Stock Market Spread Betting: FTSE 100 Consolidates Ahead of Key EU Debt Summit
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Stock Market Spread Betting: FTSE 100 Consolidates Ahead of Key EU Debt Summit

Stock Market Spread Betting: FTSE 100 Consolidates Ahead of Key EU Debt Summit

As we reach the climax of arguably the most important day in the history of the European Union, doubts remain that a lasting and meaningful solution can be found to the biggest threat to the world's economy.

Concerns that we may only see temporary measures that would mean kicking the can down the road again caused a late sell off in US shares markets last night which had already been firmly in the red.

These declines are filtering through to the FTSE 100 this morning but, once again, not by as much as many would expect.

Our spread betting account holders have been selling into the market, expecting bigger falls from these levels, however the FTSE 100 continues to hold the ground above 5500.

There has been evidence of a bit of shorting in the last few days as the jury is still out as to whether we have actually entered another bear market or not.

Contrarian investors will tell you that now and the past few weeks have been ideal buying conditions and, as a result, markets have recovered well up until now.

The rallies have have taken several stock markets back to major resistance levels. In particular we are not far off many of the key 200 day moving averages that were broken through to the downside back in the summer, signalling the bear market had begun.

Bear market rallies can often take us back to this widely watched moving average where it can normally fail before the next drive lower. The big question is will today's summit be the trigger for the next major move to the downside?

All eyes will be on Europe today and the outcome of the debt summit. Lots of speculation is doing the rounds as to what's been agreed on the level of haircuts that the banks will be required to take and just how much the EFSF will be boosted.

Also, will there be anything else more radical announced such as a Euro bond?

As mentioned, there's a feeling that some financial spread betting investors have been taking a cautious stance in recent days in case the markets find themselves disappointed by the end of the day.

There's even the chance that today's decision might slip once again, something that we've got rather used to.

The other major focal point today is Italy's last ditch attempts to get important budget changes through parliament, which are also meant to go down to the wire.

It is possibly underestimated just how important these reforms in Italy are as not many people appreciated just how much debt Europe's third biggest economy has outstanding.

If they do not pass austerity measures that will appease investors then they will seriously struggle to attract them to buy their debt next year and beyond.

This would put them in a perilously dangerous position, just as Greece, Portugal and Ireland have done in the past.

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'Stock Market Spread Betting: FTSE 100 Consolidates Ahead of Key EU Debt Summit' by DB, updated 26-Oct-11

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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.

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