Stock Market Update 30 March 2012

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Financial Spreads: Spread Betting and CFD Trading


Stock Markets: 30 March 2012

The last day of Q1 is set to start with a bang as window dressing pushes the financial spread trading market higher at the open.

When we look back on Q1 of 2012 we will remember it for a decent rally in stock markets at a time when Greece defaulted on its debt but still managed to remain in the Eurozone.

For those wishing to hear an end to the European saga unfortunately this one is going to drag on and on.

One of the big questions for Q2 will be whether the UK will follow suit as is the view of the OECD who said yesterday that they expect growth here to have contracted in Q1.

They are in the minority at the moment with most people expecting the UK to narrowly avoid a double dip. However it's going to be a close call and more views might head over to the OECD's camp following the worse than expected consumer confidence this morning.

An unexpected dip in consumer confidence like this reminds us that consumers are not a happy bunch as oil prices remain near their highs, despite the little correction is recent days, making petrol worryingly expensive. When your central bank is hoping on a consumer led recovery, this data is not welcome news at all.

Even so this isn't going to stop the markets from making a last ditch attempt at rallying into the final stretch. We had been calling the FTSE to open up some 40 points however when it came to commencing trade it was only 25 or so on the side of the angels.

At the time of writing the FTSE is at 5761 with gains fizzling out just as March has rather been a story of that ilk.

Only a few days ago when the markets were at their highs for the year they were posting impressive gains or at least the German Dax was.

German shares were up well over 20% with the London benchmark pushing 7%, but since then the gains have almost halved.

Whilst the uptrend looks to be still intact for many, any continuation of the rally into Q2 will not come with any particular ease.



Stock Markets: 29 March 2012

A negative start to today's session and the continuation of weakness so far this week is starting to cast doubt in the minds of the bulls since this rally commenced back in October of last year.

The euphoria over Greece has died down now and the focus is shifting onto other Eurozone nations, in particular Spain.

So the concern about the Eurozone that has re-emerged is putting a dampener on the strength of the markets so far this year in the first quarter.

We have been on course for some really impressive gains and, whilst this is still the case for the likes of the German DAX and French CAC, the FTSE has been very sluggish. At one point the UK index had posted gains of over 7% but we're now only looking at half that.

This morning, the weakness from across the pond has rubbed off on Asian markets which have had a bad month in March and this in turn is influencing the European indices on the open.

The FTSE is at 5790 at the time of writing and bulls and bears will be watching the near term support and resistance levels seen around 5760, 5710 and 5845, 5880, 5950 respectively.

Whilst Financial Spreads' CFD trading quote has just been edging higher in the run up to the open, the continued rejection of the highs gives the feeling that there might be some more room to the downside.

Whilst the longer term rally is still intact, in order for it to continue there has to be a bit more of a retracement in order to attract the buyers back in earnest.



Stock Markets: 28 March 2012

A funny old session took place yesterday as the market looked like it would continue the rally that commenced on Monday only to reverse the move higher slowly but surely throughout the session.

It was the oil and gas sector that dragged on the FTSE as a Total platform gas leak entered its third day.

Memories of BP die hard and investors sold other members of the sector in sympathy as Total's shares dropped over 6%, recording its worst fall since the crash of 2008.

The fact that the leak could take longer to resolve than the BP disaster is a worry in itself. The disruption to production could also have a knock effect for the natural gas spread trading market as other nearby rigs take precautionary measures and close down too.

Bernanke made another speech yesterday and just as he was acclaimed to have contributed to the gains on Monday, his bearish comments on the economy didn't ingratiate himself with the bulls.

American shares sold off later on in the session and that has rubbed off on Asian markets and European markets on the open. The FTSE is lower by some 15 to 20 points to around 5850.

A bit of concern surrounding Spain has also contributed to the bearishness of the past 24 hours as the European sovereign debt crisis sights swing towards one of the bigger economies of the Eurozone.

All this is keeping gains in check and yet again we see the FTSE move sideways in this painful move of the last couple of months between the 5950-75 and 5750.

At this rate we may not see the bid higher by bulls as we approach the end of the first quarter, which looks like it might end on rather a sour note.

