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I dont think it will break above that 330week MA, but I do think FTSE
will touch it

May I ask why? Whats so signifcant about the 330wk MA, versus say the 320wk or 300wk or 200wk? Im very new to technicals.

330wk = 1597 days, a fibonacci number, whose moving averages often provide significant support/resistance. Fib ratios are naturally occuring all around us, in physical geometry and timescales. The higher the fib number, the greater the level of support/resistance, so you would expect the 1597dma to be stronger resistance than, say the 233 or 377dma.

Do a Google search on "Fib ratios" to learn more.


FWIW I think the FTSE has another leg up as the US markets rebound.

Van is right about the Fibonacci connection

We are very nearly there (FTSE-5180 today!): just a smidge to go,
and we will see if the 330wk MA stops the momentum

Why all the emphasis on the FTSE100 ? The FTSE250 is currently at a record high !

FTSE should hit my target today,
I will start buying in-the-money puts on September or later

I have a maths degree so am fully aware of the siginificance of Fibonacci numbers and of course the golden ratio. I might still have a little scepticism as to the exact basis for tech analysis, but thanks for answering the question.


Ever seen the film PI by Aranofski? one of my best films!

L.,
I havent seen that film

I am collecting links for Option prices:

1/
http://www.liffe-data.com/ (needs password)

2/
http://news.ft.com/markets/ftse100option
http://specials.ft.com/stats/pdfs/ftse100e...n/FOP050705.pdf

Example, from yesterday:
PUTS:
Sep.: 5325:159 / 5225: 97
Oct.: 5325:164 / 5225:109

THERE are even cheaper today.
Thank goodness I was too busy to trade

be careful though. the FTSE has been robust in the face of gloomy forecasts on the UK economy. could falling gilt yields make FTSE valuations look more attractive?

Spoon,
I trade lots of options.
Sometimes it is best to trade against gap breakouts like this morning.
But anyway, to limit risk:
I use puts, in case I am wrong, and I layer into my positions.

FTSE has popped above that 330wk MA, but will it stay there?
Today looks right to start, since this gap will likely get filled

I reckon that today's jump in Ftse is due to weak sterling, and Cable
may also be a buy today

i like the trade. just focusing on why it might not work.

let us know what you do - i might join you.

yes the weakness in cable has almost certainly helped the FTSE.

The FTSE100 and FTSE250 went up today because of a good performance on Wall Street overnight. There are US performance indicators being released all week - the signs are that the indicators may all be favourable so FTSE100 & FTSE250 may climb all week.

How long have you traded? (please dont take this question the wrong way)
These glib explanations are normally only part true
Ftse follows Wall Stret to some degree, but a weak Sterling will also help
the market

Dont shoot your whole trading capital here. I plan to spend no more than
1/3 of the capital that I have for the trade

agreed - i'd like to keep some powder dry dry for 5400.

Fine, you may see it: anything can happen.

Also, keep in mind, I am protecting a portfolio which I want to
insure against a meltdown- so my motive may be different

I wasnt implying that Wall Street was the sole factor but more often than not if Wall Street rises the FTSE100 & FTSE250 rises.

managed to pull the triggger.



bot ftse oct.5275puts at 114: that's a reasonable 2.14% of strike
for a three month in-the-money option

i plan to add to this position, but want to watch how the market moves

- - -
Some calculations that I like to run:
At 114, the next strike down, might be expected to be something like
25-30pts cheaper, say: 85-90. Actual price: 94.
So at 94, an ATM put would cost : 1.8%, annualised (3mos x 2)= 3.6%
So the notional Implied Vol., is something like 2.5x or 9%: very cheap!

why have you chosen IN-THE-MONEY puts?

I always buy in-the-money options. Here's why:

+ They experience less time decay,
+ They are often cheaper, in terms of implied volatility (as shown above),
+ They will increase in value faster (ie they are more than 50% delta)

I think of them as synthetic forwards, but with a built-in insurance policy.
At the price I am paying, maybe 8% vol., they are a real bargain. I like the
October expiry, since it takes me thru the seasonally weak autumn

okay that's what i thought although still think you may as well sell the forward.

mind you i'm no expert on option theory.

