No6's Financial Markets Thread

[No6]

I doubt we have many women members, which is a pity because they could probably tell us how to spreadbet.

 

Four reasons women make good spread betters

 

Like many activities spawned by the City, spread betting was once a male-only pastime. "Just over 12 years ago, the attendees at our seminars were 100% male" Sandy Jadega of City Index tells Lucy Warwick Ching in the FT. But that's no longer the case: "now that has dropped to about 70%".

 

And while they're still in the minority, it seems that women have a few tricks to teach men when it comes to racking up profits. According to IG index, on average they win twice as much, or lose half as much, as their male counterparts. Here are four possible reasons why.

 

First off, men hate to be wrong. And that's an expensive failing as a trader. The risk is you run losses for longer than you should. The correct approach is to follow a strategy, bet relatively little, and cash in losses quickly rather than stubbornly sticking with a duff trade.

 

more....

 

http://www.moneyweek.com/online-trading/sp...ters-05004.aspx

[No6]

How is the FTSE doing?

 

Looks like on the daily chart that is is slightly stretched, but still in an upward trend. Whether this is enough to take us into the new year who knows, but the last few days have seen not so much a sell off as a rest. Perhaps resting before a secondary surge results in the santa rally next week and 6000 being hit.

 

 

Interesting development in the weekly chart as this seems to be turning positive also. Parabolic Sar indicator (green dot on chart) just turned positive.

 

[No6]

Emerging Markets warning.

 

Individual investors are pouring money into emerging-market stocks at the fastest pace since 2007 as the biggest rally in 16 years spurs three of the world’s largest banks to predict shares will hit record highs next year.

 

The last time investors were this bullish, the MSCI Emerging Markets Index sank 11 percent in three months, data compiled by EPFR Global and Bloomberg show. The gauge trades for 2 times net assets, within 4 percent of the most expensive level on record versus the MSCI World Index of developed-nation shares, according to MSCI Inc.

 

“After all this money has flooded in, with everyone in love with them and all the euphoria surrounding them, it’s hard to find fundamental value,” said Harris Associates LP’s David Herro, who was named international stock fund manager of the decade this year by Morningstar Inc. “Growth in emerging markets is greatly helping the world, but you can overpay for it and that’s what’s happening.”

 

http://www.bloomberg.com/news/2010-12-15/n...conformity.html

[John Doe]

Emerging Markets warning.

I'm not sure that there is fundamental value anywhere.

 

The way money chases such markets reminds me of a kids football match, a great swarm of kids running all over the field in a tight group, with the ball somewhere in the middle.

[No6]

I'm not sure that there is fundamental value anywhere.

 

The way money chases such markets reminds me of a kids football match, a great swarm of kids running all over the field in a tight group, with the ball somewhere in the middle.

I suppose it depends on that old chesnut question, how do you define value? I don't think the main world markets, UK, USA, Europe and Japan, etc are particularly stretched right now, the Motley Fool post above makes a good case as to how the UK might have a lot further to go. On the other hand, emerging markets by definition are more risky and often have stretched valuations because of future expectations. It's the price (perhaps psychological feer/greed etc) you pay for a potential greater return.

 

And let's not forget money will always find a home somewhere, the lesson to be learned from the Million Dollar Traders series above, is that in the financial markets money always has to be at work somewhere and they are more often than not always looking for the greater return on investment, hence why they often get in trouble when it all goes wrong. My own view on this is that money doing nothing is actually an investment decision that good investors/traders should learn as it is good discipline to wait for the right opportunity whatever your timeframe for investing/trading is.

[drbubb]

Little over one month on and that 6000 appears again in the sights.

Where do you see the technical top out of interest Dr Bubb?

Click on the Update chart, and it looks like a possible Double Top

[romans holiday]

And let's not forget money will always find a home somewhere, the lesson to be learned from the Million Dollar Traders series above, is that in the financial markets money always has to be at work somewhere and they are more often than not always looking for the greater return on investment, hence why they often get in trouble when it all goes wrong. My own view on this is that money doing nothing is actually an investment decision that good investors/traders should learn as it is good discipline to wait for the right opportunity whatever your timeframe for investing/trading is.

