The FTSE 2006

[ukhero]

Hi UK,

Many congrats for your consistent work. Just by the way, you expect FSTE to end around 5-10% up on the month which is 1.05x5618=5898 to 1.10x5618=6179? 5% is 280 pts? Energy and miners carried the weight pretty much for most of last year. Would like to know any reasoning behind your bold prediction. [ The reason for my question is .. I got my hands burnt last year when I short it in July/August after a long 13 week non-stop rally which started in May.. it only pulled back for two weeks then went up.. boom to 5500.. that's when I realised my TA is not working for FTSE and avoided it. ] Thanks..

LVG

Leovirgo,

Can I answer this later on during the weekendas I'm away at the moment till sunday.

UK

 

[leovirgo]

Leovirgo,

Can I answer this later on during the weekendas I'm away at the moment till sunday.

UK

Sure you can.

 

[David Goddard]

If it hits 5740, I would go short.

 

[ukhero]

The FTSE Monday, 9th January 2006

Friday's results:

Open: 5691.

Close: 5731, up 40pts. Far better then I anticipated.

Range: 5691 - 5731.

Last 5 trading days: up 93pts.

On the month: up 113pts or 2%

Dow: 10,959, up 77pts.

Last 5 trading days: up 241pts.

On the month: up 164pts or 2.25%

News items of note:

Well worth a read:

http://uk.us.biz.yahoo.com/ft/060106/fto010620061741042608.html?.v=1

FT.com - 'London’s main equities market returned to positive territory on Friday, closing at its highest level since June 2001, as fresh bid speculation helped excite traders.' - I anticipate an abnormal amount of bids this year which, if I'm correct, will push the FTSE all the way up to 6000.

Charts, and nothing but the charts: Friday's had no clear indication but did err towards a possibility of a small early rise. Mondays, no solid indication.

Companies reporting:

Carr’s Milling Industries [AGM]

INTERIM DIVIDEND PAYMENT DATE:
EMAP
Halfords Group
Hyder Consulting
ITV [the one to watch over the next few weeks]
Land Securities.

Economic Data:

None.

The FTSE tomorrow based on present news and data: the DOW's positive move boolsted the FTSE Friday afternoon so I don't believe it will add any further impetus come early Monday morning; charts are unclear; company results may add a minor fluctuation to the market. In all, the market will be driven by the days news.

Early gut feeling: none at the moment..

Will I bet? My Long did well Friday, but I could have done much better. Hay Ho! Monday, I'm not overly sure where its going, so I intend to sit back and watch.

If you are betting: make your own decision, watch the markets open and do read the news for clues as to which way the FTSE may go.

Yours

UK

 

[ukhero]

Leovirgo,

Bold predictions.

I'm bad for them, aren’t I? Some I get right and some I don't.

Here we go:

During the last few days of the month I try to predict the next, as do others, as to how it will pan out. Here's January's:

A. What are analysts saying? In general, I've noted analysts are predicting a bumper month. And I agree, some months I don’t.

B. How will company and economic data release effect the month? My personal study says: in general, a strong positive.

C. What do the charts say for the month: a rise.

D. Does historical data lend any insight? I lean on this a lot. I look primarily for similarities based on market momentum, and a few others, in order to predict said month. December 1997 / January 1998 had these certain qualities, in which December rose 5.42% and January rose 6.27%.

Of course, I could be entirely wrong. Having spent 10-15 hours studying I could end up flat on my rear end. But that's life.

Yours

UK

 

[leovirgo]

Leovirgo,

Bold predictions.

I'm bad for them, aren’t I? Some I get right and some I don't.

Here we go:

During the last few days of the month I try to predict the next, as do others, as to how it will pan out. Here's January's:

A. What are analysts saying? In general, I've noted analysts are predicting a bumper month. And I agree, some months I don’t.

B. How will company and economic data release effect the month? My personal study says: in general, a strong positive.

C. What do the charts say for the month: a rise.

D. Does historical data lend any insight? I lean on this a lot. I look primarily for similarities based on market momentum, and a few others, in order to predict said month. December 1997 / January 1998 had these certain qualities, in which December rose 5.42% and January rose 6.27%.

Of course, I could be entirely wrong. Having spent 10-15 hours studying I could end up flat on my rear end. But that's life.

Yours

UK

UK,

Thanks for your patient reply. It's been a 11 week rally so far. Wish you all the best,

LVG

 

[mark twain uk]

A bit of a non-event day, maybe the action will happen on the ftse cash after the close, kick-started by the us markets

 

[Morris]

HSBC responsible for more than 10 points on the FTSE today.

