Economic Reality

Up until Friday this week, the market was showing the signs of a 'wait and see' stance as predicted, awaiting the month and quarter end.  Was Friday's blow out rise a demonstration of the market's vain hope that the promise of ever-lasting central bank liquidity will trump the economic fundamentals ? We are of the view that Friday was nothing more than an engineered bout of short-covering, as the large market players sat it out on the sidelines. This has NOT left the market, on a quarterly basis, oversold and so we expect medium term pressure still to be on the downside, as it dawns on everyone that a severely slowing world economy can not be solved by adding yet more debt.
This forthcoming week we advocate a maximum position of £12 per point on the short side. We recommend selling an initial 5 contracts above 1361, selling a further 3 above 1368 and finally selling a further 4 contracts above 1383. We will set a stop-loss at 1395, and a target of any price below 1320 where we will take profits. For actual trades visit : Portfolio