Hear hear! During the "great moderation" this was the established truth for investors. Even if this "truth" is not so obvious now, investors, as a herd, are creatures of habit and quickly return to their old ways. This explains why investors are drinking deeply at the market... even in the face of risk. Another crash or two and the sea change should be cemented.

[No6]

Click on the Update chart, and it looks like a possible Double Top

 

Or a higher high before another minor correction before going up again.

[drbubb]

6, in case you missed this Bullish forecast (not mine) on the DrB's Diary thread

 

I am betting (a bit) on the downside, mostly with Long-dated puts.

I think that way too many people arte talking about QE2 "saving the market", and the Bernanke put.

But look into BB's track record, and the materials above.

 

I am also betting against Tony Caldero who uses Elliott Waves to predict prices going higher.

 

His comment:

The OEW pivots during the 2002-2007 bull market were based on the 2000-2002 bear market. The pivots we are using now are a combination of the 2000-2002 bear, the 2002-2007 bull, and the 2007-2009 bear markets. Also, this bull market is following the same price track as the previous one, but it is terminating its waves one pivot below the 2002-2007 bull market. Tricky, but it is clear. Therefore I have some projections in price and time for the rest of the bull market.

 

1313 Jan 2011 1187 Feb 2011 (9% correction)

1440 May 2011 1313 Jun 2011 (9% correction)

1552 Sept 2011 1291 Dec 2011 (17% correction)

1576 Feb 2012 end of bull market

/see: http://caldaro.wordpress.com/2010/09/26/sp...ket-projection/

[No6]

6, in case you missed this Bullish forecast (not mine) on the DrB's Diary thread

 

I think that what this shows is that if you look hard enough you can find similar patterns from the past which essentially mean nothing going forward except that it is a possibility that it will repeat. I believe in cycles, short, medium and long term, but I feel that wave analysis, especially when trying to predict the future is largely a futile one. It is easy with hindsight, but where exactly you put those wave counts on a chart can be very subjective if you ask me. I'm sure there are are wave bears using the same analytical tools that see exactly the opposite going forward.

 

What is interesting about that chart is the similar pattern 2002-5, compared to 2009-10. The earlier period is a little smoother, but essentially carried on upwards until topping out in 2007/8. It is easy to see how another bullish period could be setting up as indicated on the chart. Of course, the pattern may not repeat at all.

[No6]

Looks like FTSE 6000 is going to be hit sometime this week.

[jerpy]

Looks like FTSE 6000 is going to be hit sometime this week.

 

Tomorrow?

 

Incidentally, starting to notice a few fund manager predictions for next year. Not seen one below 6,000, some things are always predictable

[No6]

Tomorrow?

 

Incidentally, starting to notice a few fund manager predictions for next year. Not seen one below 6,000, some things are always predictable

 

Could be, or tomorrow. The FTSE just seems to be edging up slowly even though most of the news about is not so good in the last few days. I wouldn't be surprised if we hit 6000 for Christmas and then when the traders come back we get a little sell off again early in the new year as this latest rally is beginning to look a little stretched and running on empty.

[No6]

Incidentally, starting to notice a few fund manager predictions for next year. Not seen one below 6,000, some things are always predictable

 

From The Guardian.

 

Shouldn't forget that the FTSE100 is basically an international index, making most of their money and profits from overseas.

 

A happy new year for stocks and shares?

 

Major City fund managers are making remarkably upbeat forecasts for FTSE performances in 2011

 

It has been dubbed the "Santa rally". The London stock market has climbed to its highest level in two and a half years, and despite fears of a "double dip" recession and huge public sector job losses, many fund managers predict another strong year for stocks and shares in 2011.

 

Over the past week the leading asset management companies, which control billions of pounds of small investors' money, have issued predictions for the year ahead, and the message is remarkably upbeat.

 

A common theme is that Britain's biggest companies – the so-called "mega caps" that dominate the FTSE 100, such as BP, Shell, HSBC and Glaxo – are cheap compared with emerging markets, where valuations look stretched. A poll of fund managers by the Association of Investment Companies found that 77% expect the FTSE 100 to end 2011 between 6000 and 6500, compared with the 5850-5900 level it was trading at this week. Only 9% see it heading back towards 5000, and none see it falling below that.

