Hi folks,
So who stayed at their screens last night to benefit from the mother of all sell-offs? The way the vote was reported was straight from Saturday night TV, with running commentary as each vote was counted. I half expected a drum role before Ant ‘n Dec announced the final result. I made some great gains on an £8 short bet on FTSE, but saw a lot of that disappear with today’s quarter-end rally.

In yesterday’s blog (European Bank Rescues Spook The Market) I said that I was still looking to trade FTSE on the short side. But having been thrown by the day’s sell-off I was expecting to open some new bets at a higher level.

Instead, I found myself going short of a total of £8 in FTSE at the lowest levels since 2005. I managed to get £5 out at 4749, as the counting was still ongoing, and another £3 out on the result, though this was at a more lowly 4683. Boy did I feel good as the after-hours market sold down to 4525, but I made one crucial error. I expected the panic to continue today so left £6 of my bet open, having taken a £320 profit on the £2. I’d trailed a stop down to 4726 on a further £3 but left the final stop in the distance to keep me in the game.

The problem was that today’s game was a strong rally, up through the first stop and leaving my remaining bet deep in the red at around 4840. I compounded today’s loss by being a bit too keen and opening up another £2 bet when the index earlier broke below 4800. The subsequent rally has cost me another £100 at the time of writing.

So why the rally? I can’t say for sure; there’re plenty of hopeful rumours of a re-vote and of co-ordinated trans-global rate cuts, but I suspect it’s got something to do with quarter-end. Anyway, at the moment I’m relaxed in holding a short fiver in FTSE.

Here’s a chart for your spread betting scrapbook; the biggest single 1-day fall in the Dow. The thing is, according to the more pessimistic forecasts, the fall should have been far greater on the failure to approve the bailout. Patience Grasshopper, patience…..

Hey! Have you seen money market rates today? The cost of borrowing Dollars overnight sky-rocketed by over 4% to 6.88% this morning. Oh and another rumour doing the rounds is that Lloyds TSB is looking to change the terms of its offer for HBOS. And guess what, they’re not an improvement on the original deal.

There’ve been a couple of big moves in the Dollar today, but the reversal suggests to me that traders haven’t sorted out how they want to play the next stage of political interference. Part of the Dollar strength was down to the huge leap in overnight money rates, but I’m leaving currencies alone today and keeping my eyes on the equity markets.

Happy Trading