakness and are still baffled by the continued strength of USD. A strong USD is good for equities and not until it caves in (we're quite confident it will at some point) stocks should do just fine. Still, a break of 1326 is good indicator for bulls/bears tug-of-war. A gap is opened at 1318 and we think it'll be filled today or tomorrow. Weekly Market Update is short from 1325 with stop 1331, targeting 1291 and 1261.

After posting strong results on Tuesday, Oracle added 11 pct. yesterday and SAP got a boost as well, up 2.3 pct. In our note last week, we noted that IT and Health Care are the two most undervalued groups in the S&p 500 currently (Financials, Utilities being the two most expensive) and that there's strong evidence that tech and software spending is far from peaking despite weakness close to the consumer.

Companies such as SAP, Oracle and others benefit from the ongoing capex cycle that has at least another 6 months to play out. Plenty of strong charts in software and computer-related shares in both Europe and the US - we urge you to have a look at them if you're investing for the mid-term.

Index charts have improved after yesterday's impulsive rally. A close in DAX above 5980 would open the door to 6160 and SMI is just 60 points of fresh all-time highs. FTSE, however, still looks bearish and 5945 ought to cap any further near-term strength. There's severe risk of acceleration lower upon a close below 5830