I dipped my toe slightly into the water last night a little too early with a tight stop loss on a long position. I had the right idea but the stop did its job and took me out. When in doubt a stop is your best friend. The trade was in the right direction and at the time the FTSE 100 was down 3% which would have made me 300 Euro by this mornings opening prices. I don’t feel too bad and for the moment I’m going to wait and see. I think there are two scenarios that I will be looking at.

Scenario One
Today is options expiry day and I’m going to see what way the market closes. Based on previous trends this day can lead to a reversal. Depending on the size of the reversal I might do nothing and let this long play leave without me. If this is the case my next trade will be shorting the FTSE 100 at the previous high entry of 4300 – 4400 (assuming a Santa rally takes us to this). Based on Dell results the NASDAQ could also bounce as most stocks are at their 52 week lows including Microsoft, Apple, Yahoo and Google. I am even tempted at these prices but I think we have further to go and will be stepping in once new lows are reached.

Scenario Two
The DOW closes lower after a volatile session in which case I would be willing to go long on the FTSE at 3750. Anything around the previous lows would interest me in a long position. My reasoning is that markets on very little good news are willing to rally. Slightly better than disastrous sales over Christmas could lead to a short term rally.

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