Spread Trading 19 Jul 10 - Dow Jones Fails to Break Lower Through Support

Spread Trading 19 Jul 10

Today's update see » Financial Markets.

Spread Trading 19 Jul 2010

The news this morning is all about downgrades and IMF/EU debt refusals.

The big one is, no doubt, the Hungarian issue as the IMF and EU have turned down an increase in aid in response to the new government’s austerity package.

In reality we can probably deduce that the supra nationals have been searching around for somebody to ‘act’ tough with who will serve as an example without harming the weakened EU banks to any great degree.

As a reason to sell the Euro it is therefore not a good one as markets may well take the view that ‘harsh reality’ has been the one missing ingredient in the ‘saving’ of the debt markets engineered over the last two months.

The Irish downgrade has been taken in its stride and the reduction is only a couple of pips below AAA which still means that it is deemed a quality investment grade. Down grades have been seen to be buying opportunities in recent weeks so traders have been nervy of selling the Euro first thing.

The other fun bit of news was the easyjet timeliness issue. Ryanair was forced into paying a £50k libel sum to Stelios over some minor point and then easyjet make a great song and dance with ‘paid for’ advertising to this effect.

What irony then that this is the same day that their punctuality stats are shown to be worse that Air Zimbabwe. I cannot imagine who delivered this juicy piece of data to the journalists but the moral of the story seems to be “do not mess with Michael O’Leary”.

Markets are opening pretty much at the levels of Friday’s close after the re-emergence of double-dip recession talk in the US had bashed us back down from the 5300 level.

The resistance at 5280/5310 is becoming critical to price progress as we are continually failing, for one reason or another, to make any impact on the barrier.

At the other end of the line 5100-5110 is similarly a good support level and with prices currently at 5124-25 we are finding our spread betting account holders to be heavy buyers in early action looking for this to hold.

For those with long term aspirations any prices at current levels look reasonable as returns on equities are well ahead of Cash and Bonds, average yields on the FTSE are above 4% versus 0.5 to 3.2 for other assets. The problem is that asset values are looking to be under pressure as we concern ourselves with the fear of deflation and a possible return to negative growth.

Short term dealers are picking up stock but they will be watching the support levels like hawks, as a breach of 5100 may trigger a bit of a sell off from weak Longs.

The Dow has also fallen back to a good support level, 10080, but as with the FTSE could not break through. This has triggered buying here as well and our spread betting clients will now be hoping that the jitters of Friday are forgotten through today’s session.

Currency markets are responding to the IMF announcement with strong buying of the Euro and my comment of earlier in this report has rather been overtaken by events.

When written, the Euro was below $1.2900 but is now up at $1.2960 and looking strong for the session. Markets like certainty, even if the certainty is unpalatable, and the decision to admit that there is a point at which the lenders will not go beyond may well be a seminal one.

The Euro has problems that will go on for years and years to come, problems that will bury some of the weaker members. However, if the political will is to hold the structure together come what may, and to make the harder choices that will enable this to be the case, then the argument for the demise of the Euro become less over whelming. Yes, the Euro is probably overvalued but not to the extent that will force its capitulation.

Sterling is being pulled around by the Euro but has been falling versus Eurozone for some time now. Three weeks ago we were up at €1.2400 but are now struggling down at €1.1815.

While the Pound has been gaining ground over the Dollar, rallying above $1.5000 to the current $1.5335, this has not been enough to keep pace against the Euro.

Gold fell dramatically through Friday but ran full into the huge support, both as a price level and on the long term rising bull trend line, at $1186 and stopped.

We are now back up at $1192 and clients are buying everything in sight, as they have been for weeks now. Traders must worry that the world and his dog are long of Gold, but this has been the case for years now and we are still in a definite bullish trend.

Only a breach and close below the aforementioned $1186 price level might be slightly damping on optimism and the rising trend line is now at about $1189 so punters will be keen to see it remain above these two points. On the upside $1196 is minor and $1212/18 more solid resistance.

