This week’s LS Trader financial spread trading update is now available and can be read by clicking here.

During the past week we saw an initial continuation of the stock market rally followed by failure to move higher at resistance and then a sharp reversal. We look at what may happen next for the S&P 500 focusing as ever on the long term trend and the impact that major moves from the S&P 500 on other markets.

As usual in addition to our stock market focus we look also at commodities, in particular Gold and Crude oil and the key levels to watch out for in both of these markets. We also look at the continuing rally in interest rate futures as traders seek safe haven investments.

On the subject of safe haven investments, the Japanese Yen has rallied to new highs for the year and the Swiss Franc has also risen to its highest level in almost 6 months, whilst the US dollar has continued to slide. Recently the dollar has gained when stocks have fallen and that inverse relationship seems to be abating at present as the US dollar index has fallen to new 10 week lows. This decline has been to the benefit of the Euro, which briefly touched $1.30 last week. We wrap up our forex focus with a look at the British Pound.

This week’s LS Trader financial spread trading update begins with:

The past week saw the recent stock market rally run out of steam and reverse sharply on Friday, which may be a sign of things to come.….continue reading by clicking here

Good trading

Phil Seaton

PS. You can sign up for a risk free trial of the LS Trader financial spread trading system by clicking here. The system comes with a 30 day no questions asked money back guarantee and covers each of the stock, commodity and forex markets discussed above.

Spread betting stocks and stock indexes update following Friday’s close ahead of the long holiday weekend in the US for Independence Day.

We wrote on Thursday that the next couple of days were of potentially major significance for the stock markets and in particular the S&P 500, which earlier this week finally broke through long term support.

As we have written before, when we have a major trend change or breach of long term support or resistance we like to see the market close beyond the prior support/resistance level at least once and preferably twice to give confirmation. Ideally, we also like to see confirmation from Friday’s close in addition. Friday’s close is the most important close of the week as it represents the level at which traders are willing to hold their positions over the weekend.

On the September S&P 500 contract we saw a new low intra day of 1006.5, slightly lower than Friday’s close at 1014.3. It looks likely that we will get a test of support at 1000 next week, which is a major psychological round number and there is the possibility of a bounce higher from that level although both the long and short term trends are now down. If 1000 fails to hold the market then we look to the next support area around 980.

We have also written previously about the large head and shoulders pattern, which has been forming of late and the break below support this week gives a break of the neckline and points to a large continuation lower. Taking the distance from the top of the head to the neckline indicates a downside target in the 860 region, which is roughly the area of the July 2009 lows. Should the market fall to that level, which seems quite a long way off from here, then the next target would be the March 2009 lows around 650.

This potentially gives a major trade to the downside and would be an extremely profitable trade for those people that are spread betting stock indexes and are willing to go short as well as long. Users of financial spread betting should be equally comfortable spread betting from the short side as well as the long side if they want to increase their spread betting opportunities and profits. If anything, markets fall quicker than they rise, so trading profits can be clocked up quickly.

Good trading.

Phil Seaton

PS. To find out more about the LS Trader financial spread betting system and our trend following methods for spread betting stocks please click here.

Over the past couple of weeks or so we have been writing about some key levels in the stock markets and some key things to be looking at when spread betting stocks, in particular the S&P 500. We have been writing about the importance of key long term support at 1034.8 on the S&P 500 September contract and how we expected that that level would be tested if support at 1070 failed.

We had written previously that the failure to push up above the resistance area around 1120 did not bode well for the short term since and the doji patterns that had formed at those levels confirmed upside resistance, indicated that the market was tired and changed the short term trend from up to neutral. It did not take much more from there to send the market lower towards short term support at 1070.

Yesterday the 1070 support level failed and this triggered a big down day for stocks and the S&P 500 fell all the way to the long term support level, briefly piercing support with a new contract low of 1030.5 before a slightly higher close at 1035.3, just above major support. This represented a decline of 3.32% for the day. This was also followed by major moves in the other stock indexes, which included failure for the Dow 30 at 10000 and the FTSE falling through 5000 and means that today is very likely an important day for the stock markets.

At the time of writing this, which is fairly early on Wednesday morning, the stock index futures are pushing marginally higher and it would not be too unusual to see a bounce higher in early trading after the size of the move yesterday. What happens during the rest of the day remains to be seen but the key thing to look for today for those of you who are spread betting stocks is a move back below support at 1030.5 and in particular a close below this level.

