Month: May 2012

Source: ForexYard

The dollar was able to benefit yet again from risk aversion in the marketplace today, as worries about the Greek political situation caused investors to abandon higher yielding assets. The EUR/USD dropped to a fresh four-month low during the morning session, reaching 1.2679 before staging an upward correction. The pair eventually peaked at 1.2758. The greenback also saw gains against the Australian dollar. The AUD/USD fell as low as 0.9868 before moving upward during mid-day trading.

Turning to tomorrow, dollar traders will want to pay attention to the US Unemployment Claims figure at 12:30 GMT, followed by the Philly Fed Manufacturing Index at 14:00. Despite a lack of overall growth in the US labor market in recent months, the number of people claiming unemployment insurance in the US has remained relatively steady. Should tomorrow’s news come in below the forecasted 368K, the greenback could see gains vs. its main rivals. With regards to the manufacturing index, analysts are predicting the news to come in at 10.3, well above last month’s figure. If true, the USD/JPY could turn bullish as a result.

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

Utilities are the proverbial red-headed stepchild of stock market sectors.  During bull markets, so the thinking goes, utilities tend to underperform more aggressive sectors like technology  or industrials.  But during a good market rout, utilities take a beating along with the rest.

How unloved are utilities?

As I wrote in a recent article, they were by far the most shunned sector by the large money managers interviewed by Barron’s (see chart).   Fully 30% of the “Big Money” managers picked utilities as the worst performer of 2012, and barely 3% thought it would be the best.  (On the flip side, more than 30% of the managers chose financials and technology to be the best performing sectors, and technology had not a single manager who voted it worst).

As a contrarian trade alone, utilities would be interesting.  After all, the sector has been known to take investors by surprise; during the 2003-2007 bull market, utilities were one of top-performing sectors on a price basis, and this did not include the high and rising dividends enjoyed by investors during the period.

And this brings me to my primary rationale for liking the sector.  In a world where 2% is a “good” yield on a ten-year bond, the 3.8% paid by the Utilities Select SPDR (NYSE:$XLU) is attractive.  It’s roughly double the dividend yield paid by the S&P 500.  And unlike the interest paid by a bond, the dividends of XLU constituent companies have a history of rising over time.

While portfolio growth is essential to meeting your retirement needs, growth ultimately doesn’t pay the bills; but income does.  Yes, you can sell off appreciated shares to meet current expenses, but that doesn’t work particularly well when the market is trading flat or down.  Just ask investors who needed to sell their shares during the pits of the 2007-2009 bear market and panic.

The problem for most investors is that their traditional sources of stable income—bonds and CDs—simply do not pay enough in this interest rate environment.   This means that finding a respectable current income often means accepting stock market risk.

Frankly, I’m ok with that.  An investor who is comfortable holding a 30 year bond to maturity should equally comfortable holding a solid dividend-paying stock.  If income is your objective, the bends and twists of the stock market can be safely ignored—so long as you are reasonably sure that the dividend is safe.

Utility stocks have a place in a diversified income portfolio, but they are by no means the only game in town.  Select equity REITS are also highly attractive at current yields.  One that I recently added to my Dividend Growth Portfolio is Realty Income Corp (NYSE:$O).  It holds a very conservative portfolio of retail properties  and yields a healthy 4.5.%.

Oil and gas Master Limited Partnerships, and increasingly their general partners, are also attractive options.  Kinder Morgan Inc (NYSE:$KMI) is one that I recently added to my Dividend Growth Portfolio.  It currently yields 3.8%, and I expect the dividend to increase substantially in the years ahead as KMI’s limited partnership, Kinder Morgan Energy Partners (NYSE: $KMR), continues to grow and prosper.

Disclosures: Sizemore Capital holds O, KMI and KMR in client accounts.

We now have a Bullish Extreme in the USD. Over the last 5 years, Bullish extremes have been very good indicators that a top was within a hand’s reach.

Chart courtesy sentimentrader.com

On top of the Bullish extreme in the USD, we also have a Bearish Extreme in Gold sentiment. Bearish extremes have been good indicators that a bottom was near.

Chart courtesy sentimentrader.com

Silver Sentiment is also very depressed at the moment, with only 29.70% bullishness. However, sentiment hasn’t pierced the “standard deviation bands” yet, and thus has more downside potential…

Chart courtesy sentimentrader.com

All this Dollar-bullishness/Gold-Bearishness has caused mining companies to sell off BIG TIME.
Some of them are now 75-80% below their top, and when you look at their charts, it looks like the world is coming to an end for those companies.
That being said, the BPGDM index from stockcharts, which shows the % of mining stocks that have a BUY signal on the Point&Figure chart, is very depressed at 10.71% at the moment. In late 2008, this index reached 0% for a very short time. Funny to see that that time, the mining stocks had set a higher low. The HUI index has now dropped below the 50% Fibonacci Retracement level from the bottom of 2008 to the top of 2011, so the next target would be the 38.20% level, which comes in slightly below 350. My expectations are that we might get close to this level over the next couple of days, followed by a very sharp rebound (possibly as high as 450, which is the 61.80% level). What happens then is still unknown, but as I pointed out, the severe underperformance of the HUI stocks to Gold is very similar to 2008, which means that the decline might not be over yet, even though a sharp bounce is overdue now with the extreme bearishness…

