ProgressiveFX.co.uk

At the brink of systematic meltdown or the buying opportunity of a lifetime? That is the question investors are faced with during these chaotic times and in the absence of an internationally co-ordinated, immediate and comprehensive sponsored solution, the clever money, if there is still such a thing, would lean towards to the former depressing scenario. But the team at ProgressiveFX, whilst not wishing to embrace rose-tinted spectacles believe that a confidence building solution is imminent and the floor of the equity market, and therefore the peak of risk rejection is within our grasp.

We suggest the sharp mid-session fall in the Dow this past Friday to 8,000 may well be the crisis floor. Alternatively, if the G7, IMF and world leaders delay the publication of the international rescue plan, and the devil is in the detail, we may see new low's early this week but we predict the corner will be imminently turned.

We are not suggesting that the fundamental problems will be fixed in the short term but market's have shunned risky assets with a selling frenzy not seen for 75 years. There are still many companies in good financial health with great prospects that are trading at discounts to fair value that are positively insane. The recent destruction of wealth and extreme price volatility of risky assets has created incredible trading opportunities in FX and equity indices that will persist for years to come. Of course, some businesses will fail. Unfortunately some countries may even fail, but the investment scenario is crystal clear. Leading up to US open each day the question is do you buy or sell risk today? Anticipating the correct answer to this question will provide generous potential returns for investors. In our opinion the best instrument to buy risk is long Dow, The best sell-risk play is long JPY (probably at the expense of the EUR). Our advice is to follow risk appetite closely with US Dow futures as good an indicator as any. Use medium gearing and tight trailing stop losses (15bps) and you could well make more in the next 12 months than you lost over the past year. Maybe.