Spread Betting Opportunities: July 2, 2009
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Thursday July 2, 2009
This edition of Spread Betting Opportunities provides an assessment of the outlook for the equity markets—the Dow Jones Industrial Average and the FTSE 100 index in the trading sessions ahead.
Short term Outlook for the Dow Jones
Taken at face value, the gain of 57.06 points in the Dow Jones Industrial Average on Wednesday is positive. However, there are some warning signs—or at least some causes for caution. First, the close at 8504.06 was over 76 points below the intraday high. That fact, combined with the light trading volume seen on up-days over the past few trading sessions suggests a diminution of upside price momentum. Again, not a full-blown negative sign but a reason to be cautious in entering new long positions.
The Dow is currently trapped within the increasingly narrow range bound by the two lines shown in the chart above: 8436—8571. Wednesday’s intraday high was about 10 points above the upper bound of that range but the index failed the attempted upside breakout.
The short term technical outlook is likely to be determined by the outcome of the price movements within that range: 8435—8570. Conservative traders would wait for a clear break of one of those price areas and then trade in the direction of that break in the expectation of price follow-through.
Key short term support levels to watch for: 8445–8435; 8280–8250
Key short term resistance levels to watch for: 8570–8600; 8800–8890.
P.S: It is very easy to make a bullish call when the market is in full upswing, or to claim to be a bear when the downtrend is crystal clear for even the novice trader to see! What is difficult (and consequently much more profitable) is to go against the grain, to defy the consensus view and make a bold call ahead of events—and to be proven correct, time and time again.
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Short Term Outlook for the FTSE 100
Having moved to key short term price support around 4250, the FTSE 100 index faced the danger of breaking that important price support area on Tuesday. However, positive macroeconomic news in the US early on Wednesday provided renewed impetus for a rally. In the event, the Footsie’s powerful move of 91.5 points (2.15%) on Wednesday enabled the index to close at 4340.71—only a few points above the short term price resistance area marked by 4325–4335. Unfortunately, for those of us who prefer to trade only when the odds are stacked in our favour, this means than the short term bullish case for further upside is not confirmed.
A move higher in Thursday’s session should bring that confirmation. Such a move would open up the prospect of a push to the next notable price resistance and upside price target area: 4460–4500. This outlook for the FSE 100 is highly contingent on the analysis for the Dow presented above.
The bottom line here is that if the index is able to see some follow-through, then it is likely to extend Wednesday’s gains and retest recent price highs and price resistance line around 4460–4500. Of course, on the flip side, a breach of nearby support would send the market lower again to retest the 4270 price area.
Key short term support levels to watch for: 4335–4325; 4270–4250
Key short term resistance levels to watch for: 4460–4500; 4620.
Again, as things unfold, more time-sensitive analysis would be presented in the Market Timing Update.
While we are very happy to provide you with the free spread betting tips outlined here, as the saying goes, give a man fish and you feed him for a day. Teach him to fish and you feed him for a lifetime.
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