The next two weeks will be very quiet with little in the way of market moving data due. This may present the odd trading opportunity and I will post on days when there is something worth commenting on. Tomorrow we will get a final estimate for US Q3 GDP which is likely to be reversed down from the previous -0.5% to possibly up to -1.0%. Tomorrow we also get the University of Michigan Consumer Sentiment index which is likely to be static although it could show a slight improvement resulting from lower gasoline prices and mortgage rates. However the many other components are likely to weigh on sentiment still. On Wednesday keep a look out for the durable goods orders in the US which again are likely to show a fourth consecutive monthly decline for November. The real data kicks off the New Year on Friday the 2nd when we get the manufacturing ISM data which is more than likely to show another decline from the previous low which I think will put immediate pressure on the market.

Today my Unilever short swung back into profit and I believe that even if it does not reach my target before the end of December I am confident that we will see the shares weaken as we move into 2009. I have also purchased today Daily Mail again at £2.575 and I am hopeful of taking a quick gain on these before markets close for the holidays.

Very little to report for Friday trading. Unilever closed up 2% which leaves my short currently out of the money, but I am happy to hold. Daily Mail has quickly fallen back close to previous buying levels but I am happy at the moment to wait and see what happens over the coming trading days before buying back in. Daily Mail I suspect has suffered a further deterioration in ad revenues and the shares are likely to be under pressure during the first quarter. This is a stock with above average risk at the moment because of the scope for deterioration in current trading and as a result I want to buy in at bargain basement levels to limit any downside . However, this is one stock that will race ahead with any sign of economic recovery, but I cannot realistically see this happening until the latter stages of 2009.

There are several stocks that are looking like interesting short opportunities and I think that over the Christmas trading period we may see some form of modest rally on light volumes which could provide an excellent opportunity to short at higher levels. Of particular interest to me are Wm Morrison and Pearson.

It is very hard to know what the market will do in early 2009. I do believe that most economists are expecting a second half economic recovery and this would suggest equities will start to recover perhaps during Q1 2009. I however continue to consider the more bearish scenario as likely and I don't think we will see any solid sign of economic recovery until early 2010 although a lot depends on the US and just how much money the Obama Administration will throw at the problem in the form of a fiscal stimulus package. The size of the unwinding process and level of deleveraging we are seeing is unprecedented. There have been banking crises which have created recessionary conditions, but none on such a global scale. My best guest is that markets will trade within a fairly broad range during 2009 and I believe there remains a real chance that new lows are yet to be reached. In many respects this will at least provide ideal trading conditions.

The ONS retail data today is very hard to believe and it has proven itself to be somewhat prone to error during the last few months. I doubt you will find many retailers in buoyant mood following the report that sales were up 0.3% during November. Every piece of evidence suggests something very much to the contrary which is why the official data is generally better ignored at the moment. Of course with so much price cutting it is possible that volumes spiked up during November, but somehow I doubt that.

Today was a good day for my CFD portfolio. I have traded in Daily Mail this week and the second trade was successfully closed out this morning at £2.69. Had I waited much bigger profits were available during the afternoon when the shares hit £2.90. I generally set profit targets and once they are hit I find it far easier and more effective to take the profit. Generally speaking running a profit is never a bad thing, but with the level of stock volatility I prefer to stick with my initial target and I keep longer term physical holdings to take advantage of longer stock rallies when they happen. I mentioned yesterday that I was again watching Unilever which was close to being ready for another short position. The shares spiked up this morning and I took the opportunity to short at £15.52 which was higher than my previous entry prices. The shares do seem to have some relative strength at the moment, I suspect partially because of the currency benefits from their international operations. I may have to wait a bit longer than usual for this one to meet my set target price, but I remain confident and Unilever I believe will have a very difficult year during 2009.

