Betfair Official Blog

And the cycle begins all over again (yawn)

Daily View - 2nd April...

A bit of déjà vu this morning as the recapitalisation of shell-shocked banks prompted a huge rally across the globe. Forgive me for being a bit cynical, but didn't the same thing happen a few months ago when Bear Stearns (amongst others) announced similar balance sheet injections? Whilst I am more than happy to hope that the world has suddenly become a much cuddlier place, it would be foolish to pretend that there are not some serious problems still out there.

As the markets continue to bash about (albeit this time to the upside), the volatility continues to make the trading environment a tough one. Although yesterday was pretty much one-directional (as the biggest retracement in the whole session was only around 25 points,) this has not been the norm recently. Intraday spikes and troughs have been exceptionally violent and it has been difficult for day traders to hold onto positions in many cases, as subsequently correct bets have proved too painful to hold in the short term.

Whilst the markets had one of their better days (with the Dow apparently having its best start to the third quarter in 70 years), the actual news coming out was not exactly stunning. Reading the business section of various newspapers seemed to be a bit of a masochistic occupation this morning. If the problems of the financial sector do start to filter through into the general economy as a whole, we can expect this secondary phase to start to kick in over the summer months.

The FTSE bulls are looking for a break above 6885 as the first indication that this current move might be more than just a flash in the pan. Yet the real confirmation of this will be if the index gets above 6110 and stays there - only then may the big investors start believing we are near an end to the last twelve months of turbulence. The opening quotes are for a small increase in yesterday's move with the call at around 6865.

As feared, Gold continues to weaken as other investment sectors have their day in the sun and the Dollar puts on a bit of a bounce. The yellow metal is now below $900 for the first time since mid-February and we have seen a 15% fall from the traded highs.

Silver has suffered even more. If the Dollar continues to strengthen and the equity markets settle into a better trading sentiment, the rush into precious metal protection may very well turn into a stampede to get out.