All aboard the FTSE 100 Express next stop 5000, Choo Choo. Can you believe it the FTSE 100 is down for the 7th day in a row. Any we’re not just talking a few points down either. At the time I’m writing this it’s currently around 170 points down. I hope your on the right side of this decline. I know I said this before but I’m so glad my pension pot is mostly in cash.
I read about the US downgrade at the weekend and then I saw the news about the ECB wanting to put measures in place to try and ease the markets but at the moment they just don’t want to be eased. There is that much doom and gloom about that I don’t see this down move ending anytime soon. I suspect we may see a bounce over the next few days if the FTSE 100 finds support at 5000ish. What I would suspect will happen is the FTSE will dip below 5000 then come back up through 5000 before going back below it again.
How I said I don’t see this subsiding for a while. Let’s look at what sparked all this off anyway. The US government if so many $trn in debt. They are unable to repay this debt so they say lets just borrow more. I’m not being funny but if you or I couldn’t afford to pay our mortgage do you think he bank would lend us more money to pay it with? Hell no. They tell us we have so many days to pay and that’s that. If we don’t pay then our house gets repossessed simple as that. Now I know it’s naïve to compare the debt of an entire country at an individual level but I think it governments want people and banks to be responsible about borrowing money then they need to lead the way. The whole credit crunch crisis was caused by banks lending money to people who they knew full well could not afford to pay it back. Isn’t this the same thing? The US has big big problems and allowing themselves to go further into debt is not the solution. I totally agree with S&Ps down grade of the US credit rating. Personally I think it should be lower. It’s time to stand up and be counted.
You do have to feel a little sorry for Obama thought. He’s really inherited this mess from his predecessors and now he’s the one facing the music for the mistakes of others.
Anyway that’s my rant about the state of the world economies out the way on to the juicy spread betting news. Well I did have one trading opportunity today but I had to pass it up because of my risk tolerance. In case your interested it was a short in Shroders. New down trend formation, super trend cross and a Vince Stanzione cross could be a good trade. Problem is the risk is almost 200 points which is way to rich for my blood so I passed.
Both my open positions made some good ground today. They are both shorts so you would think they would fall in sympathy with the rest of the market. I just hope the continue to fall. I’ll be moving stops on them later when my super trend value updates.
I’m sure you will have noticed that we had a guest blog post today from Chris. If you have yet to read it you can find it here: Stock Markets – shares a good or bad investment
It’s interesting he has a buy and hold approach. He’s right to suggest that the major Indices do recover if you wait long enough. The thing is If I had brought the FTSE 100 at 6000 I wouldn’t be holding on for a recovery, I’d take the loss and look for a new trading opportunity. That’s the thing with spread betting, you can make good money from going short as well as long. So if you receive an exit signal take it and if you see an entry signal for a short take that. One of the main features of spread betting is going short as well as long. Where is the point to hold onto something that is down trending and losing money in hope of a recover 2 years down the line. If you don’t want to go short then at least sell out and wait out the down turn until a return to an up trend starts, that’s what I’m doing with my pension anyway. All that said this is not advice of any kind. It’s merely my opinion. What you do with your own money and trading it up to you.
Anyway thanks to Chris to adding that post.
One last thing. As my subscribers will know City Index are offering £150 Trading credit for new accounts(Conditions Apply). If you would like to receive this offer and others like it you will need to subscribe to my spread betting news letter. This offer expires on the 31 August 2011.
Until next time,
“May the markets be with you!”
Harry,
The Spread Betting Beginner