Chart courtesy stockcharts.com

Let’s have a look at the weekly charts. Gold is ready to set a tripple bottom. However, if that attempt fails, look out below (especially below $1,450). The MACD has just turned negative, which doesn’t look well…

Chart courtesy stockcharts.com

When we have a look at the following chart, which is a weekly chart from 1980, we can notice a similar pattern:

Chart courtesy stockcharts.com

When the MACD just turned negative in 1980, Gold was trading above $500 per ounce. It fell all the way to $300 in the next 1.5 years or so.

Chart courtesy stockcharts.com

Silver is also at a critical point right now. If this level holds, then we have a tripple bottom. If not, look out below…

Chart courtesy stockcharts.com

Now over to the monthly charts:
Gold’s MACD is extremely stretched, and we have negative divergence between price and RSI. Since this is on a monthly basis, this is not a good sign for the future.

Chart courtesy stockcharts.com

Silver’s MACD looks set to drop lower (potentially much lower). First support comes in around $19-$20:

Chart courtesy stockcharts.com

The Quarterly chart for silver shows an extremely stretched MACD, and an RSI that is still hovering around overbought levels:

Chart courtesy stockcharts.com

The situation is even worse for Gold:

Chart courtesy stockcharts.com

When we finally look at the Yearly chart, we can see that Silver has set a bearish reversal candle last year, which we have commented on late last year. On top of that, the yearly RSI is still OVERBOUGHT!

Chart courtesy stockcharts.com

Last but not least, the comparison between Silver Now and the Nasdaq is still very accurate:

Chart courtesy stockcharts.com (Nasdaq Bubble)

Chart courtesy stockcharts.com (Silver “Bubble”?)

An overlay of the two charts speaks more than a thousand words:

For those of you who want to call me an “idiot” who doesn’t look at fundamentals, Martin Armstrong wrote in his latest report:

“Fundamentals really mean little. The whole fiat reasoning means nothing since gold declined for 19 years from 1980 when it was still fiat. The same is true in stocks when the price can decline on good news and it is explained by saying the market was expecting results “better” than that. Markets trade technically because they are influenced truly by everything. Each market is interlinked to everything else so it becomes a delicate dance of comparison and capital flows like water to the lowest cost for the greatest gain. Focusing upon just one market exclusively ensures failure.”

For more articles, analyses and trading updates, visit www.profitimes.com

I have decided to only accept new subscribers until June 30th. From then on my services will be open to existing subscribers ONLY. To secure your membership now, visit www.profitimes.com and subscribe now!

Introduction

After reaching its highest level this year, at 1.6303,
GBP/USD has dropped significantly to 1.6064. Notably, the pair has touched the
ascending trend line, and it may bounce off it or continue dropping down.

Factors Affecting:

It seems the pound has also absorbed the economic woes of
the euro zone as depicted by its poor performance in recent days. Thanks to
risk aversion, the dollar has gained considerably across the board. And,
although the pound has sometimes got some breathing space, it has continued
with its downward momentum.  In the
coming week, traders will be paying close attention to news from the United
Kingdom for any clues on the performance of the currency.

Technical Analysis:

Technical analysis on the GBP/USD reveals it has touched an
ascending trend line. Immediate resistance is found at 1.6128. A confirmed
break above this could expose 1.6303. Immediate support is found at 1.5988. A
confirmed break below this could expose 1.5790.

Forecast:

The best case scenario would be to wait and see if price
bounces off the trend line or if it convincingly breaks it. Otherwise,
aggressive short term traders can as well short the pair.

For more information about technical analysis and latest Forex news click here.

Disclaimer:

THE
ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS
SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY
WITH THE READER.

Triangles offer an important piece of forecasting information

By Elliott Wave International

There’s no shortage of books about trading these days, and you could read for months before you come across one that might apply to your trading style.

The free 45-page eBook The Best of Trader’s Classroom is specifically for Elliott wave traders and saves you time in getting the knowledge you want.

It’s written by Elliott wave trader Jeffrey Kennedy: he had individuals like you in mind when he said

I began my career as a small trader, so I know firsthand how hard it can be to get simple explanations of methods that consistently work. In more than 15 years as an analyst since my early trading days, I’ve learned many lessons, and I don’t think that they should have to be learned the hard way.

The Best of Trader’s Classroom offers 14 trading insights that you can use now.

Consider these examples of what you’ll learn:

• Use bar patterns to spot trading setups
• Use the Wave Principle to set protective stops
• Identify Fibonacci retracements
• Apply Fibonacci ratios to real-world trading

Jeffrey also discusses corrective patterns which includes the triangle formation. Here’s an edited eBook excerpt:

Triangles are probably the easiest corrective wave pattern to identify, because prices simply trade sideways during these periods. [The graphic below] shows the different shapes triangles can take.