Lots of economic data today all of which made grim reading. Activity on the high street is showing no signs of life according to the CBI Distributive Trades Survey. The survey balance fell to a record low of -55 against expectations of -41. This is a clear indication that despite the price reductions including the vat cut, there is little sign that consumers are willing to spend. The survey was conducted from the 28th November to the 10th December and we could still see a surge in spending, but clearly the signs are not good and the outlook for 2009 can only be described as awful. The employment figures today brought no relief with a further 76,000 out of work during November, a trend that is gathering speed at a worrying rate.

With the Fed reducing rates to near zero yesterday there was plenty of focus on the MPC meeting minutes published today which showed that a cut of more than 1% was seriously considered but ruled out due to the potential shock factor and concerns over the impact on the exchange rate. What is clear not just from the minutes but the speed at which economic conditions are deteriorating is that another serious cut will come in January, perhaps as high as 1% again. The headlines are starting to turn more to the concept of quantitative easing as the next course of action once monetary policy is spent and I am sure that the UK is also now firmly headed for interest rate close to zero and QE will be the next policy to be adopted. I will go into QE in more detail in the coming weeks.

I mentioned yesterday that I had successfully traded Daily Mail and the shares at the end of the day were back to where I had bought them, but I had held off buying back in because the price movements suggested further weakness. This certainly turned out to be the case this morning and by waiting I was able to buy back into the shares at £2.5575 against my previous purchase price of £2.69. This does demonstrate just how easily you can be caught out by becoming fixated with a particular entry price even if it has been successful for you previously. In many instances a chart will just not show this to you and neither will any software program. It is more down to having watched the stock and seeing how it is behaving relative to the performance of the market. It doesn't always work like that, but there are times when experience of having watched a stock closely for a very long period can be very helpful. Tomorrow I will be hoping for a positive start to trading which may well give me an exit from Daily Mail, but I fear that at best we will get a mixed start to trading tomorrow. I am also watching one of my recent favourite short stocks, Unilever, which closed above £15 tonight and I may well enter another short again depending on what the general market is doing if the price moves further ahead.

The unexpected news that the Federal Reserve has decided to target a Fed rate of close to 0% has provided a strong end to trading in the US with the Dow up by 360 points. The fear of deflation is a real one and clearly the signs are not good at the moment which is why the Fed is throwing the kitchen sink and anything else it can find at the problem. The initial market reaction is predictable and I can't help but think today's gain will quickly evaporate. There are real risks that deflation will arrive soon and the monetary policy machine has just run out of amo. However, the actions taken have been decisive and we can only hope that it proves to be enough in the long run.

I closed out my long position in Daily Mail today at a nice profit. The shares popped over the £2.80 mark and I sold out at £2.83 having bought them at £2.69. I was quite lucky as they quickly fell back and in fact at the close were back to where I paid for them. I wasn't tempted to buy back in because of the impending Fed decision. I think a key aspect of very short term trading is not always to become fixated with a particular target price for a stock even if you have successfully traded it before. The price movements of Daily Mail today suggested to me that it may well fall below £2.69 near term and I have decided to see how the price behaves tomorrow before taking another position.

The CPI figure for the UK today did not show as big a fall as some expected, with a decline to 4.1% against expectations of 3.9%. Nevertheless the trend is for a significant drop over the coming months and I believe interest rates in the UK will continue to fall with another 0.5% cut due in January.

The Friday sell off gave me the opportunity to take a long position in Daily Mail. It is one of my core monitored stocks and the downside at present looks limited to around £2.40 which is well within my stop loss. It is a stock that is relatively volatile and with the market down 2.5% on Friday and a fair chance of some sort of car industry bail out announcement in the US within the next few days, I believe there is a fair chance of seeing a modest bounce in the market. Fortunately the Dow reversed its losses on Friday and we should at least get off to a good start tomorrow morning.

This week we have the Fed interest rate decision on Tuesday when we are very likely to see a 0.5% cut in the Fed rate. Whilst widely expected I suspect that it will help the market on Tuesday. We also have the CPI data in the UK and US on Tuesday and Europe on Wednesday. All sets of data will show weakness driven on by lower petrol prices and food.

