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

strawbs - quite often disagree with your opinion (lol - when do you post anyone else's!), but not this time .... however, what to you is "long way off"? ..... i think the credit markets will stabilise first, and that may even be in Q1 ..... US housing must surely take much longer to settle with so many already unemployed and, i am afraid, an awful lot more to follow ...... however, the markets are likely (i think) to start being a little more positive in Q2/3, as already posted above

falco - i would certainly be a very happy bunny to see $ weaken, especially against and , not least because our comoany has just switched to accounting in $ but receives 35/45% of its revenue in ...... would be much happier still to see strengthen vs

The credit markets will stabilise eventually, but probably not until the scale of defaults can be sensibly calculated. The economy is a different matter. Growth for possibly the last decade has been the result of debt. That debt will take a long time to pay back. What little "real money" is left will barely keep the economy moving. Add the potential risks of a deflationary spiral into the mix and things look grim indeed.

In someone else opinion....mine too. ;-)

Strawbs

don't forget that the likes of India, China, M/E and BRIC have all been genuinely expanding, and though that will inevitably be cut back an unknown amount in the coming 12 months (or so), there is still much (new) biz to be done ..... that may not be of much immediate solace the general public in UK and USA and also Europe, though they have yet to own up, but the results will filter back down

Just been catching up the last 30 or so pages... been interesting lately, to say the least... lol Strawbs, ref : your double top charts posted couple weeks ago or so, if you draw a rising line from the base to the left, through the low of 2003, it connects with the recent low of around 3700, not saying i believe it, but that would suggest the bottom is in? I believe the turn of the year will see the markets looking towards 2010 earnings, as 2009 doom already factored in.
Falco, im with you - got burnt short on oil earlier in year at just over the $100 mark, and again recently going long in the $50's, a tad early! although i was making shed loads for a couple of weeks! just for ref using City Index, who will accept $2 (or around 1.40 p/p)
According to charts both trendlines intact at the mo, we could still be within the falling resistance lines on the next leg down (although the FTSE really didn't want to go under 4000 on friday, did it???) and we are still within the recent set of rising trendlines, from memory i think we are getting quite close to the upper trendline of the down channel, so i guess a largish move one way or the other should be on the cards - either a fall on the next leg down or an upward break to continue the rising channel... still anyones guess...

Worth reading imo...


A. Stock markets lead fundamentals. It's perfectly normal to expect stocks to bottom before the fundamentals of the economy start to look any better.


The Dow bottomed in 1932. But economic numbers didn't head up until 1935.
Indeed, during the Great Depression, the Dow bottomed in 1932. But bad economic news continued to stream out for another three years, with economic stats not showing any signs of turning up until 1935.

In the next great bear market, the 45% loss in the Dow between 1973 and 1974, the Dow rallied a whopping 53% from its 1974 low even as bad economic news poured out of the economy for the next 18 months.

[Also note that toward the end of 1974, after the Dow had bottomed , inflation started to spike higher , reaching 10.3% by early 1976. Inflation continued rising all the way through 1980, blasting gold skyward to $850. The main cause: Just like today, massive money pumping by the Fed.]

Another, more recent example comes from Sweden. In the early 1990s, Sweden experienced a housing bust worse than what's happening now in the U.S. Bad debts related to the housing collapse reached 12% of Sweden's GDP, far greater than what we're seeing in the U.S.

In September 1992, Sweden's government injected capital into failing banks and implemented blanket depositor insurance.

In the 12 months that followed, Sweden's stock market soared 42%, even while the economy continued to recede.


-----------------------------------------

Incidentally how far has the Dow receeded from its high??? 14,000 less 45% equals 7700

how to make/lose money (i had no position either way!) ..... January Nymex + about $2.00 this morning ...... next direction? ..... qui sait?

Colossal gap up from Friday bear squeeze no doubt and possible ~Santa rally but Dow futures right on the edge of the channel so gone short

Did both... closed some FGP for decent gain although holding more for greater rise??? also shorted FTSE earlier for 50 point gain (bit early in closing but profit is profit after all!), so good start to week...

Stopped out evidently,even oil has gone up! Santa or fool's rally? Euro pounding the pound again

i see crude is up $5 this evening ...... perhaps i'm not such a chump after all, though it's much easier when not risking real cash

This may have had something to do with it:

US light crude futures rallied on speculation that Saudi Arabia will make a big production cut in January.

Saudi Arabia, which holds around one fifth of the worlds known oil reserves, is said to have told customers to expect a big cut next month.

Oil prices were also given a boost after it was confirmed that Congress had approved a $14bn bail-out for the US car industry. US crude for January delivery rose $1.45 to settle at $43.52 a barrel.

Prices had fallen earlier in the session after a weekly government report showed gasoline stockpiles had increased more than expected.

The US Department of Energy report also showed a 400,000 barrel a day rise in crude supplies while distillates, used to make heating oil, saw a 5.6m barrel build.

i am quite sure saudi and most others will cut exports (not quite the same cutting production!) as <$50 even for saudi is not worthwhile

Goldman Suchs now predicting oil price to fall to $30, what a turnround do they have any credibility?

OIL
as someone else mentioned, all these smart-arses who are now predicting crude at $30 or less are (almost certainly) the same ones who were telling us just a few months back that it would certainly reach $200 and more.

there are of course already unimaginable numbers of unemployed in the developed world, with assuredly huge numbers still to follow ..... nevertheless, we still remain dependent on oil whether to produce all sorts of chemicals, run our cars (even if not new!), fuel our planes and of course to heat our homes, especially with the 3/4 coldest months still to come.

indeed demand will be less than it was say a year ago, but as i have posted before, even saudi which is arguably the cheapest major producer, finds it uneconomical to export at below +/-$50 ...... while a productive oil well cannot be turned off like a tap, the oil can easily be stored, as it is in saudi, in massive subterranean "reservoirs".

so, unless you have a lot of money to lose, i would strongly recommend that you do not short oil, and suggest that the sensible stance is to stay neutral for now.

