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The weekly report is published on Fridays to all newsletter subscribers. The report comprises of three articles which will provide you with our analysis of the markets. The report also includes three trade recommendations picked by our Research Team. This report is available for free to non-Blue Index clients, all you need to do is create a Member account in order to receive this report directly to your inbox every week.
Regular readers of this review will know our current strategy is to look to short high beta stocks against the background of the developing credit crisis. Against that we have focused our long side positions on defensive stocks, which we believe have in many cases been unfairly dragged down with the market.
Last week we suggested that for many defensive stocks, the market falls had reached a level where they had become very attractive on valuation grounds, and CFD traders should look for some support shortly. We then saw a perfect false break below the 200 day moving average on the Dow Jones, as occurred in March and since then it has virtually been one way which has suited our strategy.
One of the persistent themes of recent months has been the resilience of world economies in the face of rising interest rates. To some extent, this was a twofold response to demand from the fast growing Far Eastern economies, and the fact that rates themselves were rising from very low levels around the world. Even so, analysts have until now been surprised by corporate earnings and forecasts which so far have been higher on average than previously lowered estimates.
Clients of Blue Index will know that we have been cautious on markets for some months, and whilst at times it seemed as though there was no end to the appetite for stocks, the turning point in retrospect was easy to spot.
As we write, equity markets are in the midst of another highly turbulent day, and much of the increase in trading volume seen this week has resulted from two developing news stories in the US, both related to credit tightening. With the dollar index also very close to new lows, it is a difficult time for overseas investors in US stocks, and we expect volatility to stay very high in the next few weeks.
