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

Nerves of steel, Toya, if you waited until now ;)

NEW YORK (Dow Jones)--Brace yourself for darker days.

As the first quarter draws to an end, evidence is gathering that the economy contracted in the January to March period, as consumers hurt by the damaged housing market, high energy and food prices and the credit crunch rein in their spending. The second quarter is likely to be a downer as well.

The two anticipated consecutive quarters of contracting growth would put the economy squarely in a recession, based on the common definition of the "R" word. Many would also say the economic slowdown has met the conditions for recession set by the official arbiter of business cycles, the National Bureau for Economic Research: a significant decline in activity across the economy, lasting more than a few months.

Late last week, the Economic Cycle Research Institute - which correctly called the 2001 recession - threw its weight behind the recession call. "The U.S. economy is now on a recession track," it said in a special report.

"We believe that the economy is already in a recession," said Jane Caron, chief economic strategist at Dwight Asset Management. "Growth will contract in the first half 2008."

What happens beyond the first half is where opinions divide. While most economists agree that the government's much anticipated rebate checks will lift consumer spending in the second half of 2008, the headwinds from housing and the credit crunch remain formidable. On the other hand, consumers could get another round of help from the government later in the year. As a result, some see the economy back on course heading into 2009. Others don't expect real relief to come until 2010.


A Rough Ride Until Summer

For the first quarter of 2008, the litany of weak economic data seen thus far point to an anemic performance at best.

Data for the first two months of the year already show a pullback in consumer spending - the crux of the economy as it accounts for about 70% of the gross domestic product.

In February, spending grew just 0.1% before inflation - compared with an 0.4% increase in January - despite decent gains in income.

Caron said she expects spending for the first quarter to be close to flat, leading to an annualized growth rate of -1% in gross domestic product. The second quarter should see a similarly sharp drop in growth.

In the fourth quarter of 2007, GDP collapsed to a 0.6% annualized rate after a 4.9% pace in the previous quarter. The first reading on 2008 first quarter GDP comes on April 30.

Also suggesting a further fall in spending this year is plunging consumer confidence. In March, consumer confidence fell for the third straight month, according to the Conference Board, to its lowest level since the Iraq War began in 2003. More worrisome was that expectations for how the economy will fare six months ahead dropped as well, to a 35-year low.

Then there's the battered housing sector, which has shown few signs of life since it first tripped up in 2006. Falling home prices have sharply reduced the value of many consumers' largest asset, and a rash of mortgage resets as well as tightening credit conditions in general could lead to more delinquencies and foreclosures.

"The shock is not over," said Michelle Meyer, economist at Lehman Brothers in New York. While home sales could well bottom by the end of the summer, Meyer said, home prices "still probably have a ways to fall," and inventories are quite high.

Add in the stresses of the credit crunch and high energy and food prices, and conditions are ripe for a sharp slowdown. Stocks hit a high in October and have since fallen with nervous investors fleeing riskier assets. The Dow Jones Industrial Average and the Standard & Poor's 500 stock indexes this quarter were down 7.4% and 9.8%, respectively. Energy prices have also been skyrocketing. Benchmark crude futures on the New York Mercantile Exchange rose to $101.58 a barrel Monday from $55.40 a barrel three years ago.

Meyer expects first quarter growth to fall to an annualized -0.5% rate, with some improvement seen in the second quarter, when growth should recover to an annualized -0.1% rate. But the economy's performance will remain well below its potential growth rate of 2.75% amid a "marked slowdown" in consumer spending, she said.

With consumers spending less in the first half of the year, businesses will scale back on operations and slim down on staff. That's been borne out by the data, with businesses equipment spending falling both in January and February. Jobless claims are already at persistently elevated levels, and the economy has lost jobs in the first two months of 2008. January's drop was the first in over four years. The latest jobs report, for March, is set to be released on Friday. Economists are looking for a fall of 60,000 this month compared with the previous month's 63,000 drop.


