Once in a century event and a quick note on the FTSE

This week has seen a once in a century event occur - but it seems to have slipped under the media's radar. On Wednesday the dividend yield on the S&P 500 closed above the 10-year US Treasuries for the first time since 1958 - that is dividend yields from holding equity have surpassed yields from holding bonds. It is only the second time that the two have crossed in 109 years that data has been available.

This signifies two things - firstly that the crisis we are living through is a once in a century crisis. This cannot be understated, the global slowdown is going to continue to be one of the most difficult periods in modern economic history.

Secondly, it shows that the expected return on equity is now higher than bonds. There has been a shift to entice investors to put their money into equity. The optimists amongst us could be tempted into thinking that this may signify that equities are cheap. I, on the other hand, believe that there is still room for the markets to fall and we are still yet to see the bottom of the market.

FTSE....

A terrible week for the FTSE as it fell below the 4000 mark again.

As I expected, the FTSE approached, but did not quite hit, the 4075 mark again following my post on Wednesday - it hit 4062.5. This was a good shorting opportunity, although it would have fallen outside of the ± 10 pts margin I give myself.

From there it has fallen approx. 300 pts with huge swings. The 3945 level proved to be a support late on Wednesday and, following the penetration, resistance on Thursday with it bouncing off on the 1hr graph in the morning. This shows another shorting opportunity with a target of 3830, which it hit late yesterday evening before falling further.