But who can blame the bulls when you look at the gains so far this year; the German DAX 30 is up around 20% and the FTSE some 5%. Not the best performance ever by the London market.



Stock Markets: 27 March 2012

Spread trading markets are in recovery mode following the falls of last week after confidence data in Europe and comments from Ben Bernanke gave equities a boost.

US markets rallied overnight and that positive sentiment has followed through to European indices this morning.

Bernanke's comments tend to move the markets regularly in one direction or another and the central banker is due to speak again later today.

As a result, you can't rule out the chance that he will try to caveat his dovish comments about the US labour market, which signalled the chance of further QE and thus led to the rally. If he states that the economy is in good shape, we could possibly see a reversal.

We've seen similar moves before when one day the market has interpreted what he's said as being particularly bearish for stocks and then the next being bullish, causing a couple of days of exciting volatile trading.

The bounce by the FTSE this morning is not as convincing as the rally in the Dow yesterday and at the time of writing the London market is at 5915 up only a few points.

The German DAX on the other hand is in much better shape, putting on almost double the percentage gain than the FTSE, and isn't far off testing its year highs around 7200.



Stock Markets: 26 March 2012

This week has got off to a good start for the spread trading markets but a bad start for our Dave.

Whilst the Tories are entangled by the recent comments made by their ex co-treasurer, the FTSE has commenced the session by attempting to claw back some of the losses from last week. However, it already seems to have given up the ghost.

We opened over 20 points higher, but have been quick to reverse these gains as the market is roughly flat at the time of writing.

Last week's sell off doesn't look to be attracting masses of buyers just yet and, whilst we've seen retracements last a short while so far this year, this one seems to have been a little more prolonged.

Financial Spreads' clients have been buying into this dip, expecting the bounce to happen. Considering the strength of the rally so far in 2012, it's not unreasonable to think that we could see another run higher in this final week of the quarter.

But we are all too aware of the hurdles in the way. Crude oil prices are one of them and they remain stubbornly high with the tensions in the Middle East ongoing.



Stock Markets: 23 March 2012

There's just a little bit of nervousness starting to creep into the markets and this week has proved that the global economy is still relatively fragile.

Impressive economic data has been one of the driving factors behind the recent rally in US equities, but just recently that has been counter acted by the slowdown in China.

Yesterdays data did not help the bulls and the big fear is that we see 2012 pan out in a similar way to 2011.

The year commenced with optimism that the recovery would continue but equity markets struggled to gain traction as the European debt crisis really started to flare up which has caused another recession in Europe and negative growth for the UK.

In the US where equity markets have been the most impressive, the jobs data is proving strong, however it's yet to really translate into the corresponding growth you'd expect as a result.

On top of this, the vast amount of stimulus from central banks has indeed assisted the recovery, but with so much liquidity sloshing around and incredibly low interest rates you would expect things to be a great deal rosier.

So as this correction gathers pace, although this morning the selling is having a respite, the worry is that investors have slightly had the blinkers on and we could see 2012 turn into a bit of a 2011. Another trigger for further selling could perhaps be the next domino to fall in Europe.

Certainly Asian stock market indices have been a great deal more cautious than their European and US counterparts this week, with some suffering losses of over 2%.

At the open this morning the UK 100 spread trading market is trading at 5850 so just in the black.

Whilst we saw a little recovery from the lows yesterday, the theme of the past few days has definitely had a risk aversion feel about it so the question is whether this move to the downside has further to go.

So far it has not matched the little sell off of some 3.5% at the beginning of this month and if it does that would bring us down to the mid 5700s.

However, if the momentum for the bears does build and we see a bigger correction of 5% to 10% then we could be seeing downside targets of 5650 to 5350.

Over the medium term the 5700 area is quite a major support area and, considering this years retracements have been met rather quickly by buying, the feeling is that we might not see a double digit percentage correction.



Stock Markets: 22 March 2012

On the financial spread trading markets this morning, the FTSE is in sell mode with one stock in particular suffering a substantial decline.

Randgold Resources is some 15% lower after a coup gets underway in Mali and this is knocking the mining sector for six.

