The regular monthly spread trading review from IG Index.
IG Index FTSE 100 Spread Trading - November 08
"FTSE 100 holds above previous lows"
The steep slides to fresh multi-year lows have become something of a monthly event for UK stock markets. Although November saw plenty of volatility, with the FTSE 100 trading in a 1000-point range, the market did manage to hold above its October lows.
This offered some respite to investors and traders. Towards the end of November the index had managed to rally nearly 20% from these lows. While this may sound like an impressive bounce-back, it still left the FTSE well below its monthly highs and some 34% lower than the level recorded at the start of this year.
We are all getting used to seeing rallies in shares eventually running out of steam and it remains to be seen how far this latest recovery will go. For many, the first major obstacle is the early November high in the 4700 area. Should this level be reached, investors will closely monitor the index to see if it can stage some sort of breakout or whether it will prove to be a short-lived rally once more.
(IG Index price data: compiled 5 December 2008)
Spread Betting on the S&P 500
"S&P 500 hits 11-year low"
While the FTSE 100 managed to hold above its earlier lows, this was not the case for the S&P 500. During November, the broader US index slipped back to levels not seen since April 1997 – wiping out more than ten years of stock-market gains.
As with UK markets, American stocks bounced back at the end of November but still remain well below their monthly best. The worsening global economic outlook is, of course, the root of this weakness. After the banking crisis in summer, the focus has shifted to other industries, with major US car manufacturers now appealing for government bail-outs.
All of this means that the negative trend on stock indices is continuing. For now, any rallies are simply turning out to be dead-cat bounces as investors continue to worry that things are set to get worse before they get better.
(IG Index price data: compiled 5 December 2008)
Spread Betting on Oil
"Oil continues to slide"
The price of crude oil continues to remain a significant casualty of the global slowdown. Coming into summer, oil was trading at record highs of just below $150 per barrel, but last month saw oil slip back to its worst level in more than three years.
For the early part of the month, the $60 mark provided some temporary support but when this eventually broke, it did not take too long for oil to fall below $50. This means the price of a barrel has now dropped by almost $100 in little more than four months – and, so far, the slide is showing no signs of stopping.
Until quite recently many analysts were forecasting $200 per barrel, but these estimates are now being rapidly revised, with predictions of a slide to $25 now grabbing headlines.
(IG Index price data: compiled 5 December 2008)
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They 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 IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.
'IG Index Review of November' edited by IG Index, updated 15-Dec-08
Index of UK financial market trading articles - the regular closing market comments from IG Index...see Index.
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Risk Warning:
Please note that spread betting and CFD trading carry a high level of risk to your capital. You can lose more than your initial deposit. These products 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.
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