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

Sounds expensive if you happen to be on the wrong side of a spike. Good luck.

Strawbs.

Unemployment rate 6.1% from 5.7%. Market in freefall

glad i had guaranteed stop

Dollar weakening oil rising maybe commod stock won't get eviscerated. Is Buffett spending like Marcos today I wonder or waiting for vix to hit 40 ?

just picked up the following, which on balance, and assuming its accuracy, is probably good for the markets, insofar as it should give some stability ......


AFP - Saturday, September 6 05:05 amWASHINGTON (AFP) - The US government is planning to put under strict federal control troubled mortgage giants Fannie Mae and Freddie Mac, fire their top executives and use federal funds to bail them out, US media reported on their websites.

Fannie Mae and Freddie Mac, government-chartered, shareholder-owned firms that provide liquidity to the housing market, have been whipsawed by the financial meltdown in the past year, losing some 90 percent of their value on fears of losses from mortgage defaults.

A law enacted in July gives the US government the authority to buy shares or offer liquidity to the companies to keep them afloat, averting what some fear could be a major shock to an already fragile global financial system.

The Washington Post said the plan calls for placing the firms in a legal state known as conservatorship.

That means the value of the company's common stock would be diminished but not liquidated while the holdings of other securities, including company debt and preferred shares, would be protected by the government, the report said.

The government also plans to make quarterly infusions as the companies' losses warrant, The Post said citing unnamed sources.

The New York Times, for its part, reported that senior officials from the administration of President George W. Bush and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac and informed them of the plan.

The Times said it was not possible to calculate the cost of any government bailout, but the huge potential liabilities of the companies could cost taxpayers tens of billions of dollars.

An American Northern Rock then, I would guess the dollar would weaken on this news, why do governments persist on short term bailouts for long term pain, if NR, F/Mae and F/Mac were allowed to fail this would send the strongest message possible to other financial institutions to (belatedly ) get their houses in order.

The banking sector in the UK has a lot more downside yet and the sooner we get there the sooner they would be able to build from a sounder base, but with the Gov tinkering it will take longer and so the pain will last longer. UK bank lending will contract markedly over the next 12-18 months. AIMO of course.
2517

because the knock-on effect is too frightening to contemplate

Very frighting, if F/Mae and F/Mac was alloweed to fail, it would be the same as letting Lloyds and Barclays to fail in the UK. I couldn't even begin to imagine the consequences.

Hmmm. Next week should be interesting then. I think the bullet of a market crash has been dodged a number of times since the credit crunch first began. Of course at the start everyone was feeling bullish, so an excuse to rally had the desired effect. Now though, we've had months and months of mounting gloom, everyday more bad economic news, and maybe an equity market in denial.

Those of a nervous disposition, look away now.....

In my opinion.

Strawbs.

I wasn't saying that I expected big market falls Monday, it depends on how markets react to F/Mae and F/Mac news, you can never be sure but I would think the reaction should be favourable, because it will remove some uncertainty.

So we may see some short term recovery, before a retest of the 5200 level.

But I feel you are right in saying we have avoided a major fall so far, and we still haven't reached the bottom yet.

only imho of course..........

and what level do you think Dow will reach?

No idea !

This from todays Sunday Times;

Some analysts said the action would boost confidence in the short term. David Buik at BGC Partners said . . . that he expects the FTSE to bounce tomorrow morning after New Yorks rally on Friday, which came in anticipation of a rescue of the two mortgage agencies.

But other analysts feared government control could backfire. If there is a bounce, its a false one. If anything, the situation has changed for the worse. We knew these companies were too big to fail; now it is the government thats on the line instead of them, said veteran analyst Richard Bove at Ladenburg Thalmann. He said unless the government had a plan for what to do next this was an unbelievably negative move that would increase the government deficit and could impact on Americas ability to borrow money.

For the full article go to:
Record bail-out in US of Fannie Mae and Freddie Mac - Mortgage banks rescue should lift markets

Yep. That's the way I read it too. Central banks and governments can't clear up this mess, it's too big, all they can do is move the pain around. Sadly it's not the organisations that created the problem that will suffer, it's the rest of us. Maybe the next "great depression" is closer than we think......

In my opinion.

Strawbs

the announcement is now out (go to cnnfn.com), but i am not remotely clever enough to judge its effect ..... however, as i posted before, it must surely remove some uncertainty in the markets, and that can only be good news.

Question is, have the markets been selling off because they're worried the US government will protect F/Mae and F/Mac, or worried they won't? Surely they were always going to step in to prevent the systemic risk? Maybe the markets are worried what this might do to the dollar, and in turn oil/commodities/inflation etc. It could be a very interesting week indeed. All eyes on Asia for the first clues tomorrow......

In my opinion.

Strawbs

Neither ..... market movement is primarily driven by sentiment and uncertainty is the one of the most corrosive .... in this instance, a major unsettling influence has (perhaps) been removed

Markets are also forward looking, and follow a herd mentality. Not necessarily out of choice, sometimes out of necessity. The dollar and equity markets got a lot stronger last month, oil and commodities a lot weaker. I just hope there's not too much leverage backing the wrong horses. We may see a temporary rally, but I can't see this as good for the dollar longer term. If the housing market continues to fall in the U.S., surely the government is going to have to borrow a heck of a lot of money to keep it supported! How deep are the U.S. pockets if any more financials need bailing out, and will the rest of the world want to keep picking up the tab? Still, the UK and probably most of Europe are in a bad mess too, so where do you put your money? Gold I suppose.....

In my opinion.

Strawbs.

IMO I think we are ready for a bounce and maybe the start of another bull market. Remember hearing a few months ago someone saying the mkts couldn't possibly recover because the miners were at their peaks (ie where could their sp go) and therefore there needed to be a major sell-off of mining stocks before the recovery could begin. Last week was very frightening (hedge funds forced selling?) but I believe good long-term for the mkts. Whatever happens Monday (once again there is a view that a major crash is needed before recovery) the banks and builders sp have stabilised and the miners are oversold so I am becoming more bullish.

The Halifax said yesterday that they think U.K. house prices will continue to decline for the next 18 months. Apart from the first time buyers who will benefit, assuming they can get a mortgage, that does not spell the start of a bull market to me. TW. has not stabilised, just had a slight reprieve with the stamp duty change. Their sites are not being developed, sub-contracted trades are being laid off & their cash flow is thin.
Sorry to disagree, but further for the equity markets to drop, imo.