The FTSE 100 has been trading in a range for the past few weeks and whilst I’m expecting to test the lows I think the 4000 mark will provide good support. The Obama stimulus package once announced will undoubtedly rally stocks temporarily. My intention is to short the rally which may reach as high as 4500 before retracing to test the lows. I don’t believe we will break the lows before March.

For the present I’m dipping in and out content to steal a little here and there. I think 4000 is a buy with a close stop and anywhere over 4100 is a sell with close stop. I don’t think we will test the lows in the next few weeks but once we do I believe we will create new lows which will leave us in unchartered territory.

Entry: 4100 – 4300 FTSE (June Contracts)
Exit: 3750
Stop (Mental): 4500
Point Size: 12 Euro ( 3 x 4)
Estimated Return: 2000

Total Profit Week: 988.00
Account Total : 9,620.55

My pessimistic outlook for the Irish economy was further reaffirmed when our leader, the man who will steer us out of these economic doldrums stated “As long as I am running this Government, I will run it as I see fit”. This was in response to the oppositions assertions that the government was “bereft of ideas and even the courage to govern”. That’s the kind of for the people talk Ireland has grown accustomed to. Our government believes in a “No, we won’t” approach instead of the “Yes we can” alternative. To outsiders it must appear as if the Irish economy is rudderless and without a captain as the crew argue over the last few morsels.

Today talks begin on cutting €2bn in public spending with the government warning higher taxes are on the way. Yesterday the revelations that the government is spending its way through €55 million a day came as no surprise. Higher taxes are a certainty if ever there was one but the inability of the government to curtail spending is what astonishes me.

In discussion by unions is a tax band increase from 41% to 48% and a 10% pay cut across the public sector. Taoiseach Brian Cowen has said “There is no section of society that can be immune from the changes that we are contemplating.” but how for will public spending pay cuts go.

The enormity of the €16.5 billion required means the €2 billion in spending cuts is only a drop in the ocean. So I wonder who gets to foot the rest of the bill. Send your answers on a postcard to Brian Cowen.

I love it, amidst the ever increasing world woes John Thain has been forced to resign. Instead of showing empathy for his crashing share price he goes on a spending bender like no other. He pimped out his office last year with an $87,000 rug and a $68,000 credenza. In total Mr. Thain has spent $1.2 million redecorating his office. When Rome is burning why shouldn’t Mr. Thain have a nice office with a good view of the fires?

I love the audacity and thoughtlessness of the man. It just reiterates the disparity between Wall Street and Main Street. Thain was known as the Clark Kent of Wall Street but it looks like Superman went bad.

With Bank of America struggling to absorb Merrill Lynch and Countrywide along with its own credit losses this couldn’t have come at a worse time. Mr. Thain is also now accused of misrepresenting the risks Merrill had.

With the taxpayer pumping $20 billion into Bank Of America and backstopping $90 billion of questionable assets its not looking good for the battered bank. Additional losses and credit card debt are some of the highlights we can expect in this ongoing drama.

My views recently haven’t wavered much and my prediction of an Obama rally is something I still haven’t discounted. If the new president gets his team into place quickly and declares decisive action (whatever that action is) we may get a relief rally. If we do we could rally back to 4200 on the FTSE 100 but in the meantime my strategy is neutral as I weigh up my options. I may dip in and out but until we allow settling in time for the new presidential team I can’t help feeling there is also risk to the upside.

My plan is to wait as I have been burned too many times before for the rally to occur. Then I start small positions building into a larger short on the FTSE. For the moment anything around 4000 and I will buy small amounts with tight stops. Here is a breakdown of the longer-term plan.

Entry: 4200 – 4500 FTSE (June Contracts)
Exit: 3700
Stop (Mental): 4500
Point Size: 12 Euro ( 3 x 4)
Estimated Return: 3000

Apple never fails to amaze me. I think it’s a strong company and have had an intention to buy shares for well over a year now. I first became interested at $122 and have followed them eagerly since then. My entry price you may be shocked to read is $50. So why do I believe they will reach anywhere approaching that?

