The global economy and the uptrend in developed-world stock markets since early 2009 are in danger. The possibility of a collapse in the Eurozone is creating enormous uncertainty and contributing to slowing growth well beyond its borders, including in both the UK and the US. A co-ordinated effort from the Eurozone’s stronger members, principally Germany, is needed to prevent disaster befalling its weaker ones, including Portgual and Italy and Spain. At the same time, central banks need to pump more liquidity into the financial system, in the US, Japan, in the UK and in Europe.

I do not believe there will be a disastrous outcome in the Eurozone and that, in the final analysis, the instinct for collective self-preservation will prevail. Once the next serious round of money printing gets underway across the world, I am expecting another big rally in global equities. Until this is confirmed, my trading stance on stocks is fairly cautious.

S&P 500

At the start of June, the Dow Theory gave a sell-signal. This venerable branch of technical analysis – which compares the behaviour of the Dow Industrial and Dow Transport Averages – has helped predict many market declines and recessions over the last 110 years. The average loss in the S&P 500 following a Dow-theory sell-signal is 14.8% over six months.

While US stocks have bounced back since this signal, big risks remain. Given the S&P’s dear valuation, I believe that a sustained resumption of its bull market since 2009 will require more printed money from the Federal Reserve and progress towards a resolution of the European crisis. Still, with the index currently above its 55-day exponential moving average, I am not seeking short positions for now, despite my view that the S&P could retest 1268 this summer.

FTSE 100

The FTSE offers much better value right now than the likes of the US equity indices. According to one of the most successful valuation models of all – ShareMaestro – the UK large-cap index is currently worth around 8700, compared to its actual present value of 5600. The necessary catalyst for the FTSE in order to get some way towards that level is, I believe, a major bout of monetary easing from the big central banks.

The Bank of England is already poised to inject further liquidity into the flagging UK economy, but it is America’s Federal Reserve and the European Central Bank that matter more here. With the index currently just above its 200-day simple moving average, I have a slight bullish bias. So long as the market meets this criterion, I would buy bounces off the 13-day exponential moving average currently positioned around 5430.

IBEX 35

I do not see Spain leaving the Eurozone, nor any other country for that matter, apart from Greece. Ultimately, it is going to be less costly for Germany and for other nations if the world’s twelfth largest economy remains within the single-currency area. Spanish stocks – which include international household name brands like Zara-owner Inditex, Telefonica and Repsol IPF – already offer potential opportunities to longer-term value investors. The dividend yield on the IBEX 35 recently touched 8.4%, its second highest level in 25 years.

One issue with investing directly in Spanish stocks is currency-risk. I firmly believe that in order to survive, the Euro will likely have to cheapen versus many currencies, including sterling. However, spread bets are quoted in sterling and so do not suffer from this disadvantage.

While the IBEX has bounce from its early June lows at 5988, it has yet to surmount its 21-week EMA. Were that to happen, I would be much more willing to believe that we were in the embryonic stages of a new bull market. In the meantime, I’d be looking to short drops through the 21-day EMA. A revisit of the lows is not out of the question.

Nikkei 225

Japan’s stock market is a world leader when it comes to producing disappointments. Equities in the land of the rising sun have had countless false dawns during their long bear market since 1990. It would take a brave man to declare the Nikkei’s slump as having ended at the early-June lows of 8239. Still, it is possible that the Nikkei could surge back towards the 10000 level once the next round of global money-printing starts up.

I would be much more inclined to take long positions in the Nikkei as and when it got back above its 21-week exponential moving average, currently at 9001. Until that time, I would use the daily chart and go short each time it dropped below its 21-day EMA.

For more insightful commentary on the markets and all things spreadbetting visit www.spreadbetmagazine.com

I have absolutely nothing to report on my own spread betting because I just haven’t had the time to go looking for new trading opportunities. I didn’t even get chance to update with my latest analysis of the FTSE. I should get some time to do it this weekend as I’ll be spending a fair bit of time on the train traveling so keep checking for the latest updates.

If you are a regular spread bettor or trader then you may have noticed the launch of the new Spread Bet Magazine a few months ago. If you haven’t had chance to take a look at it yet I suggest you do. Each month it has articles from regular writers such as Robbie Burns (The Naked Trader), Evil Knievel aka Simon Cawkwell and Dominic Picarda plus a host of other articles from various other writes. Don’t worry if you’re not a spread bettor as it’s aimed at traders in general but has a spread betting and CFD trading edge to all the articles. The best thing of all it’s completely free each and every month. There’s no monthly subscription to pay at all and if you submit your e-mail address in the box provided on the right you can get the latest magazine sent directly to your inbox each and every month.

In the latest June edition of the magazine there is an interview with Simon Denham, CEO of Capital Spreads and he reveals some spread betting secrets and dispels some common myths about spread betting. You can still read the June edition of the magazine by going to the spread bet magazine website www.spreadbetmagazine.com. If you haven’t already I suggest you take a look.

