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, April 3, 2008

Market Sentiment

Dow -49=-2
Nasdaq -1=-1
S&P 500 -3=-1
Ftse 63=+1
Nikkei 533=+1
Futures 21=+1

Market Sentiment -1

IF the world economy unfolds in the way economic models say that it should, Australia will have little to fear from the downturn in the US.

It may even lead to an increased flow of capital into Australia, according to RBA director and ANU economics professor Warwick McKibbin. But while McKibbin expects a largely benign outcome for Australia, he says there are risks in the way the world financial crisis is evolving.
But the continued growth of China, India, elsewhere in Asia and in eastern Europe will keep the commodities boom powering ahead. "Australia is having its biggest positive terms of trade shock in living memory. That is generating an enormous amount of income for the Australian economy and it is not obvious that it is going away any time soon. The challenge to government policy is how to manage that shock, not how to manage the recession in the US," he says.
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