I said a few weeks ago that the UK economy would spend at least the first half of this year walking a tightrope between recession and recovery.

The UK stock market now finds itself in a similar position, moving slowly in a narrowing trade range.

For students of technical analysis, in simple terms the study of share price movements, a recent movement such as this will eventually lead to a sharp movement, known jargon-wise as a breakout.

But like reading tea leaves, while the probability of a strong move is high, the share price charts are a little more uncertain as to the direction of the breakout.

The bulls, those of a positive persuasion, will hope for an upward, while the bears, of negative thoughts, expect the market to re-test its lows of last September.

In the current environment of negative economic and company news, it would be easy to conclude that the UK market will break down below the psychologically significant 5000 level.

Perversely, this may bring a more positive mood to proceedings as most expectations will have been met and confidence in the market's ability to predict will have been restored a little.

Ironically of course, the very fact that the majority of experts expect the market to move down in the short term may be just the spur for prices to move higher as whatever the charts may say, stock markets remain as unpredictable as they have always been.

John Pearson - divisional director

* Gerrard is regulated by the Financial Services Authority. Share prices and the income from them can go down as well as up. Readers are advised to seek professional investment opinion before entering into dealings in securities mentioned in this article, which may be unsuitable in their personal circumstances.