Will we see a FTSE 100 Breakout?

Will we see a FTSE 100 Breakout?

Trading Features / Strategies from Simon Denham of Capital Spreads.

Trying to find some sense in any market activity is getting a tad difficult with almost random direction being the apparent order of the day. The most successful traders at the moment seem to be those who are fastest on their feet.

The FTSE 100 and Dow Jones are swinging wildly during each session.

This type of trading activity is generally an indication that we are about to break out from the current range but nobody is too sure which way.

On the face of it valuations appear generous (good p/e levels and solid yields versus Treasury and cash rates). On the other hand the continuing (and seemingly accelerating) rate of decline of the Global economy leaves many investors wary of taking the plunge.

Added to this, yields on corporate bonds are now so generous, and afford greater protection than straight equities, that they are affecting the possible attraction for stock.

Financial Spreads » "With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." » read Financial Spreads review.

One of the major problems for any rally is that the banks seem to be on a one way trip to oblivion. Without a banking system able (or willing) to lend at some point in the future the chances for solid growth once the recession has run its course are getting slimmer and slimmer.

Nationalisation of the banking system sounds attractive at the moment. However, State control is never efficient and without incentive to perform (sorry, but this means bonuses and dividends) banks may retreat into safety first which could stunt growth for years to come.

The financial sector is not exactly the flavour of the month with tales of cut backs in lending, readiness to go to court etc but the Repossessions rate out yesterday seems to tell a slightly different story. 13,161 homes were repossessed in the third quarter of 2008 (this is just to the end of September) yet 340,000 mortgages were in arrears at the end of the same period. This loosely suggests that less than 4$% of mortgage arrears cases are ending with the repo man.

People tend to forget that when they buy a house they can only do so because the bank has lent them money to do so. If they fail to uphold their side of the bargain (i.e. make their mortgage payments) then, like any business which has not been paid for its services, the lender is quite within its rights to seek redress. In this case the return of the asset (i.e. the house).

The arrears number is very worrying as the big increases in unemployment have really only just started to come through since the end of September and most of these (pushed out in the first wave) will probably get the best redundancy packages. This would seem to indicate that the arrears figure for the end of the fourth quarter will be much worse.

The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.

Capital Spreads » "With Capital Spreads you get all the normal
advantages of Spread Betting plus..." » read Capital Spreads review.

Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.

'Will we see a FTSE 100 Breakout?' edited by DB, updated 23-Jan-09

Related Articles:

Spread Betting Diary, updated 27-Feb-09
Spread Betting Diary: A full-time spread betting trader talks through the highs and lows of the markets...read article: Spread Betting Diary.

Spread Betting Trader, updated 17-Feb-09
Spread Betting Trader: A Day Trader runs us through his view of the financial markets...read article: Spread Betting Trader.

Inflation and Weak Pound Pressure Retailers, updated 26-Oct-09
I am less than convinced about the inflation data that we are now getting. I am now seeing across the board increases in food, fuel and...read article: Inflation and Weak Pound Pressure Retailers.

Jobs and Banking, updated 03-Jul-09
The Bank of England expects that house prices have seen the worst and that there are enough independent signals to indicate that the economy is in a position to grow in...read article: Jobs and Banking.

Rising UK Unemployment, updated 29-Jun-09
Unemployment levels are becoming an *Elephant in the room* subject as economists forever talk of Job losses as being yesterday's...read article: Rising UK Unemployment.

UK Taxes and Stronger Banks, updated 24-Jun-09
There is a small sense of medium sized to large corporations finally starting to baulk at various new business tax burdens being continually levied in the UK. In separate stories...read article: UK Taxes and Stronger Banks.

Goldmans Sets Crude Oil Target at $75, updated 05-Jun-09
Energy shares rose after Goldman Sachs lifted its price target on light sweet crude oil from $52 to $75 a barrel...read article: Goldmans Sets Crude Oil Target at $75.

The Budget and The Markets, updated 22-Apr-09
The betting is on a spread of ?175-?200bn of borrowing requirements this year. That means that, just for 2009, the state will be overspending by...read article: The Budget and The Markets.

Is it Time to be More Positive?, updated 14-Apr-09
For most of the Major indices we are now in the constricted trading area which defined the mid Jan to mid Feb volume trading range. Reading the analysts comments we can see a sharp divide in opinion arising. Half appear to think that...read article: Is it Time to be More Positive?.

Trading Financial Fixed Odds, updated 13-Apr-09
In case you haven't noticed we have now added a new Financial Fixed-Odds section. So if you are looking to trade the ranges you now know you need a 'Barrier Range Trade' or...read article: Trading Financial Fixed Odds.

First Page << 1 2 3 >> Last Page

Also see:

Trading Features / Strategies Index – an index of all the Trading Features.

Q) Average Trading Results?

A) Get free trading tips, offers, price updates, important news and more! All Free - Click here!

Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

1) Daily Trading Tips

2) Financial Tips

3) Financial Tipping