FT has been trading full time from home for two years, with nothing but four kids and a beach to distract him .
He fills his spare time with weight training and rugby, though more coaching than playing these days.
FT mostly trades the forex markets and although he plays FTSE on occasions his bread and butter market is £$.
He likes to think that his technique is evolving but still hasn’t the temperament or money to back the big calls. He prefers to trade between 1 and 3 times a day, aiming to take regular small gains, but feels part of the evolution is in not dealing if the conditions don’t feel right.
A Small Flag On A Dull Day
Welcome back folks.
Hope Easter was fun and that you didn’t go into the break short of equities, like me! Yes, for one reason or another I didn’t close my £1 FTSE short and boy did that backfire over the break. I’m suddenly £200 worse off than I was on Thursday’s close. Ouch!
After the first half-hour of adjusting to yesterday’s action in the US market it’s been deadly dull. I’ve been reading plenty, and views seem to be pretty polarised.
There’s a growing view that we’re already over the worst, that bank stocks are a raving buy and the Fed actions will see us all right.
Others reckon this is a ‘fools rally’ in a bear market; an inevitable squeeze on short positions, especially in the banking sector. The Fed in particular has acted commendably to ease concerns over confidence and liquidity amongst the banks. However, economic slowdowns don’t finish that quickly so there’ll be a lack of conviction in rallies so soon into the slowdown.
Me? I favour the second body of opinion, but I’ve warned before that I’m a miserable old cynic who prefers to believe the worst. I’ve missed out on a few decent rallies in my time.
A point worth bearing in mind though is this. Next Monday is March 31st; yep, I’m stating the obvious, and probably all it means to you and me is a new thrill as we turn the page on our Hollyoaks calendar. But to the big money boys, the fund management outfits, this is the end of the first quarter. This valuation date is used to calculate a lot of rolling bonuses, but also management fees. Management fees are generally worked out as a percentage of funds under management, so it suits a lot of people to see the market going higher.
Now, I’m not saying the rally in equities is down to that (quite a bit of good news has hit the screens over the past few days). I’m just saying that, in the absence of any really bad news, prices might hold up for the next few days.
*********************************
I’m not keen on getting too involved when it looks like half the market is off skiing, or still on the morning train into work. But I was tempted into a quickie by a chart signal in EURGBP.
The EURGBP price was falling, but the pattern was taking the form of a bullish flag pattern. Watching for a break of the upper trend line proved worthwhile and I placed a £5 spread bet to buy at £0.7810. My stop was at £0.7790 as this wasn’t a strong conviction trade and I set a limit order to take my profits at £0.7820, as this had proved to be a recent resistance level.
The price hit my target, I’m £50 better off and the chart is still looking good. But just for the moment I’ll sit on my winnings rather than chuck them straight back at the market. They can help offset the hole in my other back pocket.
Happy Trading
Enjoyed this post?
March 25th, 2008 at 4:15 pm
Interesting trade FT.
Takes 2 views and all that, but I’d be suggesting that was a ’shooting star’ candlestick at the end of a brief uptrend (4-5 bars), so might be expecting a pull back at least in the short-term.
As you say, coming up to the end of the quarter, volumes light(er) and (equity) prices should be easier to manipulate (anyone at the FSA listening????) on account of school hols/skiing/etc, but the US data didn’t look all that marvellous IMHO.
I’m with you, waiting for the next downleg-option writing on hold pending!
March 25th, 2008 at 4:43 pm
Afternoon GG,
I’ve just fallen over after kicking myself for not twigging the perfect bonking bunny on FTSE. Check out the 1-hour chart for a near perfect bounce off 38% retracement on the day.Today’s US data seemed to demonstrate further that the glass is half full. I reckon it’s half full of p*ss, but the market’s into squezzing the shorts. So patience grasshopper, patience. Written a few calls, but might be a week early.
Hey Ken, you up to much?
March 26th, 2008 at 9:08 am
Nothing happening here except waiting and watching. I’ve got 4 equities on the shortlist this week, 2 longs, 2 shorts.
My old favourite short, Rightmove, is toying with its 20MA once more. Trouble is, this one’s been up and down like the Easter Bunny on Viagra over the last couple of weeks, making it tricky to catch the turning points. Maybe I need to reduce my chart time interval, although I’m not convinced there’s enough volume in individual equities to make that a profitable approach. I’m looking for something over 490 to get back in.