There will always be those traders who try to pick bottoms in markets and buy at support levels and we may see some of that today but although the market is pretty much dead on the major support level now there are currently no reversal signals, so trying to buy the bottom is a dangerous play. At LS Trader our approach is trend following, so we wait for support to fail and then use a momentum play to trade in the direction of the trend, which in this case will be down if support fails.

Should we get a move today back down below 1030.5 then the S&P 500 will likely be heading for the psychological round number of 1000 and below that down towards support around 965-970 and possibly further out towards 860, which would complete the previously mentioned head and shoulders top.

Let’s just recap the importance of the 1034.8 level that we have been writing about previously:

• A break of this support level would give new contract lows as well as being the lowest level seen on the S&P since November last year
• Our proprietary indicators at LS Trader would indicate that the long term trend has shifted to down should the market take out support here
• The previous sell off on 5^th February found support at this level
• This is also the level of the lows of the “Flash crash” day on the 6^th May
• Support from the lows of the hammer formed on the 5^th February is also at this level and a close below this pattern negates the support from the hammer.
• This level also represents the neckline of a head and shoulders pattern that would give us a target of 860 to the downside.
• Our longer term view on the stock markets is bearish overall and we expect significantly lower prices in the stock markets later this year or at the very least at some point during the next 12 months.
• We are also on a seasonal basis moving in to the weakest time of the year, with September being the weakest month on average

Until next time, good trading and good luck with spread betting stocks

Phil Seaton

PS. To find out more about the LS Trader financial spread betting system and our proprietary trading methods for spread betting stocks please click here.

This month’s financial spread betting newsletter will be available soon. To receive it for free please click here to sign up for it.

The monthly newsletter is free and it covers the markets that we spread bet at LS Trader. We look at the markets as a whole and also look at each different market sector. We also have a market of the month and some comments on it including the chart for that market and look at what may happen next.

We also analyze some of the markets that are moving and look at the key levels to look out for from a perspective of possible targets as well as support and resistance levels. In addition we take a look at the major trends for each market sector and discuss the long term trend for the 3 main market sectors, which are stocks, forex and commodities.

In addition to the monthly newsletter, you will also receive our free weekly update which also covers the major sectors that we trade as well as the levels to keep an eye on in the week ahead. As an added bonus you will also receive 2 of our ebooks, free of charge. The first is “The 7 Rules of Successful Financial Spread betting” and the second is “The 7 Deadly Financial Spread Betting Mistakes”. Both of these ebooks will be yours for free as soon as you enter your name and email address at the bottom of the page.

Good trading

Phil Seaton

PS. To sign up for the LS Trader Financial Spread Betting Newsletter please click here

Welcome to my new financial spread betting blog .This blog is all about financial spread betting and the spread betting strategies and beliefs that I have discovered over the past decade or so that lead to financial success in the markets.

There are many different styles, methods and systems that traders use in spread betting the markets and my aim on this site is to explain the benefits and pitfalls of many of these methods. There is so much conflicting information and what I would call misinformation in the marketplace on what is required to be a successful trader so my aim is to help you navigate this path successfully and avoid any unnecessary and unprofitable detours!

Over the weeks and months ahead I will post my thoughts on the financial markets and what I think may be on the horizon. It is important at this point to state my belief that the future cannot be predicted as there are simply too many variables and unknowns and the fact that as of now the future does not exist, but by looking at market trends in the markets and certain support and resistance points on the charts, a trader can get a good idea of what may be ahead.

Over the years I have read a vast amount of books that are available on the markets and have specifically made a point of studying successful traders and in doing so look for common denominators that enable these superior trades to step ahead of the crowd and achieve consistent returns in the markets.

Backed with all this information I have vigorously researched and tested virtually every trading system and or indicator and have found what is reliable and what is bogus. I have coded hundreds of different systems and rules and run literally hundreds of thousands of backtests over a long period of market data.

My aim when I started this was to approach the markets with a blank canvas and not take anything on hearsay, but to test it out and find out through experience what works and what does not work. This has enabled me to create an extremely powerful spread betting system which I myself have traded for several years.

I hope you enjoy and benefit from my articles on this blog site and please feel free to leave any comments or ask any questions.

Good luck in your trading

Phil Seaton

PS. Find out more about my financial spread betting system and spread betting strategies here