CFD Traders Diary
Huge rallies around the world suggest better times ahead
25/3/2008
We have been saying for some weeks that the smart money has been buying into dips despite the market turbulence, and it looks as though we have a major trend change happening in world markets. The financials have been the major area to watch and the catalysts this weekend were twofold. There was huge buying of HBOS shares by insiders following the latest bear raid on Thursday, and then JP Morgan Chase quadrupled their admittedly very low offer for Bear Stearns.
To some investors, this spells the end of this phase of the credit crisis, and we feel the shorts might now be hit very hard. This morning the FTSE 100 index is up a massive 170 points with bank sector up around 8% on average on very high volume. There are also big moves across many cyclical sectors including housebuilders, retailers and other financials, and we fully expect many of these stocks to rise as much as 20% from their depressed levels.
If you want to hedge positions, then an obvious area is the mining sector which has recoiled from the big drops in commodities, and although one or two stocks appear short term oversold, any rallies within the overall market strength might give good opportunities for short positions.