Under no circumstances are the comments and the information provided herein to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice.

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

Financial Spreads » "With FinancialSpreads.com you get all the advantages of
Spread Betting as well as commission free CFD Trading on 2,500+ markets, 24 hour trading, professional level charts and..." read Financial Spreads review.

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

Article provided / approved by Financial 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

'Spread Trading 19 Jul 10' edited by SD, updated 19-Jul-10

Related Articles:

Financial Markets, updated 18-Jun-13
Financial Markets - your daily update on the markets with views and opinions from the insiders, plus a look at...read article: Financial Markets.

Online Spread Trading, updated 17-Jun-13
A look at the latest spread betting markets plus company reviews, compare prices and details on where to free charts and free live prices....read article: Online Spread Trading.

FTSE to Underperform as Constituents Go Ex-Dividend, updated 24-Apr-13
Although today's start is expected to be firm, the FTSE is set to under perform its peers as some constituents go ex-dividend, knocking 9 points off the index. The corporate earnings in the US continued to...read article: FTSE to Underperform as Constituents Go Ex-Dividend.

Renewed Demand Sees the Gold Rebound Continue, updated 23-Apr-13
Gold continued its rebound yesterday, with the online spread betting market gaining $17.7 to $1,426.2, on reports of renewed demand for coins, bars and jewellery. After suffering from such a violent...read article: Renewed Demand Sees the Gold Rebound Continue.

Index Trading: Nikkei Hits 5yr Highs as Monetary Policy Remains Unchallenged, updated 22-Apr-13
Asian markets are also trading sharply higher, led by the Japanese Nikkei which is nearing a 5 year high. Japan's optimism seems to be founded on the fact that they didn't receive any explicit singling out at the...read article: Index Trading: Nikkei Hits 5yr Highs as Monetary Policy Remains Unchallenged.

Dow Jones Falls as US Corporate Earnings Disappoint, updated 19-Apr-13
The US corporate earnings season continued to disappoint investors yesterday with the Dow Jones falling 110 points to 14,496 as a result. The pessimism was also supported by weaker than anticipated economic...read article: Dow Jones Falls as US Corporate Earnings Disappoint.

Poor Eurozone Ecostats Weaken the EUR/USD Spread Betting Pair, updated 18-Apr-13
The economic data coming out of Europe yesterday was pretty dismal, with auto sales reaching a 20 year low. Consequently, the euro dropped versus the dollar, effectively giving back the previous day's gains by...read article: Poor Eurozone Ecostats Weaken the EUR/USD Spread Betting Pair.

Improved US Housing Data Boost the US Crude Oil Spread Betting Market, updated 17-Apr-13
Better figures for the US housing sector bolstered crude oil demand yesterday, pushing the price of a barrel of US crude oil up by $1.48 to $88.83. That saved the day as crude prices had fallen to an intraday low of...read article: Improved US Housing Data Boost the US Crude Oil Spread Betting Market.

Slowing Chinese Economy Spurs Gold's Largest Drop in 33-Yrs, updated 16-Apr-13
Those trying to catch a falling knife after Friday's plunge were in for a nightmare session yesterday as the gold spread betting market posted an even bigger drop. The precious metal lost an incredible $129.2 to...read article: Slowing Chinese Economy Spurs Gold's Largest Drop in 33-Yrs.

Bearish Momentum Sees the Gold Spread Betting Market Break Below $1500, updated 15-Apr-13
The bearish momentum in gold undoubtedly gathered pace on Friday as the market price crossed below the psychologically important $1,500 mark. In a violent nosedive, the precious metal plunged $72.7 to...read article: Bearish Momentum Sees the Gold Spread Betting Market Break Below $1500.

First Page << 1 2 3 4 5 6 7 8 9 10 11 12 >> Last Page

Daily Spread Trading Index

Index of spread trading articles - the daily Spread Trading update from Financial Spreads, for more articles see the Spread Trading News Index.

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