Job to guess which way this is going to go, I wish I had known that it was going to drop as much as it has done, I am hoping that there will be a rise soon, because my porfolio is looking rather "red" as so to speak, I did sell out of a lot of positions but should have sold the lot !.

UK RETAIL
i was wrily amused to read just now how UK retailers were now relatively jolly ..... after all, john lewis sales were only down 4% against the same week last year, and reliable anecdotal evidence is that selfridges has been laying off staff this week .... i was also shopping in the chelsea end of fulham road this afternoon, and there was little sign of retail life there ...... further, beloved + daughter were (again!) in westfield on friday afternoon and reported that it was even pretty quiet there, considering the time of year

With regard to oil and the markets at the moment it is dangerous to take the current rally in equities, currencies, commodities seriously as we are currently in the silly season when the big boys/girls have closed up shop and we are in the realms of countertrend speculative movements. Oil has bounced off $40.25 which is below the bottom of the trendline and rallied to 50ish close to the top. It hasn't as far as I know breached the moving average. Oil dropped with the Dow on Friday and then recovered. US inventories on Wednesday were high as far as I know so there is no supply crunch as yet. OPEC has a meeting on the 17th. and people have been closing short positions for the holiday and this meeting. All I am saying is beware taking too many long positions as I can't help thinking we will be back to business as usual in Jan and if the Dow drops through 7500 oil will be chasing it down too!

From FT via another thread
Triple Witching may sound like something that has more in common with Halloween, or a performance of Macbeth, than with financial markets. However, investors ignore this important date in the financial calendar at their peril as it has a significant impact on how the equity markets behave at certain times of the year.

Its the name given to the days in the year on which three different types of derivative contract expire simultaneously and the next one is coming up next week.

But what makes the date worth noting in the diary is its predictable effect on the wider stock market. Research has uncovered certain trading patterns in the FTSE 100 in the weeks surrounding Triple Witching Day patterns that any investor can try to profit from.

To work out how, it is necessary to understand how the three types of derivative work.

Stock options, stock index futures and stock futures are types of contract that are traded through the London International Financial Futures Exchange, commonly known as Liffe. These contracts have set dates for expiry and are settled throughout the year.

However, on four days a year the third Friday of March, June, September and December all three of these derivative contracts have the same expiry date. Hence, the name Triple Witching.

These days can see changes in equity market behaviour because traders who hold options and futures contracts clearly have a vested interest in making sure that the price of the underlying share or index, on the London Stock Exchange, is moving in their favour when settlement of the Liffe contracts takes place.

Consequently, these settlement days see frenetic trading in options and futures contracts, as well as in the underlying shares on which the contracts settlement price is based. This gives rise to much higher volatility in share prices on these days. It also greatly influences the closing prices of shares at the end of trading on these Fridays by creating unusual buying and selling pressure on the share prices of some of these FTSE 100 companies.

To compound the effect, Triple Witching takes place on the same four days for the US stock market.

So Friday December 19 is likely to be an eventful day and potentially profitable, too. There are four specific reasons for believing this.

First, in the past decade, the FTSE 100 has risen by an average of 1.30 per cent in the 10 trading days starting on the Monday before Triple Witching Day, posting eight out of 10 winning trades.

Second, it is usual for there to be some market weakness in early December, but this nearly always peters out and sets the scene for a Santa Claus rally later in the month. Thats exactly what we are seeing this year with the FTSE 100 falling 5.5 per cent in the first week of the month and then bouncing back above its end-November closing price of 4288. This looks increasingly like the bear market rally I discussed two weeks ago (How low can it go, November 29 2008).

In fact, it may not be widely known, but it is incredibly difficult to lose money in December in bear markets.

The average loss is a modest 0.5 per cent in the past eight decades. In other words, the historic downside risk to capital, on a very short-term basis, is far less than most investors, shell shocked by this bear market, probably realise.

Third, in the past 26 years, the UK stock market has risen by 2.5 per cent on average between December 11 and January 5. And the odds of any kind of rise in the stock market during this 25-day period are firmly in investors favour this short-term trade has been found to return a profit 85 per cent of the time.

Fourth, the calendar dictates that Triple Witching Day in December can fall between the 15th and 21st days of the month. However, the later it falls in the month, the better. That is because the days follow-ing Triple Witching Day will cross over with historically some of the most profitable trading days of the year.

Since 1980, the UK stock market has risen over 75 per cent of the time in the two trading days before Christmas and in the three trading days following Boxing Day. This is easy to explain as it is common to see trading volumes tail off in the run-up to Christmas as dealers and traders shut up shop for the festive period.

As a result, liquidity starts to dry up and, given that the only market participants still trading are likely to be buyers of shares with sellers largely absent, conditions are ripe for the market to rise on very low volumes in the final week of the year.

So a combination of seasonal investing trends, a bear market rally and a technical boost to share prices from the settlement of the Liffe contracts, means the odds heavily favour the market trading higher on Monday 5 January from yesterdays close.

OIL
Nymex has strenthened by about $2.50 this morning (january contract is about $48.75) ...... while this may merely reflect the ice storms in NE USA, it may just be signalling the bottom of what, to me at least, looks like a bear bubble or whatever the correct term might be

Agreed cynic and lets not forget also OPEC meeting friday I think so we can expect a cut from them helping sentiment.

Dow futures just turned positive so fingers crossed for start of a xmas rally.

Off for a kip ready for the yank kick off.