Stock Market Update 25 January 2013

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Financial Spreads: Spread Betting and CFD Trading


Stock Markets: 25 January 2013

Yesterday, US markets managed to shrug off the early bearish influence from a 12% nosedive in Apple, with the Dow Jones heading upwards to close 50 points up at 13,821.

The rebound was supported by a surprise decline in jobless claims figures and the better-than-expected earnings session.

The US manufacturing PMI also surpassed expectations to the upside, helping the Dow reach an intraday high of 13,879, last seen in late 2007.

Still, the Dow's late pull back has dragged the FTSE 100 some 10 points lower this morning, currently trading at 6250, although the bigger retracement that our clients seem to be waiting for is yet to come.

Also see today's feature UK GDP: UK Creates Unproductive Jobs.



Stock Markets: 24 January 2013

None of the European concerns put off the American bulls last night, as investors across the pond were cheered by US lawmakers voting to temporarily suspend the Federal debt limit.

This has helped to buy some time as they can now focus on one issue rather than have to deal with the spending cuts and the debt ceiling at the same time.

Some good earnings from Google and IBM also helped to send the Dow higher, with the index rising by 70 points to 13,780.

On the other hand, Apple missed its forecasts, sparking a sharp sell off in overnight trading which has meant that European indices are a little mixed on the open.

At the time of writing, the FTSE is trading at 6200 and clients remain short overall, still holding out for a more substantial retracement.

Such a sell off has failed to materialise as of yet and if the rally continues it will be interesting to see if clients continue to oppose the strength.

Also see the update to yesterday's feature The UK Won't Get a Real Vote on Europe.



Stock Markets: 23 January 2013

Last night, the Dow Jones edged higher on the back of another bout of strong corporate earnings which sent the US index to a fresh recent high of 13,712, a 60 point gain for the day.

The Bank of Japan has announced its open-ended asset purchasing program, thus joining the Federal Reserve in trying to force its way out of recession.

The action from Central Banks continues to drive equity markets higher and this morning the strength of US and Asian markets is giving the FTSE a boost, taking it some 20 points higher to 6200.

Our spread trading account holders continue to sell into this strength, but the retracement or correction to the downside it yet to come.

Also see today's feature The UK Won't Get a Real Vote on Europe.



Stock Markets: 22 January 2013

Yesterday was pretty much a washout after the US went home early to watch the inauguration ceremony.

It seems unlikely that much will change today as arguably the most important economic data is the Business Expectations figure due out of Germany at 10am (London time).

Some economists expect this to be much better than last month's figure, up to 12 from 6.9, so there may be some room for disappointment.

In the UK, David Cameron's oft delayed and relocated speech on the EU is beginning to get rather hyped up.

One of my favourite novels considers, at one point, the analysis of political speeches.

In effect, by taking a speech and ''eliminating meaningless statements, vague gibberish, useless qualifications - in short all the goo and dribble'' you come up with the actual core of the communication.

In the case of Mr Cameron's famously postponed effort, I fully expect a summary to come up with a blank sheet of paper.

Theoretically, the speech will now take place tomorrow morning and so spread betting investors should be aware that there could be some temporary reaction.

This morning, the markets are pretty much where they were at yesterday's start of play following a frustrating day of non-movement.

It is curious how the absence of one financial centre or another often seems to paralyse all the others.

The FTSE 100 effectively saw a 25 point range, between 6160 and 6185, and we are currently trading near the top end of this at 6180.

Aside from the brief 'fiscal cliff' debacle at the end of 2012, the FTSE 100 has had an almost unblemished bull run since mid-November, rallying over 10% from 5600 to the current level.

There is little to go on at the current levels, with serious resistance another 50 to 60 points higher and minor support around 6135-45.

In addition, we have time and volume support, what little there is these days, all the way down to 5740/50 as so much of 2011/12 was spent at those levels.

As a result, barring some appalling piece of news, technical analysis suggests that a major structural pull back is getting less likely.

The European markets seem to be less sanguine however, as the recent bull run in virtually all asset classes, except the bund, appears to be running out of steam.

No doubt there might still be some catching up to do on the periphery, but the longer we go on, the closer the next round of crisis funding requirements will get.

At the moment, there is a lull over the winter months but we can expect a resurgence of in-fighting as elections loom in both Italy and Germany.



Stock Markets: 21 January 2013

The stock markets are pushing onto new highs this morning and overnight we saw the FTSE 100 almost hit 6200.

6140-50 had previously been the peak of our ambitions and so we can speculate as to whether this level will now form a support if we drift lower.

On the upside, there is minimal solid volume/price resistance until the mid-6200s, around 6245/55.

Having said that, with new territory being explored, we can't expect to see too much excitement as equity holders, wary of previous false dawns, are likely to lighten holdings and book some profits. As a result, the track up to 6200 is likely to be fairly tough.

The US stock markets have been similarly bullish, with 2013 currently delivering a 6% gain for the S&P 500.

The overall positive move since the dark days of March 2009 is now nearly four years old, although it might not have felt like a bull market to many. What is interesting to note is that many traders believe that bull markets tend to run for around seven years.

The German DAX is feeling a bit left out, with 2013 seeing essentially sideways to lower trading, aside from the gap on the opening day. In fact, the index's entire trading range has spanned just 150 points.

Dealers will be watching for evidence of further contraction of the FTSE/DAX differential, with some speculation that the massive widening evidenced in 2012 might be in the process of unwinding.

With the pound weakening and the euro gaining strength, the German economy, already faltering under enormous debt and taxation pressures, is no longer getting quite as much help from the single currency.

Also see today's feature UK Referendum on Europe: Chances of Pulling Out are Virtually Zero.