We are now approaching the holiday season and there will be the possibility of a market rally as volumes fall, which is something to bear in mind especially when considering short positions during the last days of the year. There are many expecting a New Year rally which is also a distinct possibility, but I remain unconvinced that anything is sustainable at this stage.

A good day again for my cfd portfolio. Unilever sold off nicely and I closed out my short position. I am hopeful that the shares will rally back above £15 at some point before the end of the year to give me another opportunity. I am not inclined to go long of Unilever at present because I do feel there is a lot more downside than upside in the stock. At present they seem to be happy trading at between £14 and £15.50, but I think that by mid 2009 they will have slipped further back to between £12 and £14 as the slowdown in Asia and the emerging markets impacts on volumes. I would find the shares a very interesting long term position if they were to slip back to the £12 mark. Unilever is a quality company and in better economic conditions they will recover well.

The high street is likely to be a blood bath over the Christmas period. The number of sales we are seeing and the evidence you see just by walking around the shops where you find a distinct lack of people with bulging bags shows just how bad things are. Tesco is apparently going to start an aggressive sale tomorrow with 50% off up to 1,000 lines. This is a significant move and does show that Tesco the Goliath of the sector is under real pressure at this critical time. The crucial Christmas trading updates in January will be nervously awaited and undoubtedly will be bad. However, I believe this will offer a good trading opportunity and I am expecting to see the retail sector hit hard in early January providing what should be a good opportunity to pick up some of the bombed out stocks at bargain prices.

A quiet day with little to drive the markets either way. Unlever sold off over 50 points leaving me comfortably in profit and I am hopeful of closing the position tomorrow with my target price not too far away. I am keeping a close eye on Wm Morrison at the moment which seems to have some moment after its recent strong results. I believe that the shares are starting to look fully valued and they are increasingly looking like a potential short.

Friday is the key day for the markets this week when we get US retail sales and I suspect that we will see some weakness ahead of these figures which are expected to show a month on month decline of around 1.7%.

A second gain for the FTSE today despite yet more gloomy economic news from the manufacturing sector, plus poor retail sales figures and another bad house price index move showing a 2.5% decline over the last month. Poor data is very much the norm at the moment and only the big data is likely to move markets which we are most likely to see on Friday with the publication of the US retail sales.

I was watching Unilever closely today and even with the market up by over 2% the shares were struggling to make much headway which is a good sign and I remain confident about my short position although it may be a few days yet before I get an opportunity to close it out. Given the strength in the market over the last two days and a weak end to Wall Street trading today should mean a weak start to trading tomorrow.

The life sector has enjoyed a good few days with concerns over solvency appearing to subside now that the market has at least stabilised. I did mention the potential for this sector a week or so ago and I still believe it is a sector that will outperform strongly if markets rally much further. My only concern is that if share prices continue to strengthen we may see some within the sector look to raise cash purely to strengthen their position rather than out of necessity.

The market had a good day following on from the reversal in the Dow on Friday and another strong day from the Dow today. It is very difficult to know just how much of the recent rally is justified. Undoubtedly a huge fiscal stimulus package in the New Year from the Obama administration will help, but to what extent it will cushion the blow of the recession is an unknown. Given the speed at which employment in the US is falling the fiscal stimulus package will have to be huge to have any impact and press reports of up to $1trillion seem close to the mark. It is a huge figure, but given the amount of money that has already been thrown at the problem, even at $1trillion it will not be a quick fix. It is certainly too early for the markets to be recovering in anticipation of economic recovery which I feel we won't see any real signs of until the closing stages of 2009.

Whilst I hate trying to predict where markets are going I do think that there is a possibility of a rally in the closing stages of 2008 purely due to a combination of hope and as markets slow down for the holidays volume will be low which may well aid a rally. However, even if we do rally I think there is real scope for another big sell off as we enter 2009. Fourth quarter US GDP will look terrible and the ISM data looks set to continue deteriorating over the coming months. A real catalyst for recovery in world markets is still some way off.