Firstly I believe that while one man does not make a company CEO Steve Jobs has steered Apple through bad times and out the other end laughing. Very soon he will no longer be the CEO and chief operating officer Tim Cook will take over at the helm. Tim has a long track record in the industry but from my point of view he is a business man and not the visionary Jobs was. Cook believes the iPhone is ‘years ahead of the competition’ and in his capacity is patrolling the seas for intellectual property pirates. Now point one is that Apple is known for innovation and cutting edge design so if this is the new CEO isn’t he taking his eye off the ball slightly. Creating the trend is intrinsic to Apples future success.

Secondly as this downturn / whatever lexicon is in vogue at present gains momentum personal consumption will dry up. The size of the credit card debt is yet another one of those shoes to drop. While people may have splurged on the iPhone for Christmas its price will be prohibitive in the months going forward.

Lastly where will the new innovation come from and who lead the next wave. The genius of the iPhone was that it took many elements that competitors had and combined them into a nicely designed and more fundamentally easy to use device. If the intention is to just maintain and ease off developing its competitors like RIMM or even those coming from behind like my favourite LG will catch them by surprise.

The modern price conscientious customer is looking for the best product at the best price. Will Apple rise to the future challenges of creating the best products?

The share price may not reach $50 but it is unlikely to revisit $122 anytime soon either. The battle between $80 and $90 will eventually wear the eager for profit investor down and when push comes to shove my bet is that €50 is more plausible that $122.

Total Profit Week: 1519.00
Account Total : 8,547.05

I know this isn’t confined to Irish banking shares but the Irish banking system seems to be suffering from sever lack of confidence. The plunge today of Allied Irish Banks to 0.29 cents assumes the bank is worthless and values the bank at around 278 million. Bank of Ireland and Irish Life and Permanent stocks have also fallen to new lows. This is quite amazing and worrisome not only for the banks, government but for me as an Irish citizen. Ireland stands on the verge of yet another downgrade and our government better step up to the challenge soon because the ramifications of inaction are unthinkable.

Some more reading on the topic.
Irish regulator: bank short selling ban in place
Irish financial stocks suffer further falls
AIB chief executive’s message to staff
http://www.thepropertypin.com
http://www.askaboutmoney.com

Wow what a start to the week. Today Ireland takes another plunging step into what I’m sure our children will term “The Depression”. I’m not one for doomsday scenarios but the bleak outlook for Ireland just seems to be spiralling out of control as the government stand idly by dumbfounded by the accelerating momentum.

I’m looking at the complete and utter collapse in confidence in the Irish banking system. Allied Irish Banks (AIB) is trading down 45% at 0.80 cents while Bank Of Ireland are down 35% at 0.49 cents after Goggin steps down early. This is amazing and looks like a run on the banks. I’m not sure if the ban on shorts being lifted has accelerated this but there are many people panicking now. Some of the message boards read “this is a bloodbath”, “I can’t work as the world is in meltdown outside the office”. Others apologise for offering advice “I would like to retract my advice to buy at 11 Euro”. Today is going to be a very interesting day for the government and the Irish banking system.

As I type AIB are down 50%. Carnage is the only word to describe the ensuing sell off. Thankfully I dumped a long, long time ago. So where do we go from here and are AIB and BOI the next to be nationalised as they fail to recapitalise? Interesting times ahead.

What a day for equities, just when you think you know what’s happening and a 5% drop on the FTSE 100 catches you by surprise. I know today’s US retail sales slumping 2.7% for December was bad but I wasn’t expecting a 6% drop on the FTSE (Low of 4115). I took profits today on all my shorts as I’m not comfortable running shorts this close to the Obama inauguration. The beige book didn’t add much cheer with continued deterioration over the last six weeks. I read a funny name for the unholy spawn of JP Morgan and Citygroup “City Morg”. It’s always good to laugh otherwise you would cry.

Meanwhile in other mediocre news CNBC are doing “Madoff Watch” where they have poor Roberta Combs standing outside his flat awaiting any move. Who cares? The justice system will hopefully wake up and do what they are paid to do, justice.

For my part I think we may have more selling tomorrow but an uptrend to come next week. Tomorrow and Friday have a lot of news flow going on so further percentage fluctuations could occur. I am mostly neutral but have undertaken a small buy on the FTSE 100. This is because I believe a bounce will occur and even a small correction after the heavy selling today. I’m keeping stops close.

My next big more will be shorting the Obama rally as per the last post. Best of luck out there, we are going to all need it.