Spread Betting by Vince Stanzione

It is interesting to note that we have not had a real pullback on the major indices since last summer, and the Dow has been over its 50-day Moving Average since July. If you are trading the Dow Jones, be careful with your £ per point. As the index is now at 12,600 points, a mere two per cent move is over 250 points and we should expect two per cent movements within the coming months. I sense traders are complacent and expect this calm trending price action to continue forever. However, we know that markets just don’t work like that.

Gold and silver

After a shaky start to 2007, gold and silver are looking much stronger. For gold, if we can build up a base around the $650 to $665 per ounce level we should then see a new leg up, moving us back to $700-plus. This may take a few months but I am bullish on gold and see no reason not to remain long. Be aware that $10 and $20 down days do happen in gold, but the trend remains up. Silver looks set to test $15 an ounce within the next two months and could move higher.

But note that just because gold and silver go up it doesn’t mean that mining shares will follow. With shares you are buying risks including management, the vagaries of the stock market and political factors. When you spread bet the actual commodity it’s a pure play of the price without worrying about other company factors.

FTSE 100 v FTSE 250

The FTSE 100 hasn’t been that strong over recent months. While moving higher and on an uptrend, it hasn’t raced away in line with US markets, and BP’s share price fall has dragged. In contrast, the FTSE 250 has proved much stronger, even hitting new highs. Don’t forget that you can spread bet the FTSE 250 with IG Index. The spread can be off-putting, but as a longer-term trend trader we can absolve this. Another way to back the ‘250’ is to trade the FTSE 250 iShare tracker (MIDD), which you can long or short via most spread betting firms.

Gaming shares

While online gaming has had a disastrous time, the bricks and mortar casino hotels have been on massive upward moves and most bookmakers will allow you to spread bet the shares.

Macau is one big area of focus, with a number of US operators having entered the market. Gaming revenues in Macau are now higher than Las Vegas, and a share I have been steadily buying is AIM-listed Macau Property Opportunities Fund (MPO).

MPO owns land and a tower in the new One Central luxury development, which will be ready in 2009. As casinos open and grow, more people will move to Macau, workers will need new homes and more foreign investors will buy property. Of course, with any new opportunity one has to be careful, but I like the property this trust has bought so far, and believe management will continue to invest in carefully selected developments. My view is that you can expect 20 to 25 per cent annual growth in the share price and fund value. And since MPO is listed, you can always look to sell out, so the shares offer property exposure in Macau without property ownership.

I’ve mentioned hedge fund manager RAB before. Its best-known fund, RAB Special Situations (RSS), has large exposure to mining shares. The company, which makes money from performance as well as management fees, aims to make absolute returns so it can go short as well as long.

Recently, the Mittal family increased its stake in the company and committed a further $200 million for investment in RAB funds. I still see growth aplenty ahead, as wealthy individuals demand better returns from diversified investments. You can spread bet the shares, currently trading around 98p.

Until next month, wishing you lots of success with your trading.

Vince Stanzione has produced a home-study course to teach private investors how to benefit from trading financial spread bets and fixed odds, priced at £347. For more details, visit www.fintrader.net or call 01189 476630 (24hrs).