Onn Tuesday and Wednesday last week, I felt smug and authoritative about the previous week's investments. All those buzzwords and phrases such as 'flight to quality', 'bear tack' and 'dead-cat-bounce' came to mind.
The boys had a meeting with their 'Elliott-schooled' chartist, and as a result they became very nervous on Tuesday evening. They kept muttering to me such platitudes as, 'If the FTSE goes below 5,460, there is no support and the same applies to the Dow if it breaches under the 10,250 level.'
It all looked much too technical for me, but suppose they were right? Though the US economy is unlikely to improve before the fourth quarter, one should not dwell too much on data which lags in time, such as jobless claims, which on Tuesday were the highest for nine years and Friday's US Consumer Price Index and the British RPI figures. A proactive approach to trading should be far more beneficial.
Asia is entering a mini-recession, and the meltdown in emerging markets in Argentina and Poland is making a bold attempt to cloud the fundamental issues. So the Gladiator feels he should hold on to his euro-dollar March 2002 interest rate position and his dollar-yen position, which have performed with aplomb.
But he fears he may miss the boat, particularly in the US, even though in his heart of hearts he knows there will be a few more bites at the cherry between now and the turn of the year.
So this man of war liquidated the positions on Thursday, despite protests from the troops. The euro-dollar position was bought at €95.71 and sold at €95.81 at £100 a point, gleaning a profit of £1,000. As for the foreign exchange sortie, they sold yen against the greenback at $124.76 and closed the position out at $123.50, at £10 a pip, again on Thursday. A further profit of £1,260 went into the gladiatorial sack with grateful thanks. But the boys have to come clean; they were never happy with the cocoa position and sold it out for a £300 loss. They should stick to what they know about!
Slowly, catchee monkey!
Unless support levels for the Dow and Nasdaq were going to be seriously challenged by the wide boys in the futures market, a rally of some sort was always on the cards on Thursday. As the Gladiator writes, there is the possibility of some profit-taking or that dead cat bounce, which so often happens in a bear market. What he does not need is the dead Gladiator bounce - in other words too bold an approach at short-term investment, which could end up with the troops being badly mauled.
Bearing in mind that leadership should come from the top, the Gladiator exhorted the troops to ignore FTSE-based stocks this week. They have been terribly disappointing this year. He therefore set down his stall, looking across the 'pond' for inspiration.
Faith in Uncle Sam
Three US stocks have been selected from the tech, TV and retail sectors, which come highly recommended, based on achievement and a little hope but without too much expectation.
When the bell clattered, the troops ploughed into the pit and scooped up initially some Sears Roebuck at $43.05 at £10 a point in the September contract. This retail chain with 800 department stores and 2,000 other stores across the US has apparently been doing well as America tries to spend its way out of recession, so there is reason to be optimistic.
Gemstar TV Guide, the supplier of TV equipment and magazines, came highly recommended from two leading market watchers in the Big Apple. The troops were told it would be a dereliction of its duty if this company did not receive some personal financial support. So at $44.50, shares were purchased by way of a spread bet at £10 a point - nothing too aggressive. The week's purchases were rounded off with Altera Corp, which was the recipient of gladiatorial attention when stock was again purchased on Thursday at $31, at £5.00 a point.
Box office insult
With airlines and mobile phones struggling to go on growing apace, the Gladiator saw no reason why EasyJet and Carphone Warehouse should be immune from problems. He sold them at 431p and 134p respectively, at £5 a point.
Finally the boys noticed that one bookie was suggesting that Jurassic Park 3 would gross more than The Gladiator did at the box office in its first weekend in May last year: $38.4m. What an insult! The spread at £45m was sold at £5 a million!