 

But it is worth noting that fund managers are biased towards optimism. They earn a living from the 1%-2% a year they charge in fees, and their inclination is always to say sunny times are ahead. More bearish commentators warn rising inflation could force the Bank of England to raise interest rates when the economy is still weak, the housing market moribund, and unemployment rising. Combine that with spending cuts and possible contagion from the euro crisis in Ireland, Portugal and Spain, and 2011 could turn into the great credit crunch, part two.

 

So what are the major City houses forecasting?

 

More..........

 

http://www.guardian.co.uk/money/2010/dec/1...r-stocks-shares

[No6]

China buying into Europe ...and India.

 

European Stocks Advance as China Helps Europe Limit Debt Crisis

 

====================

 

Chinese Help

 

Chinese Vice Premier Wang Qishan said the world’s second- largest economy has taken “action to help some EU members counter the sovereign-debt crisis.” China holds a record $2.65 trillion in foreign-exchange reserves.

 

European stocks continued their rally even after Moody’s Investors Service said it may cut Portugal’s A1 long-term and Prime-1 short-term government bond ratings “by a notch or two” because of the country’s “sluggish” economic growth.

 

http://www.bloomberg.com/news/2010-12-21/e...m-may-move.html

 

Chinese dragon on the verge of entering India’s bond markets

 

Armed with a cash chest of $2.65 trillion (Rs 120 lakh crore), more than double India’s gross domestic product (GDP) and 10 times its foreign exchange reserves, the Chinese dragon is on the prowl and on the verge of entering India’s bond markets.

 

It is not that foreign funds have not been permitted into India’s fixed income markets. Almost all the foreign institutional investors have a mix of government securities, public sector debt, corporate debt and units in money market funds. But China’s sovereign wealth fund, China Investment Corporation, has so far been a benign player in India’s booming equity markets.

 

However, this could be changing. At the peak of the Greek financial meltdown in July this year, China’s Premier Wen Jiabao, on a visit to Athens, offered to buy Greek government bonds. Greece then had just received support from the European Central Bank worth a massive $150 billion (€110 billion). It was at this time China’s offer for the purchase of $40 billion of Greek government bonds buys were initiated by global investment bank Goldman Sachs.

 

http://www.tehelka.com/story_main48.asp?fi...1210markets.asp

[jerpy]

Could be, or tomorrow. The FTSE just seems to be edging up slowly even though most of the news about is not so good in the last few days. I wouldn't be surprised if we hit 6000 for Christmas and then when the traders come back we get a little sell off again early in the new year as this latest rally is beginning to look a little stretched and running on empty.

 

Reckon may just creep over the mark tomorrow now. Wouldn't be surprised either in a sell off, judging by some of the rubbish rising of late.

[No6]

Reckon may just creep over the mark tomorrow now. Wouldn't be surprised either in a sell off, judging by some of the rubbish rising of late.

 

Still creeping.

[No6]

Season's greetings to everyone.

 

I think this thread has managed to maintain the balanced view that I hoped for when I started it, hopefully those reading it have found some value. I think there is something to be said in not trying to predict the big picture, there are too many "guru" types trying to make a name for themselves doing that already and guess what, most of them get it wrong. A more simple approach of following the shorter term cycles and trends often gives you the immediate answer as to the direction of the market. That is all I really look for, where are things likely to be heading in the next month or two and anyway, does anyone really believe that it is possible to predict the future of market movements with any accuracy beyond that? My attempts at the start of this thread were more or less accurate with a FTSE 6000 target, but I wasn't totally convinced the market would get there. It was a guestimate based on the fact that I thought there was too much gloom about. Now there's a contrarian view for you! Next year could be a little more difficult when it comes to predictions.

 

Like others, I probably won't be posting too much over the next few days, so it's off to do some shopping now and I've just be told that the shopping centre that I'm heading to is packed, Tesco's and Iceland have queue's 50+ deep at each till. So much for the snow bringing down the retailers, I suppose we need a bit of doom and gloom to keep us all happy.

[littledavesab]

Season's greetings to everyone.

