I’m just going to note some of my observations and what I have been following for the past few months. Banks have been of a keen interest to me with Allied Irish Banks and Bank Of Ireland offering more than a roller coaster ride for those who can stay up with the upgrades, downgrades and rumours. Approximately two weeks ago AIB were down at .90 cents and I have been very disciplined in entry points with .80 cent being my target. I don’t believe for a second that we have seen the last of the bad news and this would be a short term trade. However I missed the boat as .90 was the low and we are now back at over 1.50 with a recent dip but renewed strength. Short term outlook is very positive for the stock but long term I see renewed weakness.

Other notable stocks, well lets face it everything has goon to the moon. Take the tech sector with Apple (AAPL) storming through 240.00 and set for 250.00. Google also back on track and realistically there are very few stocks off with most making new highs. It seems the lessons of yesterday have been firmly learnt and we are now rallying on stellar growth.

So I guess all good news. For the most part I think there has been staggering progress made in stabilising the worlds economy. Just take a look at the VIX the volatility indicator, its practically asleep at 10 month lows. This either signals complacency or complacency.

With all the major indices reaching new highs today its hard to see a sustained push higher. My reasons for saying this are that as the new earnings season kicks off the expectations may be priced in. So this leaves us in the precarious position of managing market expectations. What will happen if profits meet expectations but fail to beat them? In this scenario we could drop lower. On the other hand what will happen if stocks fail to meet the huge expectations now set? This is my fear and this is why I am currently neutral and staying on the sidelines.

I could be completely wrong (again) but with companies like Wal-Mart slashing costs on thousands of products has the consumer really gained back the confidence to push sales higher. A secondary factor is that most companies have shed thousands of jobs and they are now lean but how lean can they go? There is a point where you can’t cut anymore and I believe most companies have reached that point.

With the FTSE 100 now touching 5,800 my expectation is a cautious rise to 6,000 followed by a modest pull back to 5,800 and a more severe pull back to 5,500. These are only observations and I haven’t a trading plan to back this up. I have cash waiting to acquire shares with a long term view but at current levels I don’t see much value out there.

I hope you have all prospered during the rally or kept losses low. The next few weeks will be interesting as reporting season swings into play. With UK politics heating up its interesting to see the economic initiatives from the two main parties. Recent trade pressures by the US aimed at China are also worth observing along with the European handling of Greece. All in all its an interesting geopolitical scene but from a trading point of view markets are very muted. With less and less volatility it has become harder to trade short term but again these things go in cycles and another bout of volatility is sure to be around the next corner.

Happy Trading

Related posts:

1. Quarterly Results & The October Rally
2. Economic Outlook And Recession Fears For 2010
3. New Financial Spread Betting Site Live

So How Are Your FTSE Shorts?
They were doing allot better two days ago and I should have taken profits. I was determined to stick to my plan and trade it till the end resulting in missed opportunities to take profits. Sometimes being too ridged can be a big hindrance but on the other side I have a reputation for taking profits too early.

At present I have three €5 shorts open after one was stopped out yesterday for €90. I have another order to open at 4,065 for €5. My plan is to continue to build up my short and take profits at around 3,900. I’m very comfortable with their being only a limited upside. Once earnings are over which have been better than expected I believe the focus will return to TARP, banks and the myriad of unanswered questions. This will push stocks back and create more headwinds for equities.

Entry: 4000 – 4150 FTSE (September Contracts)
Exit: 3900
Stop (Mental): 4500
Point Size: 20 Euro (5 x 4)
Estimated Return: 2000

No related posts.

Firstly I believe that while one man does not make a company CEO Steve Jobs has steered Apple through bad times and out the other end laughing. Very soon he will no longer be the CEO and chief operating officer Tim Cook will take over at the helm. Tim has a long track record in the industry but from my point of view he is a business man and not the visionary Jobs was. Cook believes the iPhone is ‘years ahead of the competition’ and in his capacity is patrolling the seas for intellectual property pirates. Now point one is that Apple is known for innovation and cutting edge design so if this is the new CEO isn’t he taking his eye off the ball slightly. Creating the trend is intrinsic to Apples future success.

Secondly as this downturn / whatever lexicon is in vogue at present gains momentum personal consumption will dry up. The size of the credit card debt is yet another one of those shoes to drop. While people may have splurged on the iPhone for Christmas its price will be prohibitive in the months going forward.

Lastly where will the new innovation come from and who lead the next wave. The genius of the iPhone was that it took many elements that competitors had and combined them into a nicely designed and more fundamentally easy to use device. If the intention is to just maintain and ease off developing its competitors like RIMM or even those coming from behind like my favourite LG will catch them by surprise.

The modern price conscientious customer is looking for the best product at the best price. Will Apple rise to the future challenges of creating the best products?

The share price may not reach $50 but it is unlikely to revisit $122 anytime soon either. The battle between $80 and $90 will eventually wear the eager for profit investor down and when push comes to shove my bet is that €50 is more plausible that $122.

No related posts.