Today in my cfd portfolio I opened another short in Unilever which closed a little above my entry price. Trades do not always work straight away and I have set a stop loss some way above my entry level. I do not anticipate the price hitting my stop and I am happy to wait for the shares to hit my target. Apart from that the rally has taken some stocks to levels above where I would consider long positions at the moment so it is a case of sitting and waiting.

I mentioned yesterday that the Non Farm Payrolls could have been a shocker and they certainly were with 533,000 jobs lost in November compared to expectations of around 328,000. There was a fairly strong indication that this was going to be a big figure when the Non Manufacturing ISM figure came out on Wednesday with a plunging employment index. Despite one of the worst employment figures in history the Dow did manage a 259 point gain due to positive noises from an Insurance company, Hartford Financial Services, which increased its profit forecasts. A market rally on the back of this is more hope than reality. Being trained as an economist I do spend a lot of time looking at the numbers which are produced on a daily basis and whichever way you cut it there is still very little light at the end of the tunnel. I hear talk on a daily basis of how markets discount a recovery a good 3 to 6 months before it actually starts, but looking at the data it is hard to see any sign of real recovery until late 2009 at the earliest. Given the speed at which the US in particular is in decline and the fact that the UK is following a very similar path does demonstrate that despite everything that has been thrown at this downturn from money to now guarantees to pay defaulted mortgage payments, it is still all having little impact and at the end of the day you cannot stop what is the unwinding of many years of credit inflated growth. However , I don't wish to sound too pessimistic as a recovery will come, but as to when remains a big question.

The housing market is in a real mess at the moment. The latest figures suggest a meltdown is still ongoing and there is little sign of any stability in the housing market. Yes interest rates are coming down, but as to whether this will make any difference is debatable. At the end of the day it is difficult to see anyone rushing out to buy a deflating asset even if it costs less to service the debt if they can get it. I think the housing market has someway to go yet and we will not see any sign of stability until 2010 at the earliest and the doom mongers forecasts of a 40-50% peak to trough decline may yet come to fruition.

My CFD trading portfolio had a good week and I will be looking over the weekend at where the next opportunity may come from. I am always on the look out for stocks to add to my list of key stocks to monitor and one that I am increasingly interested in is Wm Morrison the supermarket chain. They delivered a strong set of results this week and clearly are doing a better job at generating like for like sales growth than Tesco, but their shares to me are starting to look fairly valued at best and unlike Tesco they have no real growth prospects outside of the UK market. It is going to be increasingly difficult for them to deliver the kind of exceptional like for like sales growth we saw this week and I cannot see the shares making much more progress. For this reason I may well add them to my list of stocks available for shorting and they may well make an interesting pairs trade with Tesco at some point.

A good day for my cfd portfolio. I mentioned yesterday that I was looking at Unilever with a view to shorting the stock if it pushed over £15 this morning.The market did start off in positive territory and this was enough to push the shares comfortably over £15 and in fact they pushed up to as high as £15.47. I entered a short at £15.27 which was a little early given the move up to £15.47, but I was comfortable with my price. The shares started to sell off with the market after the MPC announcement and they quickly fell to £14.69 where I closed. This is a typical trade and is a good example of how you can set out your strategy each day focusing on a target stock and sticking to a target price.The shares closed the day at around £14.95 and I may look to do the trade again depending upon how the market behaves tomorrow. The fact that the shares were able to make £15.47 quite quickly this morning does suggest that next time I may be able to achieve a higher entry point.

The interest rate decisions today from the MPC and the ECB were well flagged and I am certain there is further to go.I believe we can expect another a 0.5% cut in January from the MPC.

Tomorrow in the US we have the Non Farm Payrolls which are going to be bad. A decline of 300,000 is most likely, but there is definitely a real possibility of a shock tomorrow.