 

I think this thread has managed to maintain the balanced view that I hoped for when I started it, hopefully those reading it have found some value. I think there is something to be said in not trying to predict the big picture, there are too many "guru" types trying to make a name for themselves doing that already and guess what, most of them get it wrong. A more simple approach of following the shorter term cycles and trends often gives you the immediate answer as to the direction of the market. That is all I really look for, where are things likely to be heading in the next month or two and anyway, does anyone really believe that it is possible to predict the future of market movements with any accuracy beyond that? My attempts at the start of this thread were more or less accurate with a FTSE 6000 target, but I wasn't totally convinced the market would get there. It was a guestimate based on the fact that I thought there was too much gloom about. Now there's a contrarian view for you! Next year could be a little more difficult when it comes to predictions.

 

Like others, I probably won't be posting too much over the next few days, so it's off to do some shopping now and I've just be told that the shopping centre that I'm heading to is packed, Tesco's and Iceland have queue's 50+ deep at each till. So much for the snow bringing down the retailers, I suppose we need a bit of doom and gloom to keep us all happy.

 

Hey No6. Seasons greetings to you also.

 

I appreciate your sentiments in sticking to the short term trends. Way things are looking right now is next year the corporate recovery will continue unless one of the soverign issues goes off the rails and it looks like we will get a real test from one or more of the PIGS at some stage.

 

Snow is melting away around London!

[No6]

Amazing. If ever something was so manufactured, FTSE hit 6000 just near the closing bell*.

[No6]

Best performing sectors in the FTSE All Share in 2010.

 

Electronic and Electrical Equipment 88%

Automobiles and Parts 85%

Personal Goods 77%

Industrial Engineering 74%

Chemicals 60%

Technology Hardware and Equipment 58%

Leisure Goods 56%

Industrial Metals and Mining 54%

Oil Equipment, Services and Distribution 53%

Forestry and Paper 44%

 

http://www.fool.co.uk/news/investing/2010/...fwflwlnk0000001

[jerpy]

Amazing. If ever something was so manufactured, FTSE hit 6000 just near the closing bell*.

 

Ho,ho,ho

[No6]

Time to begin posting some of the predictions for 2011.

 

So what will happen to the stock market in 2011?

 

We have also gathered some exact forecasts from industry talking heads. As ever, these should be taken with a large pinch of salt - even those who have correctly called it in the past may get it wrong this time.

 

And as we've pointed out for years, there's a good reason why most 'experts' predict a rise of 7%.

 

I should also admit at this point that my stock market prediction round-up repeatedly warned that the FTSE 100 looked ripe for a revaluation downwards when it reached 5800. This worked in April - the index hit 5800 and then backtracked to 4805 by early July. Of course it recovered and now I'm wide of the mark.

 

Predicting the FTSE 100 at a precise point in the future - such as the end of 2011 - is futile but given I ask others to do the same, I would plump for between 5000 and 5200 points. Poll: Where will the FTSE 100 end 2011?

 

Here are some industry views on where the FTSE 100 will end 2011.

 

The stockbroker:

 

Justin Urquhart Stewart, of Seven Investment Management: 6400

 

The fund expert

 

Danny Cox, head of advice at Hargreaves Lansdown: 6400

 

The IFAs

 

Peter McGahan, managing director of Worldwide Financial Planning: 6500

 

Melvyn Bell, investment manager of Lowes Financial Management: 6500

 

Andrew Swallow, Chartered Financial Planner at Swallow Financial: 6100

 

Martin Bamford, managing director of Informed Choice: 6700

 

http://www.thisismoney.co.uk/investing/art...ticle_id=520219

[No6]

Can the FTSE keep on rising?

 

UK shares have climbed 11pc over the past year and many experts remain buoyant.

 

Simon Brazier, co-head of UK equities at Threadneedle, is one of several City fund managers in a bullish mood. He said: "On a market level, we believe that the UK stock market can deliver double-digit gains next year. Yes, there are still risks and these risks will produce bouts of volatility, but I would not be surprised to see the FTSE 100 at 6,500 before the end of 2011."

 

Other fund managers are equally upbeat. Richard Buxton from Schroders reckons that British shares could jump in value by as much as 25pc next year. "Businesses have done a sterling job of taking out costs and, as sales come back, there will be a leveraged improvement in profits," he said.

 

==================

 

One of the key drivers for their optimism is that the so-called mega caps are not a UK play. Many of the mega caps are global giants and simply have their headquarters in the UK, while the mid caps tend to be more domestically connected. Mega caps have greater exposure to emerging markets than mid caps and they have the lowest debt levels.