I dont like futures/forwards because:

+ You either have to watch your position very closely (which requires a bigger time commitment than I can give), or

+ You must use stops (which I only use on profitable trades)

added later:
Here's today's action ... update


I think we cud see this market get slammed before long from either:
+ weak Dow etc,
+ an upturn in Sterling, or maybe
+ fall in oil: too much oil exposure in ftse now

ISLAND REVERSAL COMING?
(In place by tomorrow's opening perhaps)

Some of you may know what this means
(The market gaps up one day, trades above recent levels, and then gaps back down the next day)

Wall Street was down -101 today.
It looks like FTSE will gap down tomorrow on the opening.

That will give us an "Island reversal" and a nice look top formation.

(You can find the whole blow-by-blow & a bullseye forecast here!):

Wall Street is being torn in opposite directions. On the one hand recent economic data has been promising but on the other hand oil prices are rising alarmingly because of storms in Mexico.

Strong resistance @ 5250.

Bought some in the money Sept-05 FTSE puts. Strike price 5350, spot FTSE price 5248.

Put price: 143
FTSE: 5248
Strike price: 5350

calculations:

Intrinsic value: 5350 - 5248 = 102
Time value: 143 - 102 = 41, which is a 0.781% (41/5248) speculative premium for a 2 month put, not bad at all.
Break even: 5350 - 143 = 5207.

UPDATE: Stuck on the Ceiling.

The market seems "stuck on the ceiling" at 5,250.
Usually when that happens, it breaks up, if only temporarily.

The touch of death at 5200, did not stop the market this time.
Which is why I use puts.

Still UP on my FTSE put trades, thanks to some profits taken on last Thursday's
sharp drop (I dont like amking money that way)

- - -

For US Markets, I am studying some arcane indicators:

% OEX Stocks over their XXd MA's:
$OEXA200R, $OEXA150R, $OEXA50R

http://stockcharts.com/def/servlet/SC.web?c=$SPXHILO,uu[l,a]dacaynay[dd][pd78,2!b11!f][iut!Ue12,26,9!Lh14,3]&pref=G

I am surprised the police have not yet broken down your door after your (entirely coincidental) blogging here about buying puts the day before the bombs.

I have a different view of short term FTSE (next 6-12 months), which is why I BOUGHT last Thursday on the irrational drop. I see FTSE at 5600 at the end of the year. The reasons: UK shares still cheap, low p/e, high divi yield. The bulk of private investors have missed the boad since the market bottom in 2003. A recent surevey (don't have the link to hand now) showed that most people wrongly believed that property provided the best returns ocver the past two years when in fact it was the FTSE. Once residential property sentiment starts turning in earnest and people wake up to the fact that shares have been returning 50% since 2003, people will jump back into shares.

Until we have been through the next retail/amateur investor rally in the FTSE, it is not going to drop significantly. I expect this suckers rally in spring 2006, when the press will start turning bearish on property and financial "experts" will be pointing out that shares are a much better investment.

Meanwhile, I am making money by selling puts. So who knows, Dr. you may be a counterparty on one of my positions

Also all the dinosaur institutional with-profit funds bailed out of equities at the bottom of the market a few years back. They would take some persuading to get back into into equities but if they do they would probably do so at the top of the market.

Well through the 330wk ema now. FTSE at 5266. this bull run is scary! Still think we're due a downleg, but then I've been saying that since about 5150!

Also an unusually bad day for the FTSE250. Most days the FTSE250 far out performs the FTSE100.

5275! Gonna test 5300 pdq at this rate.

Yep, at 13:30 they announced US CPI held firm so I think there is scope for another upwards lunge.

Fell back from 5285 to close at 5262. Took out a short spreadbet @ 5278. Main portfolio had a fantastic day. BFC +27% (shame I didn't buy more)!

Which just goes to show again that technical anlysis is a great tool to analyse what has happened in the past and is useless for making any reliable forecasts.

I Have been keeping an eye on the DJI and I put open a position on its year end value as a downbet.

Markets at the moment are full of char because they can smell lower interset rates

but they

a) might not come quickly

might not work


Ian

PS I am no expert and have lost some wedge to in the past

Short term chart
now shows support at 5,210 (old resistance)

if this breaks tomorrow, then the top may be in

Could take a lot to push higher from here, especially now that the US markets have caught up.

Always dangerous to predict the market, but I expect retracement from here of a few hundred points but still within the trading range.

