Spread Trading 30 Mar 11
Spread Trading 30 Mar 2011
The FTSE just popped higher towards the close last night and once again it went against the grain when anyone would have thought that the news flow would have encouraged a sell off.
The bulls seem to remain intent on sending markets back towards their 2011 highs and again today the FTSE has opened higher after a strong move up by US markets and decent gains from Asia overnight.
The FTSE spread betting market is around 5950 at the time of writing with our price having been as high as 5970 earlier.
The break above the near term resistance of 5920/30 is another small victory for the bulls and now they’ll be targeting a move above 5970 and then onto 6000. To the downside 5870 and 5835 are seen as support levels.
All this in the face of continued bad news from a lot of “ordinary” people’s point of view as another set of data yesterday spelt our serious problems for the UK consumer.
Real income, so when you take inflation into account, fell for the first time in twenty years, confirming the downward pressure on wages. In addition, inflation within the OECD, thirty four countries from across the developed nations, has risen to its highest in almost two years and once again food prices have been the main reason for the rise.
So pressures are coming from all angles as disposable income is declining and prices are rising. The next few years are going to be a real struggle; I don’t mean to be so pessimistic this morning but it’s hard not to be.
Well at least equity markets seem to be happy.
The German Dax in particular is seeing a renewed bit of strength after being one of the indices that suffered the most following the Japanese earthquake. It’s back above the 7000 level, where it was just before the quake, but still remains some six percent from its highs compared to the Dow’s 0.005%, so US markets are just a thumbnail away from hitting fresh highs for the year.
There is the odd bit of good news and today we get the prelude to Friday’s NFP as the ADP private payroll number is released. With last week’s revision upwards for US GDP the expectations are high for a number of at least 200k.
This is not seen as important as the NFP but is could provide a bit of volatility over the short term if it’s much higher or lower than expected.
Sterling neared its two month low against the Dollar yesterday after an index of UK retail sales fell to a nine month low in March. However Cable has had a jump this morning, despite expectations that the Confederation of British Industry index will drop to minus two, which will be the lowest since June.
The pair has support at $1.5939, yesterday’s low, and resistance at $1.6043, yesterday’s high.
There was a still bit of good news for the Dollar yesterday when the Fed Bank of St Louis President said that US recovery is well on track and may be able to reduce $100bn off its original plan to buy $600bn in Treasuries.
However, this seemed to have no effect and the Euro was higher yesterday. The single currency has fallen back a bit this morning and we have support at $1.4044, yesterday’s low, and resistance at $1.4150, yesterday’s high.
It appeared that a bit of risk taking was back on the cards as equity markets were on the up and we saw the gold spread betting market pull back. With the ongoing sentiment in the air of interest rates rising investors are becoming more positive about the economic outlook in general.
Gold futures fell to an 11 week low at $1417.50 as all the data which comes out of the US is suggesting a rate rise is imminent. We could see some sideways movement over the short term with support at $1410.10 and resistance at $1423.30.
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'Spread Trading 30 Mar 11' edited by SD, updated 30-Mar-11
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