Traders put best Footsie forward
SPREAD-betters have returned to the markets with gusto. And about time too! The majority of traders scaled back their activity during the summer months maintaining a cautious stance ever since.
But following the US election result, spread-betting volumes started to soar, reaching a seven-month high in the last five days. And with action in everything from stocks to oil there's been plenty to focus on. None more so than the FTSE 100 index.
Traders jumped in with both feet as soon as the Bush win was confirmed. Accompanying this, the balance of trades in the Footsie has taken a positive shift. Prior to the recent boost in volumes, investors made an equal number of 'buy' bets compared with 'sells'. This week however has seen a surge of buyers, now reaching a ratio of two 'buy's for every one 'sell'.
A market stutter following the election result briefly threatened to wrong-foot spread-betters with a sudden switch in sentiment. But it was the US that came to the rescue. Dow Jones traders noted that the charts look positive, targeting 10,500 in the next few days, and then 10,800 as the next objective.
Most Footsie traders expected to see the market reach 4800, as it did briefly today, following the recent break above October's 4735 high-tide mark. But the medium-term outlook is slightly less certain.
Cautious traders point out that if current buying dries up the Footsie could see a sharp sell-off, pushing the market back down to 4660. As usual spread-betters will need to be quick on their feet and ready to take profits at a moment's notice.
Elswhere spread-betting volumes have been concentrated on just a handful of stocks. Yell gave traders something to shout about with its solid set of results on Tuesday. And while bank-dealers had expected a negative set of results, spread-betters bought shares between 360p and 365p ahead of the announcement. Profits came quickly, and as usual spread-betters were keen to lock in their gains. Most sold at 400p, and went home happy.
Looking ahead, traders are focusing on their favourite sector - telecoms. Both Vodafone and mmo2 are set to release interim results, and for spread-betters it could be another adrenaline fix in volatile markets.
Vodafone traders are looking for a continuation of the three-month bull-trend, and the majority of bets are buys.
Closely following the Vodafone results come those of telecom baby mmo2. A spread-betters favourite, most have won and lost plenty of bets earlier this year as bid speculation abounded.
Dutch company KPN confounded traders when their bid for mmO2 failed earlier in the year, letting the share price down unexpectedly. But we still have the 'buy bug'. And recent strength to 107p has re-ignited memories of the 2004 high-point at 115p. Spread-betters are still buying.