The service sector was in the news in the UK and the UK today. The Purchasing Managers Index in the UK fell to a new low with the service sector now contracting for the seventh month in succession. The real shock today however was the US ISM Non Manufacturing Index which literally plummeted to 37.3 against consensus expectations of a figure of 43. That is a big miss and if you drill down into the constituent parts of this index the real worry is the Employment Index which declined to 31.3 from 41.5. This is a significant decline and suggests that the unemployment rate in the service sector is going up significantly. The expectations of a 300,000 drop in the Non Farm Payrolls on Friday could easily turn out to be a higher figure and certainly the trend suggests this figure will be increasing over the coming months. The US is in a deep recession and the fact that monetary policy is now running out of ammo (a further 0.5% cut in the Fed rate expected this month will bring the rate to only 0.5%) suggests that a big fiscal stimulus package will be required from the Obama Administration to have any chance of reducing the impact of a recession that already looks close to becoming a depression if the economic data we are seeing is anything to go by.

A good day for my CFD portfolio. I closed out the Vodafone at a good profit and I made a good profit on a second reduction to my Tesco position. The Dow has closed up today which I find difficult to understand given the scale of the drop in the ISM figure today. We should now see a modest improvement in the FTSE first thing in the morning and I will be keeping a close eye on Unilever which I may well short if they make good progress. Unilever is really going to struggle with the slow down in emerging markets and I can't see them making much progress over £15. The market may well make further gains as the day progresses with interest rate decisions due from the Bank of England and the ECB. I think with the poor service sector data today and the poor data in the build up to tomorrow we can almost certainly expect a 1% cut to 2% although I would now not rule out another 1.5%. The market is likely to take this positively at least initially.

Fortunately no major economic news to report for a change. Instead my focus today was on the Tesco results which were received well by the market after the press had speculated for the last two days as to what the outcome would be. The trading update today was for the third quarter with total sales up by 11.7%. UK like for like growth delivered 2% which was slightly better than the anticipated 1.5% whilst the international operation delivered 14.6% sales growth on a like for like basis. Price falls were the main reason for the UK slowdown although more encouragingly the like for like increase was due to volume given that inflation was non existent for Tesco pricing. Non food sales during Q3 were slightly negative on a like for like basis although this is no worse than the previous quarter. Asia delivered a strong performance with sales up 29.4% whilst Europe inevitably slowed down with like for like growth at 6%, but still a respectable performance. The company made clear that it has a very strong financial position and certainly there are no worries with financing. They will be scaling back capex next year to under £4bn against most broker expectations of between £4bn and £4,5bn whilst the company expects to be cash generative during the second half.

The shares rose by over 10% on the day partially due to relief and I suspect a degree of short covering as there must have been a few traders believing the worst given how quickly the world economic situation is deteriorating. I think Tesco is a great long term stock, but I did take advantage of the strength today to reduce my holding and if the shares move further ahead I may look to do so again in my CFD portfolio.

Today I also bought some Vodafone. The latest figures for Vodafone were encouraging and after the market sell off on Monday I took the view that today would see some recovery especially as the market opened down this morning. Market catalysts over the next couple of days will be the US Non Manufacturing index tomorrow which I think will probably meet expectations whilst Thursday brings the ECB and MPC rate meetings where we can expect some serious cuts and I think this may help the market to recover more of the Monday losses and take Vodafone high enough for a quick profit.

The economic data is getting significantly worse which does not bode well for world equity markets. The PMI Manufacturing data in the UK today was terrible falling to 34.4 which is the lowest level in the history of this index pointing to a substantial contraction in manufacturing output of over 10%. Mortgage approvals for October are bouncing along the bottom some 75% below their peak consistent with an annual decline in house prices of around 20%. With this kind of data knocking around I think it is safe to assume a 1% cut is almost certainly on the cards on Thursday. The MPC has very little to lose with another big cut given the outlook for inflation.

In the US the news was just as bad with the ISM Manufacturing data coming in below expectations and pointing to a contraction in the manufacturing sector not seen since 1982. This has caused a 680 point decline in the Dow this evening.

On my CFD portfolio I await the Tesco trading report in the morning. Given that there has been a lot of press comment about the expected decline in like for like growth I am hopeful that there will not be a shock to the share price. If they do disappoint given the current nerves the shares may sell off. With the market again likely to fall below 4000 there should be some more interesting trades being thrown up soon.