views

Seasonal trends can hurt FTSE100

IT'S worth remembering that seasonal trends can cause some unexpected moves in the financial markets. So far this decade January has been a bad month for the equity markets. The FTSE 100 has declined seven times out of the last 10 Januarys and lost on average more than 5 per cent during this seasonal trend. This New Year could provide a similar selling opportunity in expectation of recent history repeating itself. Capital Spreads offers a price for the FTSE 100 of 5,375.6-5,380.6.

The post-Christmas period saw UK bargain hunters out in force. The number of shoppers out at the sales was up by more than 17 per cent compared to 2008, which has given retailers a much more optimistic outlook for the year ahead after suffering during the economic slowdown. This is an area that is always under close scrutiny in January when many of the high street
names, including Marks & Spencer and Next, reveal their performances over the Christmas period. Their numbers are likely to be more closely watched than normal this time around for signs of returning consumer confidence to sustain a recovery in domestic demand. Rather than trading on individual companies, which can be affected by idiosyncratic factors, it may be worth taking a position on the overall Retailers Index to smooth out some of the volatility. 2008 saw this index rise by 75 per cent and IG Index is currently quoting 1,748/1,756 for its Retailers Index daily bet.

Debenhams has transformed its balance sheet in recent months and worked hard throughout 2009 to reduce its high level of debt. It has also made some savvy acquisitions including the Principles label among other brands that could help increase sales and boost the share price in the coming year. Debenhams' share price ended 2009 by falling back to around the 78p level, but spread bettors with a long-term view will be hoping the share price can head back towards its August high of 118.43p, with the help of a stronger consumer and easier credit conditions. ShortsandLongs.com has a rolling spread of 77.3p-78.1p.

It's been a difficult year for the financial services sector, but Standard Chartered has fared better than most of the banks and largely avoided toxic investments. This means that Standard Chartered had not had to make some of the massive write downs continuing to plague many big players in the industry. The bank has positioned itself well by focusing on the Far East and Asia, since emerging markets are the next frontier for the financial services industry. It released its trading update last month, which suggested the bank performed strongly during 2009. Spread bettors believe the share price can continue its march upwards from its year-end price of around 1,550p. Spreadex has a March-based contract with a spread of 1,534.9p-1,559.3p