Trading Thoughts For The Week Ahead  - Sunday 4th July

This week's guest is MG and gives his own thoughts on the week ahead and a personal view on his trading strategy. If anyone else would like to be the guest next week please let us know by emailing mike@moneyam.com

Monday 5 July AGM & EGM Baltimore - The battle for Baltimore could yet be won as activist investor Acquisitor Holdings tries again to unseat the board. Now it owns a larger 26% stake, but Baltimore has hit back with the offer of a special dividend later in the year. Economics Hydrocarbon Oils- The Hydrocarbon Oils Bulletin provides details of the quantities of products that have had UK excise duty paid on them and revenue receipts. Products include petrol, diesel, fuel oil, gas oil, and gas for use as road fuel. Read the report at www.statistics.gov.ukTuesday 6 July Finals Heiton Group - The Irish industrial group is expected to report healthy results fuelled by Irelands robust economy and housing sector. Investors will be seeking indications of current levels of development activity, which must be strong enough to use Heitons strong balance sheet position.Finals - Northgate Information Solutions - According to a recent trading statement, investors can look forward to results beating market expectations of around 9.4 million pre-tax profit. Analysts see the group playing a key role in industry consolidation, as new contracts are won and costs are stripped out of acquisitions.Wednesday 7 July Ex-Dividend Carphone Warehouse - The mobile retailers stellar results saw its dividend increased by 30% to 1.3p. Although these shares enjoy only a small yield, growth prospects are encouraging. Carphones UK retail operations are seeing buoyant trading and enjoying recurring revenues that now comprise 55% of all turnover. Ex-Dividend GUS - The retail group lifted its full-year dividend by 16% to 27p in a set of results that demonstrated solid growth. Argos sales increased by 12% and retail margins grew from 7.1% to 8%. Homebase sales rose by 5% and there will be ten additional stores this year. Experian increased sales by 14% and profits by 10%.Thursday 8 July Interims Kensington Group - An upbeat trading statement from the residential mortgage specialist in May confirmed profits were on track to meet expectations for the year to 30 November 2004. Kensington performed well in its first five months, despite the mortgage market being less buoyant and more competitive.AGM Matalan - Investors will be eagerly awaiting this trading update, which is widely expected to signal a turnaround for the value retailer. Two profit warnings either side of Christmas dented shareholder confidence, but the summer season has taken off well and last years drop in gross margins should be reversed.Friday 9 July AGM -Value & Income Trust The investment trust has holdings in higher yielding, less fashionable areas of UK commercial property and equities, particularly in medium and smaller companies. Last years share price total return was 31% and net dividends rose to 6p, the seventeenth consecutive increase above inflation. AGM Walker, Crips, Weddle - Improving markets combined with global economic recovery saw a strong performance in the second half of the stockbrokers financial year. The increased trading levels resulted in significantly higher turnover and a pre-tax profit for the year of 1.1 million, while maintaining costs at a decent level.ThoughtsWell, if my friends could see me now. Let loose on one of the foremost trading platforms in the UK to give my views on where we go next, (no sod it - THE most influential trading platform in the UK. If SoS is reading this that might curry some favours down the Balti Triangle in Birmingham at least). Some of you may have noticed that Im an Index trader who has a love/hate relationship with the trend which isnt necessarily my friend!! For those unfortunate enough to have avoided my insightful trading styles over the last decade here are a few of my most important TA posts;..so Im long/short the DOW and am now going behind the sofa until the Daleks have stopped buying/selling . ..Im not worried cos the 7th Cavalry are just about to make an appearance over that ridge over there and make sure my 50/100/200 point stop loss isnt triggered .. so, if the DOW makes 10,000 by the Xmas Party Ill shove a fairy up my arse . Private/Corporal/Sergeant/Captain/Colonel/General/Brigadier 2000 its your responsibility to make sure they i.e. the evil Bulls/Bears dont penetrate my well thought out trench positions and lead to an uncomfortable last stand.. Ive been bouncing off the walls of various trading platforms for many a year starting with, the now destined to history, ESI BB in about 1995. That was full of