To Trade or Not To Trade
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To Trade or Not To Trade

To Trade or Not To Trade


Trading Features / Strategies from Simon Denham of Capital Spreads.

Markets are open on the up this morning with heavy buying towards the end of the US session on Friday and the Far East joining in on the action this morning. The solidity of the markets in the face of poor economic data is giving weight to those whose opinion is that we might be near the bottom for the current bear market. This does not, of course, mean the bottom for the economic cycle, which probably has another year or more to run, just for the investment valuation bit of it.

Quite a few eminent market commentators have mentioned that they feel the lows hit in October/November will be the lows of this particular move and that the way forward is upwards.

I admire their bravery in this call (even though it is generally not their money being invested, it is their reputations) and readers of my comment over the last month will have seen a certain readiness to put a toe in the water. But this has been merely for a certain type of stock hammered, in line with all the others, but sitting with limited debt and with a well covered dividend.


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Unfortunately I am afraid that we might be entering a classic bear market rally scenario. The year end is always a good time for rallies (especially in bear markets), coupled with the hope that the new administration over in the US will breathe new life into confidence and the shell shocked valuation of many stocks there are good tempting reasons to buy.

However, the world is in a period of what can best be described as ‘experimental economics’. The huge sums of money being, effectively, printed not to really boost the global economy but to try to save bits of it from implosion seems to me to be a continuing desperate attempt to put ever more fingers in the dyke.

Several nation states are on the cusp of default and this is only as the effects of the slowdown are just swinging into place. Unemployment numbers have finally started to rise sharply but these have a very long way to go and the huge sums being issued by the various central banks will be a weight on everyone’s shoulders for many, many years to come. Even when we do finally exit the dark tunnel of recession the chances are that growth will be constrained by ‘higher than historical’ tax rates.


The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.


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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.

Article provided / approved by Capital 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.

'To Trade or Not To Trade' edited by DB, updated 15-Dec-08



Also see:

Trading Features / Strategies Index – an index of all the Trading Features.



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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.

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.

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