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

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.

OH and lets not forget the Yanks are tipped to cut interest rates wednesday, so $ falls and oil increases. Sounds OK to me.

OPEC's oil supply cut could be its deepest
Mon Dec 15, 2008 8:32am



8:14am ESTMarket News


Oil rises above $48 ahead of OPEC meeting


ORAN, Algeria (Reuters) - OPEC ministers could make their deepest oil supply cut ever when they meet on Wednesday to combat shrinking demand, bulging stocks and a $100 collapse in prices.

For many in the Organization of the Petroleum Exporting Countries, up to 2 million barrels per day (bpd) must be removed to keep up with a slump in consumption that has knocked two-thirds off prices since July.

"We have to act -- we see a very sizeable reduction," OPEC Secretary-General Abdullah al-Badri told reporters on his arrival on Monday in this western Algerian city.

OPEC President Chakib Khelil agreed.

"Everybody is supporting a cut -- I don't have any doubt about it."

Benchmark U.S. crude rose more than $2 a barrel toward $49 in early trade -- still far from the "fair" price of $75 a barrel identified by Saudi Arabia, the world's biggest crude exporter, at the end of November.

After slashing a combined two million barrels daily, 7.3 percent of its output at two previous meetings, OPEC was on course to chop at least another five percent off a world market that burns 86 million barrels of oil each day.

Saudi Arabia, had yet to make public comment on its position, but OPEC chief Khelil said Riyadh had already cut back in anticipation of further supply curbs.

"The Saudis have already taken a decision ahead of the meeting, as you know, they have reduced their supply to the market by 8 percent, which has had an effect on the market," Khelil, also Algeria's energy minister, told reporters.

Reuters reported last week that Saudi Arabia's biggest customers would receive less oil in January -- implying the kingdom had already factored in another OPEC reduction.

PRICE Defense

Top priority for the group that pumps more than a third of the world's oil is building a floor under prices, which sank toward $40 early this month.

OPEC hopes to prove wrong the banks which foresee oil's descent to $30 or below in the first quarter of next year.

Iran, OPEC's second biggest producer, said it will propose a cut of between 1.5 million to 2 million bpd in Oran. Economists say Tehran needs an oil price near $80 to avoid a spending squeeze in next year's budget.

"I think 2009 will be a very difficult year," said Khelil. "We are very pessimistic about demand."

It would take more than half a year to remove oversupply if OPEC were to cut by 2 million bpd, he said.

The United States also expects the economic downturn to hit the world's thirst for fuel. It predicts global oil demand will shrink this year and next -- the first time since the 1980s consumption had contracted for two years running.

OPEC is also hoping for support from exporters outside the group.

"We did not ask anyone else to cut but I hope they will act and help the market," said Badri.

In the past, any collaboration has been unconvincing. Non-OPEC output is stagnating because of aging fields and underinvestment, and any declared cuts could merely mask the decline.

But the depth of the price fall has shaken all producers. Russia, the biggest non-OPEC exporter, is sending its energy minister and its deputy prime minister to the Oran meeting.

The head of Russian oil company LUKOIL (LKOH.MM: Quote, Profile, Research, Stock Buzz) said on Monday he believed OPEC is expecting Russia to offer output cuts of up to 300,000 bpd.

In 2001 OPEC cut by 5 million bpd in four stages, 19 percent of its supply, laying the foundation for a six-year boom in oil prices that culminated this summer in a record $147.27 a barrel.

OPEC's biggest cut by volume was in April 1999 when it reduced production by 1.716 million bpd, according to Reuters data.

(Additional reporting by Simon Webb in Oran and Vladimir Soldatkin in Moscow, writing by Peg Mackey, editing by William Hardy)




Thomson Reuters 2008 All rights reserved

Buy on rumour sell on fact for Fed decision or is everyone too drunk to care? I'm surprised they gave Maddof bail, mind you he must be a very persuasive dude, what a film that will make!

Oh dear ! Despite the roaring Dow, must be that triple witching, Market ticker is no longer anticipating a 1930's depression but an 1873 one that was apparently even worse!

well that's another scary week out of the way that has seen fall yet another 4.5% against to just over 1.07, a "pretend" bailout of the US car makers and oil finishing in NY at $33.87.

so what's ahead?

between now and end year, i would expect to see Dow falling further and oil having a sharp bounce, even if it is only the traders squaring away their books.

2009 will inevitably be tough, but as always, the chemical industry will almost certainly show when the trough is at or nearing its nadir.

worldwide, manufacturers are destocking as demand falls and uncertainty, the bane of everyone's life, remains foremost ..... however, a company can only destock once - it can go bankrupt of course, which will happen to many - and sooner or later, it will need to start buying its base chemicals once more ...... my gut feeling is that this will slowly restart in the second half of next year, but i state that with no real conviction.

My sister-in-law works at a small chemical firm , people are ringing up for chemicals which they mix up on the premises but the firm can't get any chemicals off suppliers because of credit restrictions. The boss has re-mortgaged his house and I think bankruptcy is looming despite a demand for their services. That's why they're so keen to get the banks lending. The long term looks like a period of sharp deflation whilst the world economies contract regulate and initiate lots of protectionist policies followed by a period of hyper inflation when oil and particularly soft commodities go ballistic when presumably it will be good to short bonds though that is probably not going to happen before mid 2009 at earliest from what I can glean.

falco .... your post does not quite follow a logical trend ..... on the one hand, you talk about long term but in the next breath you say mid 2009, which is only a very short time away.

anyway, as i am at the sharp(ish) end of worldwide chemical traffic, i'll attempt to keep this board updated when trends in that field are apparent.

cynic companies de-stocking should generate cash to tide them over the inevitable downturn as demand falls,those unable to reduce stocks will probably go bankrupt hence M&s etc rushing to bring forward seasonal sales. We don't agree that oil prices will rise rapidly as global demand will fall further in the first half of 2009 cuts by OPEC will have little impact as producing countries need cash to support their expanded infrastructure.

Mid 2009 earliest investment opportunity as supposedly best to invest 6 months before the worst. Hugh Hendry Of Electica plans to pile into Gold 2010 anticipating $2000 from there he's done a few interviews on CNBC if interested

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/3852773/Oil-at-40-a-barrel-will-cause-price-explosion-in-future.html

Gold looks good for next year, but what miserable times these are !.

M&S destocking so-called fashion items is nowhere near the same as base chemicals .... fashion has a season, and once that is past, the stock is almost worthless .... they need to get rid of it and fast!

i can tell you now, that saudi has effectively stopped well development, but Aramco who control this sort of thing, are notoriously fickle and even disorganised and are almost as likely to hit the panic button in late jan/feb as to stay standing still.

my own view is that the current oil price is as much speculator driven as was the silly level reached earlier this year ..... US monthly crude stock report will give the obvious clue as to demand, and hence the likely course of crude prices ..... however, as posted before, i would still be far from surprised to see crude spiking before year end

Hope so Cynic !.

money and mouth have now joined hands, to mix a metaphor, and have just taken a small long in Feb Nymex at $41.07 ..... there is a premium in there of (i guess) about $1.00 so you can easily track my gloom and elation vicariously!

A long bet on the FTSE at 4200 looks a reasonable bet to me ?

along bet at 4200 followed by a short bet at 4300 - would have been an excellent bet - shame I did not follow my own advice - but I have lost too much on the indices in the past - prefer to watch you professionals