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

hard to know ...... hope you're wrong; these highly volatile markets remind me of a year ago, and they're not fun!

I refer you back to post 4533.

As you say, it reminds of a year ago.

15% market correction being talked about which would take the DOW to the region of 8500.
Digitallook : "The Dow Jones ended the day at 9,712, down 249 on the previous close, erasing all Thursdays 199-point gain. The Nasdaq Composite tumbled 52 to 2,045 and the broader S&P 500 fell 29 points, or 2.8%, to 1,036.

Many experts think the much-talked about correction of as much as 15% could well be underway following a rally of more than 50% from Marchs lows."

Of course in real terms, the gap is not as big as that.

Firstly, the market dropped to a level where total economic collapse was being factored in ie we should have no need to go there again as governments appear to be reasonably on top of things

Secondly, 50% upside of very little (ie FTSE 3500pts) is not very much (1700) whereas 15% drop from here ( a top of 5300) is quite a lot (800). Thus we would be losing almost half of the 50% upside.

so many unknowns and imponderables .... caution, watchfulness and nimbleness called for

cynic - Absoluteley! Is long overdue, personally I think it can only be good for the market to consolidate has come a long way and is far removed (especially the fundamentals) from reality. My gut feeling is the cash that has been sitting on the sidelines will be used to short the market and then a rally can be considered more seriously. But hey what do I know!

The best ways to deal with increased volatility is perhaps firstly to decrease leverage or use extreme money management. Alternatively market neutral; pairs trades can insulate from extreme ducks and dives, I'm long nikkei, short dow from parity though usd/yen can mess things up

Why long Nikkei? Futures currently -60. You may be right, but surely, whichever way the Nikkei goes (with any conviction) the DOW will follow?

I'm working on the premise that the Nikkei normally trades at a premium to the Dow and is relatively oversold ... compare daily rsi. They will rise and fall together but there will be divergence/ convergence. The last time they were at parity, the nikkei added 400 we shall see...

dd
ref you post 4544
had to read it more than once,although i already understood your reasoning on the first read. i like to be sure.no doubt some will fail to understand that a rise of of 1700pts can be considered to be not very much when comparing to a possible decline of 800 pts.which might be considered to be quite a lot.where's the logic? LoL
regards
jkd

jkd

I think you understand the point I am making even if I didn't make it very well!

that's interesting .... i see that Dow blipped down to 9644 during the night, hitting the "mysterious" 9650 and bouncing off it ...... keep watching with fingers crossed and breath held

jkd and dd,

Is it not the same logic that warns you about capital protection.

Lose 25% and you need to gain 33% to get even.
Lose 50% and you need to gain 100% to be back where you were.

Except that you were looking at the reverse.

TP

Don't forget it's "Non Farm Payrolls" Friday at the end of this week all.

Trouble is, it's not a question of the figures being bad, but whether they are worse than expected. So, anyone know what we should be expecting???

Non farm payroll - forecast is -165k previous -263k.

Thanks skinny. Now all we need is the help of a corruptible congressman to give us the inside info before it hits the press!

HARRY :-)

The market has been very nervous about the banks the last couple of weeks.

I'm wondering now whether today's news actually underpins everything and over the next few days (perhaps after an initial drop) we will start to see some significant movement northwards.

I think the market is correcting itself now, so even though there is the odd crumb of good news, it isn't enough to turn the trend around.
I am cashing in most of my shares which are in profit & will sit on that cash until I think the market has turned up again. Most likely some time after the friday U.S. figures.

Today's FT : RBS cheif strategist:
"Outlook:
We said in late Aug that S&P would get to 1100/1120 by end Oct/early Nov. We said growth would peak in Aug and then weaken (see above) into and in Q1. This is all playing out. As this plays out, I expect S&P to be in the mid-900s by y/e, and mid/low 800s by Q1 2010. Credit spreads will weaken materially, IG will do better than HY, QUALITY (strong balance sheets) will be the winner. I look for 750 Crossover by late 2009/early 2010, and then further weakness as Q1 unfolds. Govvies shud rally - I prefer BUNDS to USTs or GILTS. The USD will probably rally,
but I dislike any currency where PMs are simply printing. GOLD please.
GET DEFENSIVE RE RISK."