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.


Monday, October 3, 2011

Market Sentiment

Dow -240 = -4

Nasdaq -65 =- 2

S&P 500 -29= -2

Ftse -68 =-1

Nikkei -1 =-1

Futures -81 = -4

Market Sentiment -14

The Australian market looks set to open lower today, following in the heels of the major Asian markets on Friday and Wall Street which lost more than two per cent.

At 0727 AEDT, the December share price index futures contract was down 81 points at 4,3919.

In economic news on Monday, The Australian Industry Group/Pricewaterhouse performance of manufacturing (PMI) index for September is released as is the TD Securities-Melbourne Institute inflation gauge for September.

The Reserve Bank of Australia (RBA) releases its index of commodity prices for month just ended.

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