The FTSE is now down almost 1% at 5845 at the time of writing and as the decline from the highs continues this could be the start of a wider sell off, something that we've mentioned a few times.

UK retail sales are a highlight on the economic data front this morning and they are expected to post a decline. Then later there are the weekly jobless claims from the US and leading indicators.



Stock Markets: 21 March 2012

With the focus in the UK being on the Chancellor today it will also be on the gilt market to see how bond traders receive his annual budget.

As a result, the bond spread trading markets will be the ones to watch to see whether traders believe the Chancellor can afford any giveaways and keep on track with his deficit reduction plans.

At least there'll be one other bit of bright news in the form of an upgrade to growth forecasts from the Office of Budget Responsibility, a whopping revision upwards from 0.7% to 0.8% for the year.

The FTSE 100 index has opened flat this morning following yesterday's little sell off and at the time of writing is hovering around the 5900 mark.

Yesterdays sell off looks to have been a buying opportunity for the bulls, but with the index continuing to fail around the mid 5900s and yet to break through 6000 the bias looks to be in favour of resistance levels.

On the one hand investors have to consider the fact that now even mining stocks are voicing their concern about the Chinese economy, but on the other the US is still showing signs of a recovering economy that could be sustainable.

These two counteracting factors are causing the indices to go sideways.

Whilst the eyes of UK spread trading investors will be on today's budget, this morning we do get the release of the Bank of England minutes as well as Public Sector Net Borrowing.

PSNB which fell last month as annual tax receipts came in more than expected is due to show a rise today as government spending is due to ramp up ahead of the end of the tax year.

For the BoE minutes, which showed a widening split in the MPC last time round with a 7-2 vote, it will be interesting to see whether that dove-hawk split has got wider.

Then later on we get existing home sales from the US which is expected to continue higher in a similar fashion to how it has been so far this year.



Stock Markets: 20 March 2012

The low volumes and sideways movement of European shares in recently trading is starting to bring out the bears in our spread trading account holders who've been staunch sellers of the FTSE each time it has risen.

So far some of them are being rewarded as the index simply cannot seem to break through to new highs above and beyond the resistance seen in the mid-5900s.

Whilst other indices have pushed on through to new highs, the FTSE has remained stubborn in refraining from taking on the 6000 level and remains retrained by the mining sector.

The real concern for the bulls at the moment is that the recent rally may have just gone to far and in order for the markets to carry on higher they need to have a decent move lower first. It's hard for people to jump in at these levels if they haven't already done so, having missed out on the rally thus far.

Questions abound on the financial spread trading markets as to exactly where the next catalyst for more buying is going to come from. Whilst the economic data overall has surprised to the upside, there are doubts as to how sustainable it can all be.

The impressive jobs data in the US is yet to really translate into impressive growth figures. As a result the doubters are saying that we might be in a similar position to a year ago when 2011 was expected to be the year of the continuation of the recovery, only for that never to materialise.

So the FTSE is a little softer this morning and is some 35 points in the red at 5928. Near term support is seen around 5915, 5895 and 5860 which the resistance is really all about the 6000 level. The longer this period of consolidation continues then the more the rally is thrown into doubt.



Stock Markets: 19 March 2012

On the indices spread trading markets, the FTSE is commencing the week on the back foot as the index continues to hover sideways and simply cannot seem to overcome the near term resistance levels.

The 6000 mark still hasn't been overcome and this morning's sell off so far was not expected ahead of the open.

Even the German DAX, which has seen considerable strength in the last few weeks, is seeing a bit of selling pressure early on. The DAX 30 remains in a solid short term uptrend, however important support levels are not seen for some time until below 7000 in this selling starts to pick up momentum.

It's hard to see this as being the start of a possible larger sell off since every time any correction has taken place in the past few months, it has been met very soon after by buying.

For the FTSE over the near term support is seen at 5915, 5890 and then 5860 whilst resistance is seen at 6000, 6020 and 6050.

Economic data really is thin on the ground today with nothing major to report so we have to wait until tomorrow when we get UK inflation numbers.


By Simon Denham, 30 March 2012


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