Short 2 is Telecity, another silly PE company in a firm downtrend and exposed to the economic downturn. It’s poised to break down through previous support, which could be a shorting opportunity (but could wait for the next lower high if general market is upward).
On the longs, L&G has broken out its declining wedge but to the scarier upside, rather than the more comfortable downside. I’m not going to chase it at its current price but could be tempted into a new long position, with tight stop, by a retracement to, and bounce off, the old resistance.
Last up is JKX Oil and Gas, where profit taking following last week’s good results seems excessive and I’m looking for a solid bounce back towards previous highs.
As things stand, JKX is looking the likeliest to be first out the traps.
March 26th, 2008 at 11:49 am
Yep, patience is a virtue. Well, I’ve heard of 2 out of your 4- GG’s the smaller company expert. Option premiums dwindling with this lack of activity, just over 3 weeks to expiry, a big move would be good.
March 26th, 2008 at 1:57 pm
Patience — schmatience.
Opened a couple of Rightmove shorts at 486 and 487, which is where the 20MA has now come down to. Waiting for 490+ is (I hope) now a rise too far, especially as the buyers seem to have departed. But I’ve kept the stake lowish in case I’m jumping the gun here.
Target is 465. Initial stop at 497 but looking to bring this down to breakeven once the price is clear of 480.
March 26th, 2008 at 2:17 pm
Just having a look through the dusty nether regions of my Inbox as I thought I recognised a name.
Found a note on Telecity from a couple of weeks ago and its not a stock I know well (don’t I recall it at silly prices from the dot commery era?).
Good results, comfortably ahead of forecasts, good occupancy levels & no hint that deteriorating macroeconomic conditions are (yet) having an impact on it or competitors. H2 results showed an acceleration in space taken by customers and they jacked price up by 12%. Just about to open 2 new sites (London Amsterdam) which have attracted ’strong interest’. But companies would say that wouldn’t they!
Has market leadership in expanding market-whether that deserved a 20%+ premium to its peers is debatable. However the dynamics of the market actually look quite attractive at a first glance and I’m not sure that after its recent fall I’d be on the short tack, until as you suggest it breaks prior support.
Personally, given decent market dynamics, I might be thinking about going long one of its competitors on a much cheaper rating, (e.g. Phoenix IT). It has been going in the opposite direction, (but looks like it might be banging up against resistance now) but I stress that I haven’t done any work on either and I am certainly not an IT guru!
As ever takes 2 views, and given my track record on L&G best get out the salt pot for an extra large pinch!
March 26th, 2008 at 2:47 pm
JKX I know 5/8ths of FA about,
I generally view oil E&P and mining stocks as ‘holes in the ground with liars at the top’-but that doesn’t stop a lot of people making a great deal of money out of them!
Disappointing set of recent results-at least when compared to some analysts’ expectations, particularly as operating costs rose even more sharply than gas prices. Problems in gas transmission didn’t help.
Expectations that a decent uplift in reserves could be announced mid-year contrast with a bit of speculative froth coming off the stock after 12% of the company changed hands. Reasonable prospects of drilling success in both Russia and Hungary. Company on the lookout for further aquisitions.
Can’t offer a fundy view on this one, from a technical perspective one could argue it is (just) hanging onto a support level. Don’t like lower low and lower highs. And no hammer at end of downtrend yet. Not much consolation but my (tried & tested) MACD setup suggested a short at 460 on 3 March-neutral readings currently.
March 26th, 2008 at 4:13 pm
Just stuck JKX on a 5 min (intraday) chart and I have to say I am moderately more encouraged.
Possibly too early to tell but tentative signs of a ’rounding bottom’ and (from a purely technical perspective!) we all like rounding bottoms!
March 26th, 2008 at 4:37 pm
You’re right, FT, patience is a virtue. And boy do I wish I was virtuous. Stopped out of RMV at 497.
Thanks for the feedback on JKX and TCY. Keeping a close eye on JKX especially. Could be one for tomorrow.
March 27th, 2008 at 4:49 pm
Wey-hey, look at JKX go, up 5% on the day.
But you know me, I’m a patient kind of guy, so I didn’t leap in. Sigh.
Actually, school hols, no need to get up and play taxi driver, bed seemed more welcoming than the computer screen. By the time I took a look at the market, JKX was up, up and away.
I think there’s another moral about virtuosity and early rising in there somewhere.