It can be seen that certain investors are speculating that a period of stock market consolidation is just around the corner. This is not a surprise when you consider that the S&P 500 has rallied over 75% since March last year.
Stock market fundamentals are also looking stretched, with the S&P 500 Index now trading at around 19 times reported operating profits, the highest PE ratio this year.
The Dow seems to have run into a bit of a brick wall with the 10950/11000 points area blocking the way to higher prices.
Having said that, the more representative S&P 500, which covers the top 500 US companies, is showing no such signs of fatigue. New 'recent highs' are being created on a weekly basis. As with the Dow at 11000, the S&P also has a psychological resistance mark looming into view at 1200. It is this area which may prove crucial.
Note that back in October 2008 it was the breaching of the 1200 level which triggered the huge fall down to 830 in just a couple of weeks trading. Most of the rally of the last year has just served to recoup this two week period of chaos.
If the market were to run into trouble at the 1200 level then note that this is where financial spread betting can be useful. With a spread bet you can buy and sell the markets. If you think the S&P 500 will fall you can speculate on it to go down.
Looking at specific opportunities in the tech sector, investors have digested Apple's iPad sales figures. The firm sold around 300,000 units on the first day of trading the new must-have product. Although this was ahead of the number of iPhones sold on the first day, it was under the median of a wide range of forecasts. Apple's shares were practically unchanged on the news.
Looking at the forex markets and, over the last year or so, many investors have preferred the higher yielding 'commodity currencies' such as the Australian Dollar.
The good news for those investors is that the Royal Bank of Australia has raised rates again. And it looks like there is more to come.
The RBA raised its policy cash rate from 4.0% to 4.25%. Although it was not a surprise, the RBA's observation that 'today's decision is a further step in that process' was enough to convince investors that there is more where that came from. 6.0% next year still looks possible.
Looking at the general trend elsewhere in the forex markets, it is interesting to note that in the past five weeks the Sterling/Dollar exchange rate has changed direction a dozen times and gone nowhere.
That's not all bad news though. If you are spread betting and the markets are repeatedly covering the same ground it is often good for range traders.
Although, when you are range trading you need to be careful. When a market breaks out of a range it can do so in dramatic fashion and catch out the unwary. A stop loss order on a spread bet can help reduce the risks.
With spread betting you can lose more than your initial investment. Spread betting carries a high level of risk. Please ensure that spread betting matches your investment requirements. Familiarise yourself with the risks involved. If necessary, seek independent advice.
iAutoblog the premier autoblogger software
