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.
UK Equities Back Above 4500
Morning folks,
Fortune favoured the brave yesterday and gave them a whopping great pay cheque. My cautious approach to equities yielded nowt, but this morning I made a few quid playing the market both ways. Anyone tempted into yesterday’s long gold bet will have been rewarded today with a $20+ rise. Hey, and what about UK inflation? No, no-one else gave a rat’s arse either.
OK, let’s start with a quick re-cap of yesterday’s blog (Bailouts Galore). I reckoned the FTSE index was stuck for the day in a 4100-4200 comfort zone and that it was pointless making a call while a lot of the US was on holiday. The only bit I got right was saying that I couldn’t call the FTSE within 200 points in either direction!
Well, those who reckoned there was a point in making a call on the market were rewarded with humungous gains, even on a minimum bet. I backed my judgement by nipping out to pick up my youngest son and returned to find FTSE over 100 points higher. There was a common theme here, as I returned from an evening rugby meeting to find a further 200 points added during the evening session.
And this morning I walked in to find FTSE had grown by another 100 points. This was too much and I waited for the early excitement to evaporate before selling a couple of quid at 4504. I trailed my stop down and was closed out at 4420. Watching the 5-minute chart I decided to jump in and buy £2 at 4425, riding the market up to 4470 before being stopped out at ‘68 and ‘45. Overall, I managed to stick just over £200 in my back pocket; a fraction of the gains available, but still a profit.
So now what? Well, I’m tempted to enter a small long bet. There’s a danger that I’m joining the party just when all the beer’s run out, but I think there’s a short-term breakout on the daily chart:
FTSE looked pretty determined to shake off the earlier losses and, helped by a strong performance from the Dax, pushed back up to the 4475 level. I reckon if the price can push above this level and hold at least a 10-minute green candle then we could be in for more near-term gains. For me, these markets aren’t sorted out yet so I’m going to restrict my bet to a £2 buy somewhere just above 4480.
Also in yesterday’s blog I asked whether gold was a brave trading buy, purely from looking at the chart. Sadly, I didn’t back it myself as I rarely trade gold. But if I had, I’d have seen a $20 rally this morning, giving the option of a quick profit or locking in a small gain and rolling the dice again.
And finally, I warned that although there were shed loads of economic data this week I doubted they would have much effect. In the UK CPI pushed through the 5% level to 5.2%, above market expectations, but frankly dear, no-one gave a damn. The German ZEW economic sentiment indicator came out at a whopping -63 (-51 expected), but accompanied by a statement that those interviewed after various bank bailouts were more optimistic. In both cases, equities barely paused to digest the news before moving on up.
In a busy afternoon look out for the official US bank bailout announcement part 2 (or is it 3 now?) and in Ireland at 3.45pm Mr Lenihan will deliver his first budget speech.
Happy Trading
Update. Now long of £2 FTSE at 4485.
October 14th, 2008 at 11:28 am
hah! Well I really went the distance. with the market up above 4520 I moved my stop up to 4505 and now I’m out. I guess the next test will be to see if 4500 holds, but there must be some danger of the US flying again. there looks to be a bit of room before the moving average resistances kick in.
October 14th, 2008 at 12:41 pm
back in at ‘18
October 14th, 2008 at 12:48 pm
Hi FT,
I’m with you on trying to make some cash on the long side — although I reckon the bigger picture remains that we’re in a downtrend.
With all my Oct options back out the money (and who’d have believed that last Friday), I couldn’t resist writing the Nov 3500s this morning. It’s a 5-week month coming up but 80p of premium was too tempting, even with the volatility we’ve been seeing. I’ll be looking to take profits on this, I think, rather than run to expiry.
I’ve also taken small long positions in the S&P500 and Nasdaq, which should allow me to profit from the new mood of euphoria. Trick will be to get out before that mood evaporates. Avoiding FTSE given the option positions, although it’s all pretty well correlated.
October 14th, 2008 at 12:59 pm
Hi ken,
yeah i’m a grumpy begrudging long;had to close out my best Nov options on Fri, so a touch wary of getting the current special offers. Not really riding the long trades, so getting small pluses rather than bagging the big-one.
October 14th, 2008 at 2:14 pm
i’ve gone the other way 9and I’m not talking Dale winton).
October 14th, 2008 at 7:27 pm
Is the ‘invisible hand’ going to step in at eight thirty this evening, or have they used their ammunition on the banks this afternoon?
October 14th, 2008 at 7:40 pm
Not as spectacular as yesterday but 150 points on the DOW in 7 minutes is not to be sniffed at. Unfortunately Hank’s wristwatch must be slightly fast, he went two minutes too early.
October 14th, 2008 at 7:45 pm
Yep, it looked like we could have breached the 9000 barrier if it wasn’t for the ‘official guidance’. I wonder if similar tactics will be used to close the S&P above 1000.
October 14th, 2008 at 10:46 pm
Hi guys
have been playing the short game all day - OK lost this morning big time - but won the afternoon so bit like a 2-1 win - just do not like anything long at the moment as per previous comments - sorry
October 15th, 2008 at 9:28 am
Hi Simon,
was up as late as you last night, but finishing off a piece due out later. Yep, I quickly saw the error of my ways and turned short. Kept £6 short open overnight and reaping the benefits this morning.
October 15th, 2008 at 9:59 am
I”m doing the bi-trade thing and running two positions - a long Dow rolling bet from 8702 at £1/pt (took most of the profit off that yesterday and left just £1 going) and a short Dow at £2/pt from 9390. Will probably close out the long if the dow drops below 9000, which looks entirely possible. Also have broken the habit of the last few months and gone long gold, short USD/JPY and USD/EUR. However USD is staying relatively strong so I may come out of that soon unless there’s a big move (more shocking US data???) that weakens the USD. I reckon it’s due for a reversal, partly because the data isn’t getting any better…If USD stays strong then the deflationary call is still in place and I expect gold to weaken further, basically in line with the collapse in commodity prices everywhere and global recession.
FT Alphaville had a great piece on gold from merrill lynch yesterday - very thoughtful, very useful - http://ftalphaville.ft.com/blog/2008/10/14/17030/markets-live - quoting a bit here -
Long-term, bailouts could create metals price inflation
In the long-run, base metals prices could pick up again. Supply capacity in many
commodities remains constrained as the sector has not received the much
needed capital investment. Thus, while the bailout may help keep banks afloat by
printing more money, it will not lead to an expansion in metals supplies and could
bring about a second round of metals price inflation as energy prices recover.
Gold could continue to move higher in three stages
As the ultimate store of value, we believe three variables can explain changes in
the price of gold: risk, currency and commodity prices. Departing from this analytic
framework, we believe gold could surge to $1500/oz in three steps. First, with the
outburst of the credit crisis in August 2007, a rising risk premium has pushed gold
up. The second stage will primarily be about USD weakness. Finally, as currency
markets stabilize, the third stage in the appreciation of gold could be driven by an
energy price recovery. The main risk to this view would be a very broad and longlasting
global recession, as a deflationary spiral could reduce gold’s allure.