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Alpesh Patel's columns :
01/13/2004	The Resolutions
01/02/2004	The Year's High
12/22/2003	Slow down or Ramp up?
12/16/2003	Xmas Rally or Not?
12/09/2003	That good news is bad for the markets
11/27/2003	It's not Christmas Yet
11/13/2003	Now they have risen
11/07/2003	From here until rate rises
10/30/2003	The Best Advice from now until end Dec
09/29/2003	Lessons in shorting
08/29/2003	One Last Throw of the Dice
08/26/2003	To hot in the kitchen. and everywhere else
06/18/2003	Making Money, dosh, mullah
06/11/2003	The Dollars Doing What?
05/30/2003	Oh no, not more Europe?
05/23/2003	More strategy ideas

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Alpesh Patel – A weekly look at market opportunities and pitfalls

Alpesh B. Patel is one of the UK's best-known traders and financial journalists. He writes a regular column for the Financial Times, has written seven bestselling books on trading, and makes regular television appearances for Bloomberg, Sky Television, Channel 4, The Money Channel, and the BBC.

Miserable or Not?

04/20/2005

There are times every year when every trader wonders, 'is it a downtrend with a temporary upward move or is it an uptrend still which has just had a small downward blip.

The answer is important because he needs to decide several things :

Do I rebalance my portfolio to be net 'long' ie a holder of stocks or net 'short' using say CFDs or spreadbets to profit from further falls.
Do I exit those stocks which have taken a bit of a hit and my profits no longer look as good as they did last week, or do I hold out for the resumption?

So what is it doing now? As I have repeated several times in this column, earnings exceeding expectations are providing a floor to the market falls. However, if earnings start missing, and especially if that is due to poor growth due to oil, inflation, Chinese competition, then the market fails and falls.

But, a funny thing happened with Apple's results, which teaches us a lot. It's profits exceeded expectations and rose 6-fold and the market still fell. It did not care for earnings beating expectations.

But, there is another but. I was at a board meeting this morning where we had a presentation from a Senior Economist at Goldman Sachs. Their view is one of increasing demand from China and India, not just competition. So companies selling to those economies should do well. Well, this we know, except that the earnings from those low income countries is poor. But, what if we got the markets thinking about the GDP growth in China as a boost to Western fortunes. That may provide some temporary floor.

The problem is, such a floor would be temporary, and the Apple effect worries me still. On balance it looks like a market where any upward move is a blip, not a turnaround.

How does it look in the UK? Well, over a tumultuous week, I like to see who has best weathered the storm. Pharmaceuticals are doing best. GW Pharma, Oxford BioMedica, Sinclair Pharma, Antisoma, Pharmagene and even AstraZeneca.

Elsewhere to catch my eye on performance and fundamental news where there could be an India or China demand and also some money for UK companies: 'US and India sign Open Skies agreement' - so should mean more plane orders and engines (Rolls Royce, BAe); defence too - Chinese are pushing for lifting of EU arms embargoes.

British companies with know-how and technology leads should be a starting point for the longer term investor. For the shorter term one - as I've said, rises now look like they will fall soon after.

Also, if you would like a free multi-media CDROM on 'Investing Better', which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh@tradermind.com.