Total Profit Week: 37.00
Account Total : 10,679.05

With volume low today on the Dow the push lower was more a case of no buyers rather that lots of sellers. The panic selling that was expected never occurred and the Dow was simply pushed lower on weak volume.

The FTSE held well at 4000 and briefly scouted below before coming back to settle at 4025. Tomorrow Obama outlines his housing solution and we will see how markets react. I’m confident of a return to 4200 on the FTSE as I think this current drop lacks the real conviction to drive us lower. It’s going to be a testing week but unless someone releases dire news I see us heading back into the trading range.

Total Profit Week: 943.50
Account Total : 10,642.05

Last night was another example of take profits when you can. I am certain that the FTSE 100 will break the 4000 barrier and have been building up a substantial short on this expectation. Last night I went from +500 Euro to a loss of -1000 in minutes. My reasoning for not taking profits was because I have a nasty habit of ill timed exits. Waiting till my exit point has come was one of my new years resolutions and so I’m happy I’m doing it. On the other hand I would be happier with 500 quid in my pocket.

The reason for the rapid market move was the government’s announcement to subsidise troubled homeowners mortgages. This caused the S&P to do a nasty U turn and jump 3% from heavy losses. The DOW came back from -200 to break even. Today’s session will tell if the bulls have legs but as we are maintaining the trading range it will be hard to see us break this unless we get further announcements.

I will be incrementally adding to my existing short and this rally could reach 4400 before it’s finished. I’m happy with my current position and because I have this though through I believe its a good trade. My stop is at 4700 and is very wide. As I increase my position I will be taking small profits on those shorts opened at lower levels, this should mean I can get better entry point but maintain the position size.

I hope no one was caught out in the squeeze. Risk management and well placed stops

So what did you make of the “The Bernanke & Geithner Show”. From my point of view it was a little under whelming and they portrayed themselves badly. Tim Geithner did come across a little better towards the end but still the confidence wasn’t there. As for big Ben Bernanke he seemed, stressed (which I understand), unprepared, nervous and jittery. His answers weren’t confident and he lacked conviction.

For these and many more obvious reasons like the lack of detail the markets roundly sold off. The DOW ended -380 down just off the lows of the session while the NASDAQ ended down -66 points. Generally I think there is agreement that this show gets the thumbs down. It will be interesting to see do the markets perk back up or continue down tomorrow.

Total Profit Week: 78.00
Account Total : 9,698.55

Monday sees the launch of one of the biggest bailout/stimulus efforts in history. Secretary Timothy Geithner is due to reveal how the Treasury will use the second half of a $700 billion bank bailout package as well as unveiling new programs to aid the ailing financial markets. The size and quality of the stimulus is obviously unprecedented but will this be enough or will we be back here in another year?

From a trading point of view I’m nervous on both fronts. If this is an amazing package (I have my reservations) then there could be a violent whip snap back to 8500 on the DOW bringing the FTSE 100 up to 4500. In this scenario most traders would be anticipating a recovery and buying stocks while I on the other hand would be selling short. I don’t believe the US can fix this alone and China along with Europe could undo all the good work any stimulus will do. That’s why I would sell any rally.

I do have shorts open at present and my concern is that the markets rally. If on the other hand market participants judge the efforts wanting then a large sell off will push us past the lows and with no backup plan look out below for equities. Great for me but the ramifications are huge and the outlook bleak. I have no strong opinions on what will happen but I will be watching with baited breath.

Just out: U.S. nonfarm payrolls plunge 598,000 in worst month since 1974 increasing the jobless rate to 7.6%

Taoiseach Brian Cowen has told the Dáil he would “like to see” pay for top bankers cut by at least 25%. The key phrase here is “like to see”, meanwhile over in the US we have the rather more forthright Obama leadership demanding a limit of $500,000 as an executive compensation cap. These guys are still getting away with one of the most obscene jokes in history and should be shackled with the keys thrown away.

In other cheery news ADP numbers out in the US put unemployment at 522,000 but revised up December figures. Over this side of the pond our live register figures have hit a record high of almost 328,000. All in all these are bleak numbers and don’t bode well for the future, let alone Friday. However markets being markets this figure coming in as expected could rally the markets further. Who’s to know?

I’m still dipping in and out but waiting for a rise above 4250 before shorting again. I am currently running three short positions.