Stock Markets: 18 January 2013

Risk appetite continues to show signs of recovery as yesterday saw a sharp rebound in equities despite a negative start.

Across the pond, the Dow Jones didn't even flinch after some really bad Phili Fed data, which did lead to a swift safe haven spike in the price of gold.

Some commentators have been talking about a seismic shift from fixed income and safe haven assets into equities as many of the major risk issues of last year have largely been addressed. In addition, the overall global economic picture looks rather better than it did even a few months ago.

One example of that was last night's Chinese data which showed retail sales in the world's second largest economy beating expectations.

Crucially, the all important GDP figure also surprised to the upside and this sent Asian markets higher.

This good GDP number marked the end of more than 2 years of continuous decline and it has been talked up for some time now.

Many have argued that China is turning a corner back towards the sort of increasing growth that can drive the global economy.

For all the talk of the switch from bonds to equities, the chatter is that the emerging markets are the place that investors should put their money. Or, at the very least, those global stocks that are most exposed to the world economy, which for a lot of people means the FTSE 100.

Naturally, the FTSE 100 has commenced the session in positive territory as a result of those long awaited Chinese figures.

With its heavy weighting of mining companies, it is these high beta stocks that are driving the rally this morning.

In fact, the index has reached a new high for the year at 6142 and so the bulls will be looking ahead to the next near-term resistance levels seen around 6160/75/90.

To the downside, over the near-term 6110/6075/50 are seen as support levels.

This morning will also see UK retails sales data covering the all important Christmas period.

Whilst the headlines have focussed on the high profile high street collapses, there have been some positive retail stories such as John Lewis, ASOS and Next.

Nevertheless, last week's weak BRC figures have some traders braced for another disappointment as they indicated that the squeeze on consumers continues to constrain the appetite for shopping.



Stock Markets: 17 January 2013

This morning, the weaker Asian session may have filtered through to London but we are only a handful of points in the red, just below 6100.

During yesterday's dip to around 6080, clients that had sold the index may have taken some profits, but the overall position remains short as they continue to expect a larger move to the downside.

Also see today's feature Inflation Pressure Could Cause a 'Mega' Stock Market Crash.



Stock Markets: 16 January 2013

The FTSE 100 continues to hover around its highs and this consolidation phase is making things a little more uncertain, despite another little creep higher from US stocks yesterday.

Following the good run that equities have had so far this year, investors are pausing for thought as they weigh up the risks.

Those risks remain very palpable considering that around the corner the US debt ceiling problem will have to be addressed and the spending cuts will have to be argued over.

Politicians across the pond have already been flexing their muscles over the debt ceiling issue. It looks like these first few squabbles are going to be the prelude to something bigger that will unsettle the spread trading markets even further.

Despite the political and economic risks that investors face, equity markets remain under-pinned by the free flow of monetary stimulus created by the central banks.

The new Japanese Prime Minister is a huge advocate of further stimulus from the Bank of Japan in order to stoke inflation and try to turn the ailing economy around.

This stance has lifted the Nikkei 225 to its highest level since May 2010, although last night there was a sharp correction to the downside, marking its largest daily fall in eight months.

Investors, particularly those in Asia, are looking ahead to Friday's wealth of Chinese economic figures. These could be the catalyst for the next leg upwards if the retails sales, industrial production and GDP figures show that the Chinese recovery is well on track.

In the US last night, the Dow crept higher once again by some 25 points to 13,535, reversing earlier losses following better-than-expected results for December retail sales.

At the same time, the banking sector was also in demand amid optimism regarding its earnings which is thought to be turning the corner after a few difficult years.

But this gain was only meagre and was not enough to push Asian stocks higher overnight and this morning European indices are in the red.

The FTSE 100 continues to find support around the 6100 area. Even though the index did dip below this level yesterday, the follow through from the bears hasn't materialised and so the consolidation continues.

There's a fair amount of economic data today, with US inflation and industrial production figures at lunch time and then the NAHB housing market index this afternoon.



Stock Markets: 15 January 2013

Unfortunately, the broader FTSE 100 is just in the red this morning as UK spread betting investors struggle to add to this year's gains.

The index is hovering around 6100 and we've now seen the market trade within a 40/50 point range for almost a week.

Another spat between President Obama and John Boehner brought back memories of the US fiscal woes that haunted the markets ahead of the Christmas break.

Investors are aware that we only have a few weeks before the spending cuts deadline and the imminent debt ceiling issue.

On top of this, technology giant Apple shocked the market last night by reporting weak iPhone sales.

This upset US equities in early trade, although the Dow remained resilient, advancing 20 points to 13,507.

For now, the overall uptrend looks to be intact as investors remain quite optimistic about quarterly results.

Also see today's feature Time to Sell UK Retail Shares?



Stock Markets: 14 January 2013

Investors are feeling optimistic, especially those across the pond, who pushed the Dow a few points higher to 13,488 as traders got more enthusiastic about US corporate earnings.

This was the highest level since October last year as online spread betting investors also liked seeing that Chinese exports are regaining momentum.

For now, it seems that the bill which averted the fiscal cliff has done its intended job, with the markets focusing on fourth quarter results.

Asian indices, such as the Hang Seng and Nikkei 225, were pretty much green across the board, although this momentum doesn't seem to have followed through to Europe.

We had been calling the FTSE to open higher this morning, but it ended up opening flat and has been drifting a little lower, currently just below 6120 at the time of writing.

Clients remain in their bearish mood, continuing to sell the FTSE around these levels, and are still expecting a slightly larger move to the downside.

Also see today's feature Fund Managers Remain Optimistic About 2013.


By Simon Denham, 25 January 2013


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