A week that showed so much promise ended up being a huge let down. A lot of ink was spent on the take over of Freddie Mac and Fannie Mae by the US government, and it allowed equity markets around the world to open the first trading day up 3%. This sadly didn’t last, as traders realized quickly that this take over was akin to putting a band-aid over a third degree burn; it was not a long term solution.
The theme for next week is inflation, as UK, EU and USA are all releasing some sort of inflation numbers. This is important for traders of Equities, Futures and Forex as these numbers will have a strong effect on each of those categories. We expect inflation to be high in every country, as rising commodity prices are filtering into the consumer prices at this time of the year. Also on a side note, this Wednesday, the Bank of England will be releasing minutes from their last meeting, while most of the information is stale; there are a few useful titbits which can give you a glimpse into the future about the BOE’s concerns when it votes on a rate decision.
There is uncertainty in the equities market; smart traders use every move up to short the overall market. The most obvious sign that the market is jittery came on Monday, when in the middle of a huge run-up, a stale story of a bankruptcy filling by American Airlines caused a huge dip in the major indexes.
As a result, traders at BetOnMarkets believe a one touch to the down-side of the Wall Street index is the best value play out there. A one touch at 11200 on the Wall Street Index (Dow Jones) with a 14 day term returns more than 22% ROI.
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