The bulls really pushing this leg for all its worth - FTSE now currently 5316!

I'm getting very close to shorting at these levels.....look at the 5 year chart...the resistance is HUGE at 5350ish and I think we'll turn down there....probably back to 5000.

Why should it all stop at 5350 just because the chart says so. Do people postpone buying because the charts are not favourable?

These charts are a self fulfilling prophesy it seems to me. If everybody knows about this 5350 thing it probably is a good time to short if everyone stops buying.

350 x say £20.00....tempting!

looks like that early-2002 high may get tested

Weekly FTSE ... update

Sentiment has been very bullish of late, seemingly unstopable. Who would vote against a market that brushes off terror alerts, saudi succession questions, oil > 62, Iran sticking up two fingers wrt nuclear?

The only thing to weigh against this is WHO is making this rally. For the past week and a half avergae trade size has beem only 2/4rds of its normal self, Yesterday the ftse put in its fifth day up on the back of a two month long rally, and the gain was the biggest o fthe 5 days. Futures to cash differentials have swung from 20 points to zero, but closing the gap has taken as long as an hour. Inthe mornings 15 point arbing gaps have persisted for 10s of minutes. Recent buyers seem to be anticipating a rise on a rate cut, an event itself discounted by the markets for weeks on end. This all suggests to me what many already know: the professionals are all an holiday.

The question is what happens when they come back on Monday.

An extract from today's Daily Reckoning email - the views of an "pro options trader"

"Sure, just take a look at the percentage of US stocks
above their 10-week moving averages. In only two months,
the percentage of NYSE stocks trading above their 10-
week moving averages has gone from 16% to a recent
reading of 80% - that's very overbought...So for now,
I'm just paralysed," Shartsis concluded. "This market is
way too dangerous for my comfort level, but its positive
momentum dampens my enthusiasm for going short. So I'm
sitting on my hands. I won't sell the market short until
we see some sign that the market is breaking down. We
haven't seen that yet."

Might mean something to somebody!

Translation: we are due a pullback, but it might well go higher yet!

BET ON THE CYCLE
the 4 year cycle bottoms in Q4.2006, and the seasonal cycle: Sept/Oct.2005



FOUR YEAR Cycle in FTSE
Low : 2,876 jun.24, 1994
Peak: 6,180 jul.20, 1998
Low : 4,649 Oct.05, 1998
Peak: 6,930 Dec.30, 1999
Mar.12,2003 Sep.24, 2002
Low2: 3,275 :Low1: 3,610
chg.: 3,655 :chg.: 3,320
Today 5,330 Aug.04, 2005

Next Major Low?: Oct.? 2006

FTSE touched 5350 today. Oracle, your call looks spot on at this stage.

I have added to my short position.

Looks like that FTSE keeps on truckin! Big front page news in today's Indy about oil prices and how it's dragging us all down. If (when?) the FTSE takes a tumble, where will all the smart and 'not-so-smart' money go?

Property?

Don't think so!

The pound and the dollar are looking lousy too. Is this a sign that gold is going to rocket?

This can't be good for an economy surely as gold doesn't 'do anything'. Surely buying gold for capital gains is the same as the 'property investors' we all loathe?

...this is where things will get really interesting,I am convinced we are about to pull back...the chart held support here on the way down before breaking lower,and stuff like this usually ends up as resistance on the way up.


DID ANYONE ELSE NOTICE THE VOLATILITY AT THESE LEVELS OVER THE LAST FEW DAYS??????....we had a taste of this level,or close to it a couple of times now and it has pulled back sharply on the last couple of occasions.

...the rest of it aside,sterling is strengthening again......HPI,consumer stats due soon,not going to be good......it's all in place for a pullback.....the only pice left in the jigsaw now is the pullback from oil price....which I think someone already did a tech job on and stated it looked overbought too.

I'm sticking to my bet!!

Hope so. I'm short on the both the FTSE and oil and a bit out of pocket at the moment!

isn't US driving season nearly over????,how are they doing for heating oil+distillates?

...if the oil price has been driven by lack of capacity for gas,but no problem for derv's then we will get our pullback.....assuming no problems in saudi and a mild hurricane season.(both priced for bad news at present)

I'm not going to pretend to be michael fish,so i'll just have to hope there!