The Trader's Market Outlooks: Friday 25 May

EUROPEAN OUTLOOK

Yesterday was a tricky day in the indices, which is another way of saying that I lost money.

I tried shorting the FTSE a couple of times, but managed to get stopped out twice as the market chopped against me. The downtrend in both the FTSE and DAX is very much in force as I see it, and I still expect a further lurch downwards from around current levels. I would not recommend trying to get in ahead of such a move, though, as I think the choppiness will likely persist.

Perhaps the most likely trade today for me is shorting EURGBP, if it can perk up a bit first.

Click here for analysis of some leading equity indices

COMMODITIES

My attempt to short gold yesterday proved premature and I got stopped out for a $5 loss. Like equities, the precious metals are in a sort of sideways period right now, which is not my preferred territory for trading. I would prefer them either to rally a bit and then reverse or to sell off hard, before trying to enter fresh short positions. Better opportunities may be had in copper and EURUSD today, both of which I am also calling lower.

Click here for analysis of commodities.

WALL STREET OUTLOOK

At yesterday’s highs, the S&P had managed to rise 2.5% in four sessions. After its last drop to oversold levels – in August 2011 – it managed to rise 9% in the same timeframe. At the beginning of its last really strong run, back in December 2011, it climbed 5.2% in four sessions. Clearly, there is something wrong with today’s rally. While it is possible that the US markets now rally in a determined way, that is not what I see happening. Instead, I think Wall Street will take another lurch lower. I am looking to short the end of intraday rallies today in the S&P and Dow.

Click here for analysis of the US markets.

**Dominic will be presenting at the London Investor Seminar on 18 June - book your place today.**

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