 

The large cap bulls say this greater international exposure is particularly relevant now, given that the UK economy is likely to be in the mire for some time in light of the Consumer Spending Review.

 

There is another reason why they are optimistic – valuations. Despite the solid returns, the FTSE 100 has lagged behind stocks that are listed outside the blue-chip index – suggesting that our biggest companies have some mileage left in them yet.

 

http://www.telegraph.co.uk/finance/persona...-on-rising.html

[No6]

Bullish views keep on coming.

 

Why US equities could be hard to beat in 2011

 

Hosting a debate between a panel of fund managers and asset allocators recently, I was struck by the unanimity of their views on what would be the best-performing geographic area next year.

 

Emerging markets, especially Asia outside of Japan, were top of everyone's list for 2011. The US did not get a look-in.

 

That set my contrarian antennae twitching, and events over the pond last week have confirmed my view that next year might be quite a good one for investors in the world's biggest stock market. Politics, monetary and fiscal policy, corporate strength and valuations all point to the US market ending 2011 significantly higher than today.

 

The US electoral cycle has tended to favour the year after the mid-term elections, especially when a lame duck president is forced to hold his nose and do deals. Last week's fiscal package represented a significant climb-down by President Obama, and the extension of George W Bush's tax cuts beyond their planned end-2010 expiry removes one of the biggest obstacles to continuing economic recovery next year. The biggest surprise in the package was a 2pc cut in payroll taxes, which will on its own give the economy a $120bn (£76bn) annual boost.

 

===============

 

The final reason why 2011 could be America's year is the sheer weight of money that is sitting on the edge of the equity market. I think the rise in yields on government bonds in the past few weeks might mark a watershed moment when investors start to question whether they have got their money in the right place.

 

After a couple of years of outflows from equity mutual funds, the tide is turning as investors accept that they have to move into riskier assets if they are to hope to replace the income they have lost from their risk-free deposits. If rising bond yields change the perception that fixed-income is a safe haven proxy for cash, the US equity market could receive a significant injection of new money next year.

 

Easy money, decent growth, reasonable valuations and indifferent investors make a pretty interesting combination.

 

http://www.telegraph.co.uk/finance/comment...at-in-2011.html

 

4 Reasons Why Stocks Will Rally Again in 2011

 

1) Corporate Earnings

 

Third quarter earnings season was one of the best in recent history. This was the main driver of stocks to rebound from the lows of late summer. The simple fact is that the health of corporate earnings has more to do with the movement of stock prices than any other measure. (If this is news to you, then perhaps you forgot that buying stocks is about buying an ownership stake in a company. And owners of companies don’t care about the “chart pattern” of the stock price. They care about the stream of earnings they will receive in the future).

 

So how good were Q3 earnings, you ask?:

 

* 3.78 stocks had a positive surprise for every 1 that was negative

* The average positive surprise showed earnings 5% above expectations

* 1.48 positive estimate revisions ratio for FY 2011 earnings. Meaning estimates are steadily moving up for the future.

* Year over year growth looks like +25.3% for Q3. But +43.1% year to date over last year.

 

more.....

 

http://seekingalpha.com/article/243627-4-r...y-again-in-2011

 

No New Normal as Strategists Predict 11% S&P 500 Gain

 

December 23

 

Dec. 13 (Bloomberg) -- Rising profits and cash balances will push the Standard & Poor’s 500 Index to the biggest three- year advance since the 1990s, surpassing forecasts for below- average returns, strategists at Wall Street’s biggest banks say.

 

The benchmark gauge for American equities will rise 11 percent from last week’s close to 1,379 in 2011, bringing the increase since 2008 to 53 percent, the best return since 1997 to 2000, according to the average of 11 strategists in a Bloomberg News survey. Goldman Sachs Group Inc.’s David Kostin, the most accurate U.S. strategist this year, said sales growth will spur a 17 percent rally in the S&P 500 through the end of 2011.

 

Market analysts say earnings will hit record highs, keeping valuations below historical averages at the same time government spending aids the economy. Reaching their average forecast for 2011 would give the index annualized gains of 15 percent over three years, twice the rate anticipated by Pacific Investment Management Co.’s new normal theory that anticipates deficits and increased regulation will limit returns.

 

http://www.businessweek.com/news/2010-12-2...p-500-gain.html