Markets continue to look buoyant in the UK as the effects of Oil and Mining bolster their respective sectors.
As mentioned several times over the past few days the FTSE is struggling to overcome the 6250 resistance. Although we have closed at or around the level several times traders have shied away from buying above the line. The pressure still appears to be very much on the upside but we are vulnerable at the current level to some bad piece of news. Mind you, markets do seem to have finally got shot of the reaction of reading every piece of information negatively and are swinging over to the other side of the equation and are beginning to don the rose tinted glasses.
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Spread Betting on Indices, 8 May 08
Indices are a tad weaker after the US indulged in one of its late night sell offs with the Dow Jones dropping 200 points from its highs and the S&P giving up on the 1400 level for now. The FTSE is called to come in 30 points lower at around 6230 but the bulls still seem to hold the upper hand and shorts are vulnerable to spikes higher.
Spread Betting on Indices, 7 May 08
The markets today are likely to open slightly to the good as the short squeeze continues to bite.
Whilst the FTSE 100 has managed to break above the post Jan highs, the FTSE 250 is still just below the peaks of the rallies in February and March. The high in February was 10385 and in March, 10335. The current FTSE 250 spread is 10289-10309 having rallied some 250 points since the end of April. If the index can break above 10400, and stay there, then the squeeze in the main indices is likely to continue but if we fail in the junior index then the senior partner may well struggle to make much headway above the 6250 price level.
Spread Betting on Indices, 6 May 08
Markets today are likely to be on the up, initially, as crude oil and gold continue to bolster the Mining and Oil sector and, rather more cruelly, continue to squeeze those who have shorted the market. As mentioned last week the contraction of the FTSE over the previous weeks trading was a sure sign of a break out coming. That the break out was, on a probability basis, more likely to be to the upside than down. Clients continued to sell any price above 6100 and were unfortunately caught out by the sharp shift on Friday as the pre-bank holiday activity saw traders tighten the screw on anyone trying to set up shorts.
For those who wish to restrict short selling of stock the latest moves show what happens when the bears get caught out the wrong way round. The cost of borrowing the stock means that they will be hammered both ways round and the market can be as cruel to short sellers as to those caught long of a ‘Northern Rock’. If you are long at least you can sit back and await events. If you are short you may easily be forced out of positions by an adverse move. Markets are the most capitalist element of a capitalist society. You must be able to ‘invest’ either way round to maintain market liquidity and maintain correct market valuations. If all you could do in the market was to buy or do nothing then the ability for major players to manipulate the markets would be greatly enhanced (far above the minor one day problem of HBOS a month or so ago).
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Spread Betting on Indices, 2 May 08
We continue to hover around the 6100 level in the FTSE with our call coming as high as 30 points above where the market closed last night, so 6127. A good, but most importantly sustained rally from US equity markets yesterday has put the bulls in the driving seat this morning. Asian banks did well overnight so we can expect banking stocks to attract buyers this morning. Clients in particular seem to favour many of the banks over other sectors at the moment with a few longer term bulls having bought some quarterly contracts. Banking stocks have also provided good opportunities for day traders recently, trading in and out of them over shorter time frames as they’ve been swinging in quiet tight ranges (along with the overall index).
Spread Betting on Indices, 1 May 08
Quite incredible, in all my time working in The City I cannot recall when the FTSE has ever finished four trading sessions in a row at, effectively, the same level. The last four closing prices have been covered by around 5 points.
We had another go at breaking above 6100 and an attempt at trying for the downside but both were swiftly and quite easily defeated as the markets awaited the Feds’ decision last night. The eventual quarter point reduction was outside of the UK’s trading hours and so the big rally and subsequent fall of the US indices had, in the end, no effect on our markets.
Virtually every major index ended one of the biggest ‘information’ days of the month unchanged (by recent standards) although the Dax did manage to reverse the previous days’ weakness with a 0.9% rally.
The FTSE 100 spread is called some 15 points lower this morning at around 6075. However with much of Europe taking the day off (1st of May) and probably then making a long weekend of it before the UK then takes Monday off, the chances are that volumes are going to be on the light side.
Without one or other of the major centres (UK, US or Europe) in play the whole market tends to drift and after the last five days performance it is difficult to imagine it to be any different this time.
Indices Spread Betting, 30 Apr 08
As with yesterday’s comment, the markets look like opening almost unchanged after attempts to the upside and the downside were defeated. In fact, the FTSE 100 had to rally 50 points in the last half hour to achieve the ‘unchanged’ status. This now marks three days in a row where the index has closed within a 2 point range. A pretty unusual occurrence considering the fact that crude oil and metals have had a truly exciting time over the past few days. The Capital Spreads clients continue to sell heavily on any rally above 6100 and have been amply rewarded so far.
Indices Markets are opening almost unchanged this morning with the FTSE called about 10 lower at 6080 and the Dax 10 higher at 6895. However the UK index might struggle to hold these levels in early trade as the Oil and Metals markets fell sharply from the previous days closes. Mining stocks may be weaker on the off with BHP and Rio trading some 3% down in Australian markets. Oil is now all the way down at ‘just’ $113 for the June Brent Crude contract, some $4 from the highs, but I do not get the impression that this is a concerted sell off just yet. It is more probably along the lines of a pause for breath. If the weakness continues over a couple of days then we may find that the sentiment turns sharply but until this happens I am afraid that peak oil looks here to stay.
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Indices Spread Betting, 29 Apr 08
Well the plus 6100 level on the FTSE 100 lasted less than one trading session but the positive aspect is that at least it has not been rejected completely. Throughout the day the lack of upside progress weighed down on traders minds and by the close nerves were beginning to fray.
Even so, in recent times, the rejection of highs has tended to be rather more violent than yesterdays price action and the closing level was virtually unchanged from Friday’s close. There are two differing views to take from this...either it is a confirmation of the resistance levels at around 6100 or the pressure on selling was not enough to cause the bulls to throw in the towel.
There is a slight dislocation between the FTSE 100 and the German and US indices with the former up 30 points and the latter two down 30 points. However, to be honest there seems to be little in the way of momentum and with every attempt at a break out either up or down seemingly being defeated the prospect is for a quieter start to the summer than in previous years.
Indices Spread Betting, 28 Apr 08
Markets look to be finally attempting the 6100 level this morning as we expect an opening level 35 points up at around the 6125 mark. After two weeks of refusing to even contemplate a pitch above 6090 it might be that a unilateral move higher, effectively in ‘out of hours’ trading, is what is needed to make the move. The important point will be whether we are able to maintain our 6100 plus level in the FTSE 100 or whether we will just get sold back through it. There is almost certain to be an attempt to push lower in early action.
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.
'Indices Trading May 2008' by DB, updated 09-May-08
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