rather than pick out individual stocks to trade, it can often be worthwhile to trade the indices themselves, especially in times of high volatility.

for those so inclined, i attach below charts for FTSE and FTSE 250, though one might equally be tempted to trade Dow or S&P, which is significantly broader in its coverage, or even NASDAQ

for ease of reading, i have attached 1 year and 3 month charts in each instance

I'm pleased you kept those to yourself Skinny :)

Clearly no need to hedge equity profits until a FTSE sell signal forms, at these heights I've got plenty of head room to take my time with the hedge also.

Worth a note is that since June the ECB has shrunk its LTRO repayment balance sheet by 5% whilst the FED has gained 5%, the BOE has gained 15% and BofJ has gained 9%. This explains why the Euro has strengthened recently, and would suggest that any correction may be seen in European markets first... DAX on watch for short signal.

To follow on from the above post, Dominic Picarda of IC:
"Just how much further can the likes of the FTSE 100 and EURGBP rise without some sort of decent-sized correction occurring? Daily relative strength index readings above 80% represent a very overbought situation. To give some measure here, the three times that EURGBP got so stretched, it went on to suffer dips of 4%, 12% and 6% respectively. The best moment to sell in each case was not when the daily RSI was at its highest level – as it is now – but once the price hit a new high but the RSI did not.

Applying this principle to the current situation, I feel able to continue seeking out small long positions in FTSE and EURGBP for now. The DAX is more interesting, as it is not nearly as overbought. Meanwhile, I think GBP’s weakness could extend further."

U.S. stocks are expected to open flat Tuesday, with investors on the sidelines ahead of some key economic data. "Despite the subdued start, the risk-on tone remains broadly supported by hopes of further improvement in the labor market and modest growth in 4Q GDP, both due in Wednesday's session," said ETX in London. "With consumer confidence data for January expected shortly after the opening bell along with earnings from Ford and Amazon, traders' resolve to keep building out this rally certainly has the potential to be tested yet again," said Fawad Razaqzada, Strategist at GFT Markets.

'The best moment to sell in each case was not when the daily RSI was at its highest level – as it is now – but once the price hit a new high but the RSI did not. '

Otherwise known as; 'negative divergence!'

I would say that that's the best time to take a profit rather than take a position... If the market is gaining and strength is falling then the risk of holding becomes greater. Each to their own assessment though. Also negative divergence doesn't consider momentum.

Only if there is hidden divergence Shortie, this overrides Neg/posi divergence... otherwise it can be very accurate...

S&P/CS Composite-20 HPI y/y 5.5% consensus 5.5% previous 4.3%

Ford Profit Tops Estimates on F-Series’ Boost

Ford Motor Co. (F), the second-largest U.S. automaker, said it expects to lose about $2 billion in Europe this year as a likely recession in the region continues to sap demand for cars.

Ford Europe lost $732 million in the fourth quarter and $1.75 billion in the region for the full year, more than its previous forecast given in October of about $1.5 billion. The deficit will be worse in 2013 than Ford’s previous projection for a similar loss to a year earlier because a Europe-wide recession is likely this year, Chief Financial Officer Bob Shanks told reporters today.

USD CB Consumer Confidence 58.6 consensus 64.8 previous 65.1

A gauge of consumer confidence dropped in January to the lowest level since November 2011 on lower expectations and gloomier views of the present situation, according to data released Tuesday. The Conference Board said its consumer-confidence index dropped to 58.6 in January, missing analysts' estimates of 64.3.

Ah - snap Skinny!

Markets still seem determined to keep moving on up!

Je ne comprends pas!

Pas mois :(

When the market doesn't fall during a down-cycle, more often than not it explodes as soon as the cycle turns to an up-cycle once again. And vice versa.

The yen crosses are still in the down-cycle which started over Sunday night and Monday morning. Prices look to me like they've still got further to fall, but not by a lot and this down-leg is starting to look a bit exhausted. You could easily see the start of the next up-leg within 24 hours or so and, if that happens, I suspect equity markets may go into orbit as soon as the risk switch is turned back on.

Interesting to look at it from that perspective Hilary - thanks

USDJPY 1-hour to demonstrate what I mean above.



I'll be surprised if the price doesn't hit the lower red band within the next 24 hours. Once that lower indi turns up, it'll be time to fillyajimmychooshoes.

Sterling and euro yen crosses both mirror the greenback chart.

Just a few more points will see me walking with Bullies Beer Tokens.

Hils, I see you still favour the Jimmys

Prefer Aruna Seth actually, P. But (a) nobody's ever heard of her and (b) it doesn't have the same kinda ring to it. :)

I'm still looking for 6,400 sooner rather than later.

Bernanke Seen Buying $1.14 Trillion in Assets in 2014

Federal Reserve Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014, according to median estimates in a Bloomberg survey of economists.

A few hours old...

Japan govt approves $1.02 trillion budget for 2013/14 amid fiscal worries

TOKYO | Tue Jan 29, 2013 7:54am GMT
(Reuters) - Japan's government approved on Tuesday a $1.02 trillion (649.22 billion pounds) draft budget for the next fiscal year that aims to nudge tax revenues above new bond sales for the first time in four years, but still relies on borrowing to cover 46.3 percent of its spending.

The first full-year draft budget compiled under Prime Minister Shinzo Abe, who led his Liberal Democratic Party back to power last month with promises of economic revival, marks symbolic improvement after years of deterioration.