Notice how oils were strong but reversed & sold off later.


And cash closed down a whole .30 points.

 

[wstockuk]

Hello all,

First post, thanks to all for the knowledge gleaned so far!

I've been dabbling with a little spreadbetting with Tradindex but have realized the error of my ways and will be switching to CMC pretty soon but I just wanted to idiot-check a plan with you guys.

I currently invest in a few managed funds within an ISA, the core of which is a FTSE all-share tracker. I like trackers because of the risk balance. However, it seems that if I was spread-betting on an index, I could get exactly the same chance of profits but the gearing would amplify them. Even if I was low-rolling at £2 a tic, that would still be equivalent to a 10 grand holding, right? And as I'm aspiring to eventually have five-figure holdings in a tracker fund, I don't see why anyone bothers when they could spread-bet.

It all seems a little too good to be true, but in a bull market, how can you lose if you go long over, say, a quarter at a time?

I'm sure I'm missing something here, so perhaps the old hands could set the naive young one straight.

Thanks!

Will

 

[leovirgo]

Hello all,

First post, thanks to all for the knowledge gleaned so far!

I've been dabbling with a little spreadbetting with Tradindex but have realized the error of my ways and will be switching to CMC pretty soon but I just wanted to idiot-check a plan with you guys.

I currently invest in a few managed funds within an ISA, the core of which is a FTSE all-share tracker. I like trackers because of the risk balance. However, it seems that if I was spread-betting on an index, I could get exactly the same chance of profits but the gearing would amplify them. Even if I was low-rolling at £2 a tic, that would still be equivalent to a 10 grand holding, right? And as I'm aspiring to eventually have five-figure holdings in a tracker fund, I don't see why anyone bothers when they could spread-bet.

It all seems a little too good to be true, but in a bull market, how can you lose if you go long over, say, a quarter at a time?

I'm sure I'm missing something here, so perhaps the old hands could set the naive young one straight.

Thanks!

Will

Hi Will,

I am also a newbie compared to the 'real' old hands here. I'd like to share my thoughts though.

1. What is the purpose of your ISA holdings? If it's meant for long term growth, it's better leave as it is, unless you forsee a bear market in action.

2. Gearing increase the profits but it also increases the losses. Don't just look on the bright side.

3. Risk only what you can afford to loose.

I am sure more advice will pour in.

 

[Mornington Crescent]

define what you mean by a bull market.

I dont wish to be rude, but did you think we were in a bull market when ftse was at 3500,4000,4500 ?

or just 5700 ?

therein lies the problem - the very gearing you mention will also work against you .

hindsight is the worst of all enemies.

 

[ukhero]

The FTSE Tuesday, 10th January 2006

Monday's results:

Open: 5731.

Close: 5731, down 0.30pts.

Range: 5725 - 5750.

Last 5 trading days: up 113pts.

On the month: up 113pts or 2%

Dow: 11,011, up 52pts. Another strong day which saw the market touch, retract, and then move well past the important 11,000 barrier. It's nice to see the DOW wearing a new hat, but I don't believe it will last for long.

Last 5 trading days: up 293pts.

On the month: up 293pts or 2.73%

News items of note:

LONDON (ShareCast) - 'After spending most of the day near a 4½ year high London's blue chip index slipped into the red late afternoon as the property sector tumbled and oil stocks gave back earlier gains.'

KANSAS CITY, Missouri (Reuters) - 'The U.S. central bank has pushed interest rates into the lower end of a "neutral" range and where they go now depends on the economy's path, Kansas City Federal Reserve President Thomas Hoenig said on Monday. Speaking to a business luncheon, Hoenig said he thought the economy was likely to grow in the 3.25 percent to 3.5 percent range in 2006, but that there were risks on both sides of that forecast which could alter where interest rates head.'

Charts, and nothing but the charts: Mondays had no clear indication. Tuesday, two separate charts agree on a strong possibility of a rise.

Companies reporting:

COOKSON
MARKS & SPENCER [looking good, and if so it will add confidence to the retail sector]
MCALPINE
NORTHGATE
TOPPS TILES

Economic Data:

BRC Sales Monitor.

The FTSE tomorrow based on present news and data: the DOW's all important high today will add plenty of confidence to the UK markets early tomorrow morning; Charts say a strong possibility of a rise; another day where the market will be driven by daily news events.

Early gut feeling: a rise.

Will I bet? Went Long @ 5731 prior to the market closing.

