Trading Opinion For The Week Ahead

Friday’s meltdown in the DOW (^DJI) and S&P (^GSPC) suggests that the recession has a way further to go yet. Stocks and shares may recover first, but the end does not seem to be insight yet. Still most of the weekend has gone and we do seem to have had Bank of America (BAC) or Citigroup (C) nationalised yet.

On the UK front, the FTSE (^FTSE) is quite near the lows of last November, but not as close in the US. This is likely because there has been some comeback in commodities and this has helped the index to trim its falls.It is easy to see the only way is down at the moment.

Gold has breached $1000 in no time at all, even though the dollar is still strong. Normally Gold rises as the dollar weakens. I think it likely that Gold has risen to quickly, even though I remain a long-term gold bug. Quite likely there will be a retrace of $100 or so in the near future.

On the home front (UK), focus will be on the banks again at the end of the week. But the insurers are also looking sickly. RSA (RSA.L), Aviva (AV.L) and mainly L&G (LGEN.L) took big hits this week. In the febrile atmosphere of the markets there is big overshooting. I think L&G, which is not faced with any real issues, has been massively oversold compared to its peers, even though Insurance as a sector will suffer in this year of recession. Equally, Aviva is generally gets a big rebound whenever it dips below 300p. Worth looking into those for a short-term horizon. I don;t currently have a position in either of these or gold at the moment.

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