Hi folks,
Well isn’t this just the teddy bears’ picnic? Yesterday provided a whole hamper of trades with short equities and Euros the popular choices. And there should be bags more opportunities today, though we may have to wait until after the payrolls figure for any clear pattern. For me, yesterday showed the frustrations as well as the exhilarations of trading, but I’m back with a few bets in play this morning.

Right, let’s quickly get yesterday’s currency call out the way; now I didn’t make an outright call on the Euro, but by the time Trichet said his piece at the press conference I was swayed enough to buy a scrap of cheap options on the Euro improving. Up to that point the chart had looked OK, but I hadn’t reckoned on either the Russians having a minor currency crisis or Mr Juncker (Luxembourg’s Prime Minister) helpfully suggesting that the Euro was still overvalued. I did sell EuroDollar during the afternoon, but at that point wasn’t switched on to the enormity of the move and closed out for small profits.

Moving onto equities, my well-placed short bet on FTSE the previous day was stopped out for a miserly £10 profit. Now, I’ve always read that you shouldn’t jump straight back into the same trade, so I decided to wait for a better opportunity. Trouble was, the opportunities were all at lower prices and again I settled for ducking in and out of a few shallow trades rather than riding the wave to Mega-Profit Beach. Check out yesterday’s fall in the Dow:

The Index smashed through its short-term moving averages, but it held just above support that worked during the last rout. Will it hold again or is there more to come? My humble sixpence goes on further falls.

So, what about today? First off, if you’re new to trading and wandering why the hell we’re all fussing about something called ‘payrolls’, have a quick read through Roll Up, Roll Up For The Payrolls Roulette. The US payrolls number is one of the most important pieces of economic news each month, reflecting the fortunes of the US workforce.

At the moment I’m short of FTSE, opened at 5331 and 5293, and short of HBOS, opened at 321p and 300.2p. I also opened a small short bet in EURGBP at £0.8076. It’s not done much, but I reckoned if the Russians still need to sell Euros I might get some mileage out of it, but with less risk than the big EURUSD or GBPUSD moves. I’ll save any action in them for this afternoon.

German industrial production’s just come out at -1.8% for the month (-0.5% expected), which won’t help the Euro’s cause.

US payrolls are expected to show a loss of 75/- jobs and an unemployment rate of 5.7%. For me the most interesting bit would be to see how the market reacts to a good payrolls number. Sure, probably 100+ on the Dow (perhaps even more), but will it hold the gains or will we see a tsunami of selling by grateful ex-bulls?

Finally, the tech stocks have been smashed recently as cutbacks in IT have become more noticeable:

Happy Trading