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.


Friday, November 23, 2007

Market Sentiment

Dow holiday
Nas holiday
S&P holiday
Ftse 84=+1
Nik 51=+1
Futures -6=-1
Market Sentiment +1

STOCKS dropped for a third day, sending the benchmark index to the lowest in almost 10 weeks led by BHP Billiton and Woodside Petroleum after metals prices declined and oil fell from a record.

ANZ and Babcock & Brown led financial stocks lower after US markets slid on fears that subprime mortgage losses would keep flowing.

"The US market was down on people's increasing concerns at the chance of a recession and that doesn't help commodity prices," said Steven Marsh, of Trust Co in Sydney. "People saying there's going to be a recession in the US are on top and it's reflecting on our banks."
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