This week’s financial spread betting update is now available and can be read by clicking here.
In this morning’s trading there is little happening so not much to report with both the dollar and stocks so far relatively flat.
In last week’s update we wrote that there was no economic recovery underway and we have in fact been saying that here for since last year. The economic data that continues to come out from the UK and US goes to confirm that fact. However, from a contrarian perspective, Time magazine has picked up the story with this week’s cover running the headline “What Recovery”? There is also a picture of a dollar cut to pieces for added effect.
Long term readers here will no that magazine covers often come at the end of moves and are usually a good contra-indicator. The reason for this is that by the time these stories work their way through to the media, they have the public interest. With the vast majority of the public being wrong most of the time these stories tend to hit magazine covers at the end of moves, irrespective of the underlying fundamentals.
Clearly nothing has changed as far as the economy is concerned and things are still very bad both here and in the UK and in the long run will likely get a lot worse. What will be interesting to see though is how accurately this magazine cover predicts a bounce for the dollar and for stocks. The long-term trend remains down for the dollar and it would take quite some move higher for that to change so as before any dollar rally may well be relatively short lived. That’s not to say that we won’t see a bounce that lasts several weeks, if indeed we do see such a bounce.
Stock indexes, both in the UK and in the US remain in long-term up-trends but not by much and it won’t take much further weakness to change that. However, as these markets head for major support and sentiment being clearly so bearish, we may see a bullish move. Remember that the biggest up-moves come in bear markets.
This week’s financial spread betting update begins with:
Stocks have continued their recent short-term weakness and indexes have been lower across the board this past week. The dollar has also had another bounce higher particularly in the last 3 days of last week. Long-term trends are still intact although that may change soon for stocks if we get much further weakness. For now the trends are up for stocks, down for the dollar and commodities remain mixed……continue reading by clicking here
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