Trading Day

Back online now! I know, nobody has missed me, hence am changing slightly the way I write these Trading Days. If I see some comments posted and the development of a readership I may change again. As there is an obvious delay between my trades and my comments, and a further delay for when the comments get posted, I don't think it necessary to try to make comments as 'live' as possible. This also means I can concentrate on the dealing screen and write comments at idle moments. I will experiment with this format and see how it goes.

What is ultimately important is developing trading tools and strategies that work and make money. Once those are in place then my trading comments become superfluous. We can all see the same data and use the same indicators, so will concentrate on longer articles.

Anyway... back to our programming.

FTSE

Yesterday touched 5580, which was also the low on 31 March. The Dow overshot its crucial 11750 by ten points then rallied. Today sees the Fed announcement on interest rates but as always this is after London closes, at about 19:15 BST. Depending on where you are in the world, this is often worth being awake for, as otherwise you will see the movement reflected in the FTSE's open the following day. The Dow's 11750 level is its March lowest close. The FTSE is still some way away from its March low at about 5460. Now, for the Dow this is more than just a local support - it is about the high of the 2000 tech bubble. A drop lower means that anybody invested in the Dow has been wasting their money for nearly 10 years. In contrast, the FTSE has been moving sideways for 10 years.

Just look at, say, a 20-year chart of the two indices. The tech bubble took the Dow to just short of 12,000, folowed by a credit bubble taking it up to over 14,000. However, the FTSE's twin peaks are at the same level, just shy of 7,000. From a purely technical perspective, this looks ominously like a double-top and there is no good reason why we can't see the FTSE back into the subterranean 4,000's.

I am reminded of the often quoted statistic that in the long term stocks have outperformed bonds, but only if you reinvest dividends. In a sideways market this last little proviso makes a huge difference.

Anyway, coming close to such important levels will no doubt see another bout of increased volatility, so I wouldn't be surprised if the market rises again to meet the 30DMA at about 5840 before falling further. It could, of course, just sink to 5500. I think it too late to take any long-term short positions, using the daily chart, but the 1-hour chart continues to be profitable, with the 100EMA line showing good trends over a 4 to 5 day period.

Bottom? Who knows!


GOLD

Gold has been twisting around faster than a dog chasing its tail. With the dollar on a weak upward trend and oil trading sideways it is hard to gauge the short-term future. The 200DMA at $868 is holding but gold fell away very sharply from trying to reach $910. After a period of what looked like nicely tradeable signals it now looks unclear until it makes a move outside this narrow $30 range.