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

a more detailed extract of what Mr B said last night for you all to contemplate .....

Federal Reserve Chairman Ben Bernanke told Congress Thursday that legislators should enact a fiscal stimulus package in order to help beleaguered consumers as recession fears grow.

"To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so," Bernanke said.

Bernanke said that current losses from the subprime mortgage mess were probably about $100 billion but cautioned that this figure could wind up being higher.

During Thursday's hearing, Bernanke said he thought a fiscal stimulus package of up to $150 billion, would be "reasonable."

Bernanke cautioned though that any stimulus "should be explicitly temporary" in order "to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit."

The Fed chairman said that extending some of the tax cuts engineered by Bush in 2001 and 2003, which are set to expire in 2010, could have a positive impact on the stock market today. He singled out the cut on dividend taxes as particularly key to stimulating the economy.

Bernanke stopped short of suggesting that the Bush tax cuts should be made permanent. He said he's most in favor of the "law of arithmetic" - regardless of what Congress spends on fiscal stimulus, it should make sure that it had the resources to support the package.

I think I am correct in saying that the DOW is tipped to open up 129 points, so hopefully may see the FTSE continue it's recovery today!

Amazing how sentiment changes so quickly, I went out at 09:30 with ftse heading down 40 point's and full of pessimism, looking like it would head much lower. Then up 80 point's when I returned and opposite sentiment.

This market is so volatile at the moment, with extreme mood swings, they need a good dose of prozac.

I understand the FTSE is on a PE of 11.
2517

i RECON THE ftse WILL BE NEGATIVE BY THE CLOSE ??

It's the same old story push the market up in the morning and stuff the suckers in the afternoon just like Wall Street has been rigged for the past weeks.

It's certainly been a rollercoaster today, a great day for trading the index, trouble is you need to be more of a gambler than me.

2517GEORGE

A PE of 11 is cheap, when you factor in that alot of companies in the Oil and Gas sector are priced much higher. So other sectors would be much less, having factored in much forward bad news.

I would interested to know the average ftse PE in the past, during other weak times. Maybe 1973/4, 1987, 1990/1 and year 2002.

I will try and search for the ratios, but if anyone else knows, I would appreciate the info.

spitfire43----Don't forget the PE is historic, yes it seems cheap as a whole, but within that there are individual stocks that have the capacity to disappoint on the earnings side, and therefore their PE would increase. I would be wary of dollar earners myself, having said that there appears to be an awful lot of bad news priced in. I believe the market is content with a PE of 17 in times of normal growth. I heard a guy today on Squawkbox (may have been from ING, I'm not sure) say that on a PE of 11 it wasn't a market to short.
2517

very difficult; potentially very nasty indeed.
according to advice i have received ....

FTSE
key level is/was 5900/5910
currently 5885 which cannot be called a break downwards but is perilously close nevertheless, especially after a cheery earlier day.
IF this further downtrend is established, then 5065 is on the cards.

DOW
having comprehensively missed or ignored the down signals at 12800 and then about 12450, 12000 should provide decent support.
looks as though might easily be tested later this evening as now -75 at 12090 after + about 150

UNKNOWN FACTOR
it is already heavily signalled that the Fed is going to come in with some strong action.
inevitably this will have potential long term inflationary implications.
one would guess that everything will surge on publication of the measures, but it is decidedly questioonable whether or not that can be sustained

Yes very scary cynic, I also heard today that bonds were sold off first, then equities which we have seen, notwithstanding your scenario above, and then it is the turn of commodities. The guy from ING mentioned that they (ING) had called the market a sell in October 07 and were looking for a 20% drop, so far the fall is around 14% and he saw no reason to alter their stance.
2517

20% is a key number from the high ..... a fall below allegedly signals a recession
anyway, herebelow is what the Dumbcluck had to say just before noon in NY .....

Bush: Economy needs 'shot in arm'
President says immediate, temporary tax cuts for businesses and individuals are needed to keep economy on track.January 18 2008: 11:51 AM EST

President Bush proposed an series of short-term tax cuts that he said would provide a shot in the arm for the struggling U.S. economy.

Speaking at the White House, the president did not give details of his plan but said that it would include tax breaks for both businesses and individuals, which he said must together be worth as least 1 percent of the nation's gross domestic product, or roughly $140 billion.

"By passing an effective growth package quickly we can provide a shot in the arm to keep a fundamentally strong economy healthy," said the president.

He said that his advisers believe the economy can keep growing, but that there is a risk of a downturn. "Our economy has seen challenging times before, and it is resilient," he said.

He said he was confident the measure should be able to win support from both Democrats and Republicans.


the market has clearly been most impressed!
i hope the reaction is rather better when (please God) Fed announces rate cut of at least 0.5%

I understand the details of the package will be unveiled next tuesday. So is the $ going to weaken further from here?
2517

How much of the expected Fed cut is already factored into Cable?

typed a longer and actually (for me) quite sensible response for George ..... MAM system could not believe it and collapsed when i tried to post!

in very brief then ..... not necessarily (for George) and certainly 0.25% and prob 0.5% (for Peter)

encouraging to see Dow now recovering smartly having dipped quite close (12029) to the dreaded 12000 level ..... if i was not going out for dinner tonight, might have taken a very modest long ..... anyway, it will be interesting to see

where is the money coming from , the government is already up to its neck in debt

just do not understand how they can pull these amounts of money out of a hat

SAN FRANCISCO (MarketWatch) -- Gold futures rose slightly Friday as a stimulus package announced by the White House to boost the slumping U.S. economy failed to soothe the markets, fueling safe-haven flows into the precious metal.
"The proposed 'solution' is further cheap money, liquidity and 'stimulus' -- this time in the form of showering tax rebate checks of some $150 billion on the citizenry," said Mark O'Byrne, executive director of Gold and Silver Investments Ltd, in a note.

But the equities market retraced its move higher after another analyst downgrade hit the financial sector, with President Bush's call for a fiscal stimulus package only intensifying the negative sentiment.

Frankly, the big problem with the usa is these huge suv's and monster trucks using vast amounts of (gas)(american term for petrol) and the fact that they are encouraged to do so, they do not have a very fast rail network which they should have, and should have developed years ago, huge aircraft carriers costing billions to maintain even though I suppose that they are the police force in this insecure world we live in, they also have encouraged people into getting themselves into debt and voila ! here's the end result !

RF .... sorry m8, but your logic is ridiculously narrow ..... i am no economist or analyst or even an accountant, thank goodness, but regardless of the mess the US appears (chose that word intentionally) to be in, it is almost imperative to the wellbeing of the rest of the world that the US economy remains robust and that the peasants keep spending, spending, spending ..... it may well be, and perhaps now just may be the time, though i suspect not, that the wheels really do finally and irrevocably fall off .... and God help us all if that is the case

I think that one thing is almost certain is that when the FED reduce their interest rate then the DOW & the FTSE will see a big bounce. Not sure of the exact date for their review, but certainly worth looking at stocks which are oversold & due for a correction. One problem may be that if they only reduce by a quarter point, then this will disappoint the market, but nevertheless a bounce is likely.