FuturesTechs Blog

We spent Friday at the IX Investor show where there were many people that were looking into the idea of trading the markets using Spread Betting.

A question that often comes up is what to actually trade, when it comes to Indices like the FTSE and the Dow, because on most Spread betting platforms there are several choices of product.

The FTSE 100 Index (aka “the Footsie”)  tracks the country’s top 100 companies. As many of you may be aware this list changes depending on who’s doing well and who isn’t. This week Alliance and Leicester, Persimmon, Tate and Lyle and Home Retail Group all fell out of the FTSE 100. This is a reflection on how tough Banks, House Builders, Retailers and Food companies (respectively) are doing it right now.

So who replaced them? Fine British names like Petrofac and Ferrexpo joined Drax Power and Invensys.

Petro-who? I think I know what it does based on the name; and it sounds like it likes Oil at £139 a barrel! Petrofec is an Oil service company; a truly worldwide operation.

Ferrexpo is a Ukrainian mining company.

The FTSE 100 reads like a who’s who of international powerhouses these days, whereas 10 or 20 years ago it read like a who’s who of the British High Street.

Now here’s one thing to think about while we ponder the make-up of the Index: It always champions the strong and weeds out the weak.  If a company performs badly, or if they are in a struggling sector,  they can fall out of the Index.

It’s the mining companies that have been the stellar performers in recent years, and the FTSE is now chocker-block with them.  As the Banking Stocks continue to fall like lead balloons their effect on the overall index decreases. So what you’re trading when you buy and sell the FTSE 100 is very different to what you were trading even a couple of years ago.

But back to our initial concern: The different products on offer on the Spread Betters platforms.

Most firms seem to offer at least two choices, the main two being a rolling “Cash” product or the “Quarterly/Forward” contract.

The rolling/cash merely tracks the underlying Index and settles against where that finishes each night.

The “Quarterly” or “Forward”  is based on the FTSE 100 Futures and is, in my humble opinion, the best one to trade, especially if you want to use our daily reports!  We write our reports on the Futures contract, currently for expiry in September (it trades for delivery in September, December, March and June, by the way), and this is what most Spread Bet firms will be referencing their quotes from.

If you want to trade the daily rolling contracts you  would need to work out the difference between it and the Futures before you can make firm use of our levels. The Futures should trade at a premium to the underlying, and at the moment in the FTSE that’s about 28 points.

If you have any further questions feel free to contact us via the button in the Member’s Area. We always aim to help our Members get the most out of the service.

Happy trading.

Cheers,

Clive.

Another busy week in the markets:

Bond markets have pretty much gone one way all week, and it’s been quite tidy, barring the first hour blip in the Eurex Bund Futures on Monday. I have spoken to several traders this week as it was the IDX Exhibition in London. To a man they said that Monday was one of the craziest moves they’d ever seen in these markets. Technical Analysis allowed us to step back from this and suggest it may be a selling opportunity. Sweet!

Equities have been pretty predictable, I think. Across most markets is looking increasingly Bearish and I said at the SII Risk Forum last night that I think we’ll see a fresh test of the Year’s lows soon in things like the FTSE, DAX, Dow Jones and S&P. The NASDAQ has been the most resiliant of late, but even that has now given a sell signal.

Oil is a market for the brave right now. It’s just insane!!! In the Brent Crude Oil contract on ICE we’ve seen so much volatility that it does smack of a top, but as yet we haven’t broken any really important supports, so we’re not calling a top. In fact we still consider that weakness should be bought.

And a football tournament that I have absolutely no interest in is, I have to admit, somewhat strange. I really want Holland to keep up the good work, partly because I really like the Dutch people anyway, and partly because Monday’s game was (what I saw of it) a real joy to watch.

$16.80 in 2 days. That’s how much July Brent Crude went up on Thursday and Friday of last week. That’s just under 15%.

A rise of just under 15% in 2 days? Excuse me? Are you serious?

Has anyone dusted off their pushbike over the weekend? If you didn’t you may be by next weekend! Make room for the car in the garage. You can get fit on a bike, and save on petrol!

And the price of Oil could go a lot higher in the coming days and weeks because we are in a bubble. So what does this mean for us as traders?

I tell you one thing: It doesn’t mean sell it!! This is a common mistake to make. You don’t get prizes for selling the top of a market. You shouldn’t be trying to sell into such rises. What’s wrong with trying to get on the dominant up-move? Or to get back to the pushbike theme don’t you prefer cycling with the wind behind you rather than it blowing into your face?

We could easily go to $150, or even beyond, and it can happen in the coming days or weeks.

Even if I look back at this Blog and today turns out to be the day we topped out I wouldn’t be worried, because I can safely say I don’t care if I miss the first 10% of the sell-off, because there will be a lot more to go to take advantage of.

Last week, when we were selling off, we said that we’d expect the buyers to return to the fray at some point, and we had a key support at 121.40 suggested as a bold level. What was the low? 121.32.

It’s much better to buy a pullback in a strong uptrend than continually try and bat against it by being short.

Just think about being on your bike on a windy day!!