Possible Pickup Eyed With Caution

Once the rebate checks arrive in the mail, consumers should be energized and spending should pick up in the second half of 2008.

"The stimulus package will be effective," said Brian Fabbri, chief U.S. economist at BNP Paribas in New York. Fabbri expects at least half to two-thirds of the funds to be spent, pushing GDP into positive territory. The key question though is, will the summer lift in spending spark businesses to start hiring again?

If so, the economy could be on its way to a recovery. Many are also anticipating further fiscal stimulus sometime this year, which would brighten the picture. The effects of the Federal Reserve's hefty interest rates eases should also start to kick in, as should the central bank's actions to keep markets afloat. Homeowners could get some relief from the expanded mortgage buying programs at the Congressionally-chartered housing finance firms, which would provide an additional boost.

Those are many "ifs," and for now, the pessimists seem to outweigh the optimists.

Meyer at Lehman expects to see "sluggish consumer spending" next year as glee over the government's assistance gives way to concerns over still falling home prices and rising foreclosures.

With economic conditions worsening, Dwight Asset's Caron expects the jobless rate to rise - to a 6% rate by early 2009 from the current 4.9% - and nonfarm payrolls to continue to come in negative.

"My concern is that the labor market will weaken substantially, which will deter consumers from leaving their bunkers," Caron said. She pointed to a vicious feedback loop, with job losses leading to less spending, hurting businesses even more and sparking more job losses. The process is already in place, she added. "It's now gathering speed like a cyclone."

Adding to the doom and gloom view are fears that economic weakness could start to radiate around the globe in 2009. Such a development could kick the strong net export crutch out from under the U.S. economy, weakening an already soft economic outlook even more.

Thanks for the info, Chocolat. Should be plenty of opportunities for shorting then - but from a higher starting position than my hopeless attempt last night ('short' is still a new concept to me!)

Well, that's rather annoying, contemplated a DJ long this morning at 12200, moved up 25pts since I looked 10 mins ago; must stop contemplating!

Toya, you have email.

PT - I did similar on FTSE - considered a long - but I have been caught once or twice trading in first 15 minutes after open - so decided to sit on hands and go back to bed for 30 minutes. - wrong - up 30 ponts already

seems like the dollar is biting back this morning with gold and oil reversing

Well, the git is up 100 pts now since shortly before 8 'clock :(

git ?

It's a git cos I didn't trade it :(

there was I thinking Gold Index Trades, Gilt Index !! LOL.

I am still long on FTSE

I think cynic was contemplating placing a long last night - I wonder if he did ?

Just got stopped out at 5750 - whilst having breakfast !!! - but cleared a modest 150 - so thats ok

Nice one, 150 profit per day isn't actually a bad salary on an annualised basis. I haven't touched the Indicies this morning preferring to prat about with the EUR/JPY pair over on FX, but in profit as well so happy enough. Off to play golf now whilst the sunshine lasts, back later for some DOW fiddling :)

If only I could do that on a consistent basis - it would supplement the pension nicely.

I thought I was brilliant getting a 30 profit hasn't supplemented the pension as I'm still trying to claw back a 200 loss. Think Ftse may falter now after rises this am will,as usual probably deliberate for too long.

Just seen this on the CNN website; click the link below:
CNN - Stocks ready to roll

Should mean a good opportunity on the DOW today.

PTH: thanks for your message. Have replied but never know whether the system actually works!

Unfortunately I am out for lunch and no power this pm - so will have to duck this time - but it does seem a good opportunity for Dow - although index up 75 already on futures.

Toya - I hope you took advantage of the rise you predicted ?? I am too late

I have just taken a short on the FTSE at 5812 !!!

Oops - too soon me thinks

I got in at 5765 long but had to go out so set a limit !!!!!!!!!!!!!! got stopped out way too soon b****r
Think I'll take a short now.