There is potential to exploit every disaster for financial gain. The catastrophic failings of BP recently have pummeled their share price and left it down 40%. The British oil giant has said that the costs have already reached $2 billion for the botched cleanup and additionally 100,000 barrels a day are reported to be leaking. Weekend reports also stated that the company could be trying to raise up to $50 billion in asset sales.

Meanwhile Tony Hayward is getting his life back together and enjoying some weekend yacht races. This hasn’t gone down well and his handling of the PR side of things has been “How Not To” guide book. This hasn’t helped BPs share price and his lack of remorse and sincerity has badly damaged the companies reputation. In a last minute attempt to salvage what’s left of their reputation SkyNews reported that Tony Hayward will lose control of the company’s operations and that Bob Dudley will now take over.

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The FTSE 100 has been trading in a range for the past few weeks and whilst I’m expecting to test the lows I think the 4000 mark will provide good support. The Obama stimulus package once announced will undoubtedly rally stocks temporarily. My intention is to short the rally which may reach as high as 4500 before retracing to test the lows. I don’t believe we will break the lows before March.

For the present I’m dipping in and out content to steal a little here and there. I think 4000 is a buy with a close stop and anywhere over 4100 is a sell with close stop. I don’t think we will test the lows in the next few weeks but once we do I believe we will create new lows which will leave us in unchartered territory.

Entry: 4100 – 4300 FTSE (June Contracts)
Exit: 3750
Stop (Mental): 4500
Point Size: 12 Euro ( 3 x 4)
Estimated Return: 2000

What a day for equities, just when you think you know what’s happening and a 5% drop on the FTSE 100 catches you by surprise. I know today’s US retail sales slumping 2.7% for December was bad but I wasn’t expecting a 6% drop on the FTSE (Low of 4115). I took profits today on all my shorts as I’m not comfortable running shorts this close to the Obama inauguration. The beige book didn’t add much cheer with continued deterioration over the last six weeks. I read a funny name for the unholy spawn of JP Morgan and Citygroup “City Morg”. It’s always good to laugh otherwise you would cry.

Meanwhile in other mediocre news CNBC are doing “Madoff Watch” where they have poor Roberta Combs standing outside his flat awaiting any move. Who cares? The justice system will hopefully wake up and do what they are paid to do, justice.

For my part I think we may have more selling tomorrow but an uptrend to come next week. Tomorrow and Friday have a lot of news flow going on so further percentage fluctuations could occur. I am mostly neutral but have undertaken a small buy on the FTSE 100. This is because I believe a bounce will occur and even a small correction after the heavy selling today. I’m keeping stops close.

My next big more will be shorting the Obama rally as per the last post. Best of luck out there, we are going to all need it.