ANALYSIS

3rd April 2006

Last updated: 00:15 31st March 2006
 

                      

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Good morning,

I am sorry about the missing update on Friday. It turned out that I checked into the only country lodge in the world without Internet connection.

The rally we are witnessing this morning actually started after the cash market closed on Friday night in the SP500. The futures pit saw a surge of buy-orders from traders covering their short positions. I suspect that they expected a buy-program to hit the street today. This rally fuelled the mornings surge in the FTSE and the DAX and it should hold all of the day. I don’t have any major breakdowns in the DAX today, but if a swing low made during the day is broken once the US is open, then things could gather pace fast.

The key to the SP500 futures is to hold above 1309 and only go short below 1306.

The Maps pose an interesting dilemma in that the Dow map points to higher prices off the open and then a big reversal, which should mean lower prices for the rest of the day. I will see the price action going into 3pm today UK time to decide if I want to put on a short position. If momentum is strong and the price action suggests higher prices, then I will hold off. It could be a volatile trade as we have the ISM index released in the US at the moment the Map turns back down. My trick is to always watch the DAX index as my experience tells me this index leads the SP500 rather than follow it.

 

Good luck today

Tom