Falling House Prices Send Sterling Lower

All the major stockmarkets have now fallen below their 200-day moving averages, sending investors into the US earnings season in bearish frame of mind. Gold fell and the Dollar strengthened as the green shoots continued to wither.

Back to reality in the UK housing market with numbers from HBOS showing a 0.5% fall on the month, -15% on the year. An already fragile Sterling dropped to $1.6050, but has since recovered from the lows.

I’m in ‘pause mode’ on the Dax at the moment; I’m definitely bearish but looking for a better opportunity to re-enter a short bet. I rode yesterday’s short bet down to 4596 just after the close, but taking the 100-point profit was too big a temptation to resist. I figured that if Timmy G and the pirates played silly buggers into the US close I’d get the chance to sell again at the higher levels. As it happens, they failed to show up and the market ended well down.

With the markets easier again this morning I reckoned there would be some sort of push higher to gauge the level of interest. I paid 4580 for a tentative long bet on the Dax, but I was in no mood for heroics and was quite happy to take a 20-point profit before breakfast.

As things stand I reckon we’ll see another retest of the 200-day moving average, currently standing at 4651, but I’m not backing that with a long bet. The much bigger risk is that last night’s closes set some major bearish moves off so I’d rather miss an opportunity than be caught long just as the market tanks off.

At least now my short bank trades have given a bit of ground. They’d been resolute in the face of falling stockmarkets, but this morning I’m actually 3p in profit on my Barclays trade and Lloyds is a penny easier. Of the other shares I’m monitoring I’ve held off Kingfisher as it returned above its 21-day MAV and maintained an RSI above 50. TUI Travel has dropped below its 200-day moving average, but I’m waiting for a close below the line before pressing the sell button.

I’m leaving the forex markets alone today; there’re too many G8 comments flying about at the moment. It looks as though Sterling is heading for a test of $1.59 sometime soon, but I’d rather open a sell bet from a higher level than this.

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