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CFD Traders DiaryBullish underlying action suggests higher prices to come2/4/2008 Yesterday's action saw the bulls roar back proving once again that it is unwise to ignore the smart money, which has been buying into dips recently. Much of the change in sentiment followed the reassuring news from Lehman Brothers and UBS, where fund raising to shore up balance sheets was received far better than had been previously expected. Consequently the banks were very strong, and we would expect this bullish background to continue for a while. The positive sentiment also fed through to retailing, housebuilders and plenty of other cyclical issues, and value investors are looking to pick up plenty of juicy high yields in beaten down stocks. One area that looks weak is mining, where stocks have fallen in line with the big drops in commodity prices. Gold is now back to its historic resistance level around $890, having fallen over $100 in less than two weeks, and it feels bearish in the short term. Crude oil prices have also retreated back to $100, and we would not be surprised to see it drop further from here. The message is therefore simple - portfolios should be biased towards long side positions, but for miners and oil stocks any rallies should be used to open short positions. As we write the FTSE 100 index is consolidating yesterday's gains, but do not be surprised to see another surge later today |
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