US and UK indices have continued to push ahead since my last report four weeks ago, with the Dow climbing to 10829, up from 10447, and the FTSE100 rising to 5592, up from 5428.

Although the indices have risen, they are still inside those multi-month ranges which I talked about last time. Obviously however, they are now closer to breaking out, and the index that looks like it could be the first is the DAX, which is only about 2% from the upper boundary. This resistance level has been in force for most of this year, so breaking it would be a highly significant development which should see that market move substantially higher. If one major index manages to break out, then almost certainly the rest will follow.

Just to reiterate the main point from last month's report, all major US, UK & European indices have been in ranges which have persisted more or less for the whole of 2010. That kind of duration is very significant - it usually means that when the breakout comes, it will produce a big move. Of course simply being in a range for a long time doesn't necessarily tell you which way it will eventually break, but there are some big clues. Firstly, the fact that the markets were trending up for nine months prior to the ranges. Secondly, the refusal of the market to capitalise on chances to move significantly lower during the summer - in effect what we saw were false downward breaks, with the indices quickly springing back up. Thirdly, rising lows recently. Finally, as I have just mentioned, markets are closer to the upper boundaries of their respective ranges, rather than the lower.

The gains since my last report, together with the observations above, simply serve to underline what I said four weeks ago: "I'm now even more convinced that we are in a bull market which has much further to go, and I'm sticking with my long-term target of FTSE at 10,000 by the end of 2012"

This may still seem like an outlandish forecast, but it can be understood quite easily by breaking it down into stages. The all-time high on the FTSE 100 is around 6950. If I'm right about the breakout from the range, the all-time high is within striking distance. The reason for this is simple. The range is around…

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