If you are betting: make your own decision, watch the markets open and do read the news for clues as to which way the FTSE may go.

Yours

UK

 

[wstockuk]

Thanks for the replies-

The crux of the issue is this: Why would anyone have 10 grand in a tracker fund when they can achieve practically the same profits/losses with a much smaller amount through spread betting the index? I'm sure I'm missing something...

Will

 

[leovirgo]

Thanks for the replies-

The crux of the issue is this: Why would anyone have 10 grand in a tracker fund when they can achieve practically the same profits/losses with a much smaller amount through spread betting the index? I'm sure I'm missing something...

Will

It all comes down to the investment attitude, your acceptable level of risk, and expected returns ect... Three options here...

1. See if you are still comfortable when you put 10k in spreadbetting account and trade on a nearly full margin e.g, £20/point ( 400 time margin will require £8,000 as initial margin and reserve £2000 for P&L fluctuations). 100 points move alone either way will be £2000 + or -. Returns can be 20% within a week or a month.

2. Put £10,000 in tracker fund. Returns are not likely to be more than 15% after charges etc even in bull markets.

3. Put £3000 in spread betting account, trade £2 per point. Apply 2% money management rule and put the rest (£7000) in tracker fund. I would choose this option.

:cheesy: :cheesy:

 

[Mornington Crescent]

wstockuk

sounds like you didnt read my post.

 

[apples10]

Thanks for the replies-

The crux of the issue is this: Why would anyone have 10 grand in a tracker fund when they can achieve practically the same profits/losses with a much smaller amount through spread betting the index? I'm sure I'm missing something...

Will

you are . . .. . .

tracker funds are the VW Golf of investments and spreadbetting is the rally car without ABS, would you start to drive in the rally car or build up to it through the Golf?

The route I would take if I were you would be tracker funds (or etf) - single stocks - cfd on single stock - spradbetting.

The mistake most people take is jumping in at the deep end.

rgds

 

[FetteredChinos]

Thanks for the replies-

The crux of the issue is this: Why would anyone have 10 grand in a tracker fund when they can achieve practically the same profits/losses with a much smaller amount through spread betting the index? I'm sure I'm missing something...

Will

yes you are.. you are missing out the cost of carry on that margin...

an example...

say the FTSE is at 5,000 give or take...

the long term annual growth rate on the index is approx 11% n'est-ce pas?

so on an average year, you would expect to get about 550 points..give or take..

now, the cost of carry of holding a long position on the FTSE cash is just over £1 per point per day.. say £1.20 or so, but this is dependant on LIBOR etc..

365 days x 1.20 = 438 points

so, all in all, a profit of 112 points....

bearing in mind, as mentioned earlier, the gearing affects the volatility of these returns, a net profit of 112 points a year is pretty poor return for the risk being taken.

in financial terms, if you were doing long term buy-and-hope, you would probably need a £5000 capital in order to meet margin and drawdown requirements for a spreadbetting strategy..

so, £5000 in a tracker yields : £550
£5000 in a spreadbet yields : £112

hmm, can you spot the difference?

FC

 

[mark twain uk]

Putting, or even keeping, money in a tracker fund in month 35 of a bull run is asking for trouble, I would take the money out and wait for confirmation that the market has turned, you can then go short with a trailing stop loss and not only you would make money on your SB instead of losing on the tracker, but you will be paid interest on the short position. Now that's a more attractive proposition.

CAUTION: the above only works IN A FALLING MARKET!

 

[mark twain uk]

FC,

the case you painted above is the worst case scenario, if wstockuk went long on quarterly spreadbets he (or she) would not have to pay the same interest as on the cash position. But any gains are based on the idea that in long term the shares go up. With the volatility of the last few years the wisdom of buy-and-forget-about-it strategies is very questionable, it makes much more sense to get in and out of markets at appropriate times. Just ask people who put money in tracker funds in 99 and 2000.

 

[FetteredChinos]

FC,

the case you painted above is the worst case scenario, if wstockuk went long on quarterly spreadbets he (or she) would not have to pay the same interest as on the cash position. But any gains are based on the idea that in long term the shares go up. With the volatility of the last few years the wisdom of buy-and-forget-about-it strategies is very questionable, it makes much more sense to get in and out of markets at appropriate times. Just ask people who put money in tracker funds in 99 and 2000.

i dont mean to **** on your bonfire here, but there is the same cost of carry associated with futures...approximately the same rate as the charge on holding a "cash" position.

as the quarters develop, the difference between the cash price and the futures price diminishes.. this is due to the time erosion of the futures contract.

FC