Think Financial Markets - Excellence In Trading Financial Markets: August 2012

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, August 31, 2012

Market Sentiment

Dow -107 = -4

Nasdaq -32 = -2

S&P 500 -11 = -1

Ftse -24 = -1

Nikkei -86 = - 1

Futures -18 = - 2

Market Sentiment 11

Stocks look to open lower as another sharp fall in iron ore prices dragged the markets lower on Thursday. Commodity prices have been declining globally since early this year, in line with slower growth in China, but while coal prices recently have stabilized, the fall in iron-ore prices--Australia's biggest export commodity--has deepened.

Thursday, August 30, 2012

Market Sentiment

Dow 4 = 2

Nasdaq 4 = 1

S&P 500 1 = 1

Ftse -32 = -1

Nikkei 37 = 1

Futures -8 = - 2

Market Sentiment 2

Stocks look to open slightly lower, bucking offshore trends. Markets continue to wait for upcoming announcements from Bernanke and the ECB. Locally, the market will be watching for Australian building approvals and private capital expenditure data.

Wednesday, August 29, 2012

Market Sentiment

Dow -22 = -2

Nasdaq 4 = 1

S&P 500 -1 = -1

Ftse -1 = -1

Nikkei -52 = -1

Futures 5 = 2

Market Sentiment -2

Stocks look to open relatively flat with little concrete off-shore leads to follow, in conjunction with waiting for Bernanke's speech. At a speech at the Brookings Institution, Finance Minister Penny Wong said China has ample policy tools it has yet to employ to avoid an economic crash and likely will use them. The finance minister also countered some analyst fears that Australia's housing market may be headed to a bust after seeing surging growth in recent years. These fears are based on a survey of sales of new homes by the Housing Industry Association released on Tuesday which showed a 5.6% decline in July from June, and an 11.6% slide on year.

Tuesday, August 28, 2012

Market Sentiment

Dow -33 = -2

Nasdaq 3 = 1

S&P 500 -1 = -1

Ftse 0 = 0

Nikkei 15 = 1

Futures 0 = 0

Market Sentiment -1

Stocks look to open flat as markets wait for Bernanke's key note speech at the end of the week. The Australian dollar has fallen in preparation. Reporting season rolls on with more results expected today.

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