Where Does The Markets Go From Here? Wish I Knew

Had a phone call asking for a view on the markets now that the stock indexes regionally had gone up after the rate cut by the Fed. The Fed did excatly what the markets were hoping for and the market investors have 'rewarded' the cut by pushing up stocks. The old adage has of a Buy on expectations and then taking profits when the news comes out seems to fit this scenerio.

The latest focus is now on subprime problems (Northern Rock) in London , Bank of England about turn guaranteeing all bank deposits in Britain , as well as the higher oil prices, courtesy of weaker US dollar from Fed cut. One thing for certain is that credit problems will continue and the rate cuts are just temporary stop gag measures to soothe the confidence of everyone. It will be interesting to note that Gold price continue to ride up higher again and gold has always been viewed as a traditional hedge against inflation. The market is likely to use them as an excuse to sell the stocks again, would stay long still on the Oil and Marine stock although expect range trading by day traders and hedge funds. The Yen continues to firm and ebb to the USD but my general thinking is it is likely to be overall continual uptick...what a snail compared to the Euros.

On the home front, there is a higher interest with lots of TV and Print ads advertising training courses on currency trading and it is likely to continue to grow. No surprise given that currency trading is another option for the retail investor when the stock market is in the doldrums. Note that this is not new, it used and is still being done so by the high net worth individuals and corporates but there is now a wider reach with even the auntie and uncles and university students signing up for the courses. Certainly, if one is invested in Euros and short USD, you will be adding on to your net wealth even if you are not making as much as you like on the equity side. A note of caution, there is always a trend for the small investor to margin up their accounts and hence suffering losses when the positions go against them.