Hopefully there will be more spread betting from me next week. I just haven’t had the time this week to dedicate to it. Probably for the best anyway since the last FTSE update I did I was looking for short positions. I’m sure if I’d placed any shorts since then with the FTSE rallying well over the last few days I would’ve been stopped out. Mind you with the rally looking like it might have run out of steam and the possibility of the down trend still being in action it could be a good time to go short. Well see what my FTSE analysis shows up over the weekend and I’ll go from there.

Well another turbulent week for the FTSE 100 index this time on the positive side. After my suggestion that the market may open down after the bank holidays I’m left with egg on my face as the FTSE had two days of strong rises before falling back a little today. Any suggestion that the markets are about to turn and form a new uptrend however would be premature to say the least.

Looking at the chart the recent upward moves could merely be a retracement of the previous falls a few weeks ago which could potentially signal the ideal time to go short and sell the rally. All the technicals still indicate weakness in the FTSE with the 50 & 200 EMAs pointing downwards. The 20 day EMA has turned up slightly which is hardly surprising after the two days of strong rallies. ADX value is still high at 32 with DI- above DI+ however the ADX value has started to point down. Visually the down trend is still in force with the series of lower lows and lower highs yet to be broken.

If we take a look at a longer time frame chart, weekly instead of daily we can also see that the down trend is still in force with the sequence of lower lows and lower highs yet to be broken.

My outlook for the days/ weeks ahead is still bearish especially with the Greek election due to take place next Sunday the 17th June. In fact if I could trade the FTSE within my risk criteria I probably would go short on Monday. I suspect the recent euphoria of Wednesdays and Thursdays rises will be short lived and prices will continue to slide possibly with the Greek elections being a catalysis, dependent on the result of course.

If you do decide to trade make sure you only spread bet with money you can afford to lose. Although spread betting has the potential to make you rich you might just go broke trying to get there.

Spread Betting Action

In other news I closed out my enterprise inns position this week. After looking at the chart it suspect the uptrend may be over. A new series of lower lows and lower highs has started to emerge which I don’t like the look of and as the saying goes “The trend is your friend until the bend in the end”. So at the moment I’m out of the market completely. I haven’t had a lot of time this week to look for new trades either with it being my first week back at work and all. Hopefully next week I’ll have some more time and will be able to find some good trades. I’ll keep you posted with how it goes.

Well it’s certainly been a busy time in the markets while I’ve been away. I was reading back through my FTSE analysis for the 11th May and it seems my suggestions of an impeding down trend have come true. The markets spent the five days moving downwards only confirming the downwards momentum further. Then I went on holiday and the markets have been consolidating somewhat between 5400 and 5260. The 20, 50 and 200 day EMAs are all now in down trend formation with the 20 below the 50 and 50 below the 200 and they are all pointing downwards indicating that the downward move will be continuing. There is also a lot of news floating around from the US and Asian markets that I think will cause the FTSE to slide when it opens again on Wednesday. Therefore this means that positions to look for this week are short only. It also means that I may look to exit my long position in enterprise inns. I’m not completely decided on that yet though. It seems to be holding its own in these tough times and could well prove to be a good stock that bucks the trend of this downwards move. I’m going to have to think about this some more and make up my mind by the end of the week.

Just to add further to confirmation of the down trend the 14 day ADX value is at 36 and climbing. Plus the negative Direction Index is way above the positive directional index. I would say this is further confirmation that the down trend has further to run yet. I wonder if this has anything to do with Greece and the election that is due to happen on the 17th June? Maybe the markets already know something we don’t! It wouldn’t surprise me if they do. I don’t know if others have noticed that certain world events always seem to coincide with moves in the market, or is it that the market moves coincide with world events? There’s one for all the conspiracy theorists out there.

My outlook for the week ahead is most certainly bearish. I’ll up date again with any new trades that might come my way and I’ll be positing my next weekly FTSE analysis at the weekend, so keep checking back and don’t forget to tell your friends, the more the merrier.

First off an apology is in order. I didn’t update with my recent spread betting activity before I went on holiday like I said I would so if you were waiting for my update I apologise. Work was hectic just before I left making sure everything was in place to run smoothly while I was away, plus I had to make sure we were all ready to go on holiday so I just didn’t get the time to update. I’m back now though and here’s an update of what’s been happening while I was away.

You may recall I was going to close all positions while I was away. Well with one thing and another I also did not get time to close them out. Luckily I only had two positions open which I managed to check while I was in Spain. We have some friends out in Spain who have an internet connection and Laptop which is what mad my Spread Betting in Spain possible. There is no way that I could’ve done it otherwise. Anyway I kept an eye on my positions, tweaking stops as necessary. My position in Avocet mining stopped out but my position in Enterprise inns is still in play. Over the coming days and weeks I’ll be looking for new positions to get my self established in the markets again.

I’ll also be doing my FTSE analysis again either today or tomorrow. It doesn’t really matter when as the UK markets are close anyway because of the extra bank holiday for the Queens Jubilee. After that things will get back to normal with my weekly FTSE analysis update at some point each weekend.

Ok that’s all for now. I hope the markets have been kind to you while I’ve been away.

Until next time,
“May the markets be with you!”
Harry,

The Spread Betting Beginner