people who knew what they were talking about like Scripopholist (then PW) holding forth about this, that and the other. There were also people like David Jones who used to tell us about the latest revelation from his Institute of Trading Analysis and Fellowship of Hairdressing studies. There was also a bloke called Bullshare who seemed to be able to trade every nano-second on things called Futures he even organised El Nino just to make 150k - overnight. Frankly I darent post in those early days these guys sounded as if they knew what they were talking about. My trading of the stuff they published in The Sun and The Mirror just seemed to go up but I hadnt a clue why so how could I post that Id bought Asda cos they said it was a good idea in the Sunday Times (my Fish and Chips had been wrapped in the Business pages). I thought my salvation had come when Channel 4 had a bloke and a terribly sensible bit of totty covering some of the crap AIM stock Id been buying. Their programme was called Show Me The Money. In fact, in those days, if your load of pooh didnt rise by more than 100%, in a couple of hours it must mean that all they needed was a mention on that programme and all would be resolved. Mr. (Bloody) Sensible PW/Scripopholist, at that time, declared that he had shorted the GOD LIKE Nasdaq at 100 a point. For goodness sake this was the year 2000, and only idiots couldnt see that all the tools theyd used to analyse the markets were redundant. This was a new epoch. I forget where Mr. (B) S actually placed his ridiculous short somewhere stupid like 4500 on the NASD what a div !!!!!!!!! Lucky bar steward cashed in his short with a smug grin on his face despite the ravings of a number of posters on a particular BB who believed it was his fault their fantastic tech stocks were dropping like stones. Anyway, we all know what happened next so, at that point, I decided I should go all techie and do some thinking about what I might reasonably use to predict where I should buy/sell. I discovered TA Techies Anonymous and Im still attending the meetings. You know the sort of thing .. my name is mg and I am a techaholic yesterday I did 3 MACDs, 4 Stochastics a Bollinger Band, its ruined my sex life and I need help I refuse to mention anything to do with underwear..Enough of Memory Lane - what about next week and the long hot summer? As you might have read on the 25/40/25 thread I now, principally, use those MACD settings as my major signal for stocks in my SIPP portfolio. However, they are also the settings I use to guide my Index trading as well. Gone are the days when I was trying to scalp on a 5/10/15 minute basis some traders can do that successfully I found it didnt work for me. So I now use the MACD 25/40/25, along with MACD Histograms set at 26,9,200 and Stochastics charts with settings of 21/14 all effectively smoothing settings. I then attempt to enter positions which should serve me OK over a couple of days/couple of weeks. NOT ALWAYS SUCCESSFULLY !! This last week, fortunately, gives us an idea of how this can/might work.If we take the DOW chart ..what it says to me is that the overall down-trend has now been confirmed. The Histogram is moving steadily towards zero, the MACD is converging and weve had a spike down on the Stochs. Having said that, and for me a key lesson, trading the indices is all about timescales. I expect that post the July 4th holiday we may have a bit of a spike back up again but that spike IMHO is unlikely to get back up to the 10400 level. So, if youve got enough margin a stop just above 10400 should not be triggered. A limit at 10100 would bring in a couple of hundred points but longer term 9800 would not be out of the question.What about the FTSE chart? .. probably even better in terms of trend direction. For me, the uptrend since the beginning of the year has been breached. We have the MACD Histogram at zero, a MACD crossover and Stochastics dive. Again, IMHO, we may/could have a bit of a bounce back when the US starts trading on the 5th July maybe for a couple of days but the overall trend has changed. I would be looking for at least 100 points in the relatively short term but a test of 4000 has to be on the cards. So, I have donned my Thongs, prepared the Goldilocks Regiment for a full scale attack on the evil forces of the Corned Beef Brigade and I will be taking no prisoners . NB. The Spreadbetters love Index Traders because, on the whole, we lose. If you decide to enter this wacky world then do it with your eyes open. The DOW is a BEAST and the FTSE behaves like an untrained DOG. But, apart from that its good fun ;)

MG

All the above comments are purely a personal opinion and no investment advice is intended. Please do your own research