Think Financial Markets - Excellence In Trading Financial Markets

Think Financial Markets - Excellence In Trading Financial Markets

Market Sentiment

It is essential that we have a general feeling of which direction our market may trade on any given day.

To achieve this it is necessary to be aware of how global markets have performed on the previous day as well as during the night.

We measure this sentiment by allocating points to certain global indicies to measure their strength or weakness.

We look firstly to The Dow Jones Index. This index is one of the world’s most influential and as such rates very highly in determining the daily sentiment.

We allocate between 2 pts plus or minus if the overnight movement is less than 50pts or 4pts if over 50pts

The next most important indicator is the SPI200 which is the futures contract covering the Australian markets top 200 stocks and trades almost 24hours per day.

We also allocate between 2 and 4 pts as per the Dow.

Then we add both the Nasdaq and the S&P 500 indicies from the U.S they are allocated points as follows

Nasdaq above /below 30 ,plus or minus 2pts or less than 30, 1pt

S&P 500 above /below 15, plus or minus 2pts or less than 15, 1pt

Next we add the FTSE 100 results from England and the NIKKEI 250 from Japan which are allocated 1pt for a plus or minus result.

The maximum points on our table are 14 and variations of this will gauge bullish or bearish sentiment.

Other very important overnight markets to be taken into consideration when trading the Australian market are firstly the strength or weakness in the Aussie dollar versus the US dollar and we rarely have a good day if the commodity markets have been sold down during the night.


Thursday, September 20, 2007

Market Sentiment

Dow 76=+4
Nas 15=+2
S&P 9=+1
Ftse 177=+1
Nik 580=+1
Futures 29=+1
Market Sentiment 10

THE market took a big leap forward yesterday, emulating US markets boosted by the cut in interest rates which eased fears that defaults in the US subprime mortgage market and a consequent credit squeeze would spill over into the broader economy.

Most stocks lifted, with the big miners, gold stocks and banks all making solid gains.

ABN Amro Morgans private client adviser, Simon Ferguson, said the rate cut in the US and commentary by the US Federal Reserve on the prospects of further rate cuts had especially helped stocks in the financial sector.

"Those stocks that had been hit hardest earlier in the week - the financials and the banks - are probably the ones that have rallied most," Mr Ferguson said.

"You've got, on top of that, good metals prices."

Mr Ferguson said that although the market had rallied strongly, it was still expected to be volatile for some time as further issues in the US subprime mortgage market emerged in coming moths.

"Today's a good day, but the trend is not there," Mr Ferguson said.

The ASX 200 index closed at its day's high, up 163.6
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