Spread Betting Opportunities

Spread betting opportunities for week beginning:
Monday December 17, 2007

This edition of Spread Betting Opportunities considers the outlook for both the Dow Jones and the FTSE 100 in the days ahead.

Short Term Market Outlook: Dow

The most recent chart of the Dow Jones Industrial Average is presented below:

spread betting charts

Trading Assessment

Over the last week, the total losses for the Dow amounted to 285.73 points. However, the loss of 178 points on Friday really added little to the short term outlook presented in the last Market Timing Update sent to subscribers last Thursday.

Essentially, I noted there that the Dow was within a short term trading range bound to the upside by the trailing red resistance line and to the downside by the corresponding trailing blue line that is currently providing price support. As you can see from the chart above, Friday’s drop started right from the resistance line which provided a good entry for a short-term short selling position as was anticipated.

The outlook remains one of expectation of buying power around that blue line (currently about 13267). So, for now, the technical evidence suggests that a move to that price area may well present a good entry point for a high-risk buy bet, with an initial target of 13480–13510 and then around 13780. However, a move below 13250 would suggest the likelihood of further declines all the way down to 12900 or lower.

Short Term Market Outlook: FTSE 100

The most recent chart of the Footsie is presented below:

spread betting charts

Trading Assessment

Despite the gain of about 32 points on Friday, the FTSE100 lost a total of 157.9 points by the end of last week.

As I expected in the last Market Timing Update, the Footsie did find support within the outlined price area and the bulls staged a mild rally before pulling back again towards the end of the trading day on Friday.

Take a close look at the chart of the Footsie and the Dow above and you might notice a small similarity in terms of the current price level relative to the short term price support and resistance lines that I depict on the charts. Just like the Dow, the Footsie is trading within those price bands 6345—6458. Because the balance of power between the bulls and the bears is quite even in this instance, the interpretation is straight forward.

A move to the support area should bring in buyers, resulting in a bounce and a move higher to that price resistance line should encourage more selling. However, a decisive break of either extreme should see a follow-through resulting in a sustained move in the direction of the break—at least in the short term.

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