Spread Betting Opportunities: January 21, 2008

Monday January 21, 2008

This double edition of Spread Betting Opportunities assesses the immediate outlook for both the Dow Jones Industrial Average and Nymex Crude.

Short Term Market Outlook: Nymex crude

The latest chart of Nymex crude (as at Friday January 18) is presented below:

spread betting crude oil

Once again, at the start of 2008, Nymex failed in its bid to scale and remain above the $100 level. The longer Oil takes to achieve this landmark move, the greater the likelihood that price would simply fall away towards the $75 to $80 range. However, we are not there yet.

After losing 224 points over the last week, the technicals for oil are starting to shape up for another run higher in the week ahead. The evidence suggests that so long as prices can hold above $88.60, then we should get a move towards the price target within the band $92.97 to 93.25. That represents a potential move of over 300 points in the trading sessions ahead.

Conservative traders should be aware that a move below $89.15 would invalidate the underlying short term bullish sentiment and potentially send prices much lower towards $86.

Short Term Market Outlook: Dow Jones Industrial Average

The latest chart of the Dow (as at Friday January 18) is presented below:

spread betting crude oil

Equity market bulls have been on the receiving end of some serious mauling in the hands of the bears pretty much from the first trading day of 2008. Over the last week, the Dow lost a massive 507 points.

Even after all the heavy falls of recent sessions, the Dow continues to look vulnerable (longer term) from both a technical and fundamental perspective. However, the index is starting to show signs of short term over-extension and we could see a bounce in the week ahead. Such a bounce should reach around 12340 in the first instance and then the next key upside target would be around 12600.

Despite the potential for a bounce, the high levels of volatility that we have been seeing lately call for caution in taking any speculative long positions at this point unless one is willing to bear the particularly high level of risk involved in trading in the current market environment.

Have a profitable week in the markets.

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