That Was The Week Ending 10 th Nov

FTSE This Week  – DOWN!  :  Monday- Friday  a drop  of 130 . 1.7% in old money – a variety of causes- currency and consumer among others.

Daily Volatility: 7.5-11.6 from about 9.31 to 10.61  

FTSE cash index – open 7560  high 7582 low 7422 close 7433

FTSE volatility-  9.31-10.6     (last week: 10.26 close 9.31) 

What Trades Would Have Done well, this week?

Well, not much to report- a sizeable drop but the way it happened meant that volatility remained sickeningly low. From 11.30 on Thursday it dropped about 100 points. What conclusion can we draw from this week ? Crushing volatility has become a thing: https://www.bloomberg.com/news/articles/2017-11-06/most-cash-ever-backs-these-short-volatility-funds-as-calm-rules

All you can do is look for comparitive value – calendars, combo’s and regular spreads, but selling vol is not a game. I make the case for not trading this week. Having no positions is still a position. I have had periods of just not being comfortable with trading. It’s good to be uncomfortable, slightly. Should your trading be so low risk as to raise no concerns, you need to scale up.

SUMMARY

I think we are in the ‘Santa rally’ region where the market drifts up. Fund managers like to look good for the end-of-year window dressing. With so much political uncertainty in the UK,and Theresa May being undermined, the £ could get a battering. The effect of this tends to lift the FTSE as it makes ‘exports cheaper’. The irony that is lost? The UK imports a lot more than it exports. Therefore we have to pay more for imports leaving less cash to buy local stuff. I should state that I have no economics education. This is just opinion and therefore ill informed. Retailers  have taken a small hit- but the finite pot of disposable cash is a factor. Wage growth is anaemic, so growth (which is illusory) has been weak. Perhaps the tiny interest rate rise has limited people’s capacity to spend more.