….triangles offer an important piece of forecasting information — they only occur just prior to the final wave of a sequence. This is why triangles are strictly limited to the wave four, B or X positions. In other words, if you run into a triangle, you know the train is coming into the station.

Jeffrey goes on to provide three real world examples of the triangle price pattern. Here’s one of them with his accompanying commentary.

[The chart above] shows a slight variation of a contracting triangle, called a running triangle. A running triangle occurs when wave B makes a new extreme beyond the origin of wave A. This type of corrective wave pattern occurs frequently in commodities.

 

Learn more about the 14 trading insights that Jeffrey Kennedy presents in The Best of Trader’s Classroom.This chart-packed 45-page eBook has a $59 value — but you’ll get FREE instant access by simply joining Club EWI. Membership is also free and it just takes a minute or two to sign up. There’s no obligation after you join. Just follow this link for your free download of The Best of Trader’s Classroom >>

London Gold Market Report
from Adrian Ash
BullionVault
Weds 16 May, 08:40 EST

BENCHMARK prices to buy gold for London settlement rallied more than $10 an ounce off new five-month lows beneath $1528 on Wednesday morning, bouncing as the Euro, world stock markets and commodity prices also paused this month’s sharp liquidation.

Spanish and Italian bond yields also eased back but remaind over 6% after Spain’s prime minister Mariano Rajoy told the parliament in Madrid there is “a serious risk that the markets won’t lend to us or lend only at astronomical prices.”

Over in Greece – where the daily “bank run” of withdrawn Euro deposits is now totaling some €700m per day – president Karolos Papoulias meantime appointed a judge to act as interim prime minister and set the date for an election re-run as 17th June.

“[Gold] selling continued in Asia today across all exchanges,” says Swiss refinery and finance group MKS in a note.

“Market participants have given up waiting for a bounce,” says a Singapore dealer. “The market will do what it needs to do to clean out the weakly margined before it becomes healthy once again.”

Hedge-fund legend George Soros opted to buy gold in the first quarter of 2012, reversing previous sales according to new data from March 31st released yesterday and showing his fund more than trebling its position in the $60 billion New York-listed SPDR gold ETF.

Fellow billionaire hedge-fund manager John Paulson – who represents the largest single holder of SPDR Gold shares – maintained his clients’ stake, leaving it unchanged for the first time since June 2011 at the equivalent of 53.8 tonnes.

Losing 8% since end-March, prices to buy gold have now lost one-fifth from the record Dollar peak of September last year – “the common definition of a bear market,” notes Bloomberg News.

“This is an example of our old friend ‘the crowded trade’,” reckons John Ventre, manager of Skandia’s Spectrum and multi-asset funds, speaking to Investment Week.

“Very many investors now own the asset, even though the market is in fact incredibly small. As investors – particularly levered ones like hedge funds – take losses in other parts of their portfolio, then selling pressure emerges across the board as investors pull their horns in.”

The spot-price to buy gold “is not far from our downside target zone at the September and December 2011 lows,” says the latest weekly report from technical analyst Axel Rudolph at Commerzbank in Luxembourg.

“Over the next few days a minor bounce back towards the breached 2008-12 uptrend line is likely to be seen before another down leg rears its head, probably by next week.”

Together with gold Wednesday morning, silver bullion also bounced from new five-month lows, adding 50¢ to trade above $27.70 per ounce.

Over on the Hong Kong stock exchange, however, shares in Chow Tai Fook Jewellery Group – the world’s biggest publicly listed jewelry retailer – closed 10% down at an all-time record low.

Along with the rest of Asia, the Hang Seng Index overall fell for the 9th session in ten, while US crude oil dropped through $93 per barrel and copper contracts dropped another 1.5% on the day.

“Gold’s slide has to be put in perspective with other commodities,” says Walter de Wet at Standard Bank in London, pointing to the 1-month drops in crude oil, platinum and copper.

While prices to buy gold have lost 7%, “Even [emerging-market] currencies such as the Brazilian Real and the South African Rand have depreciated 7.9% and 5% respectively against the US Dollar.

“Liquidation is taking place irrespective of market fundamentals.”

“Jewelers don’t know what to do,” says Ronald Leung, head of Hong Kong’s Lee Cheong Gold Dealers, speaking to Reuters.

“Maybe when the price has stabilised at some levels, they will start to reenter the market. There’s a bit of scale-down buying.”

Some wire reports said Wednesday that demand to buy gold had picked up despite a fresh record low in the Indian Rupee capping the new lows in the world’s #1 consumer market.

“Amid drying-up demand in off season,” says NDTV – pointing to the traditional summer lull between wedding and festival periods – these lower gold prices “could ease the burden on [India’s] import bill.”

India’s gold bullion imports equaled some 2.6% of GDP last year, almost equal to the country’s entire balance of trade deficit.

On top of 2012’s quadrupling of import duty, “Gold imports could be discouraged by creating opportunities for more productive investments in the economy,” writes RV Kanoria, president of the Federation of Indian Chambers of Commerce & Industry (FICCI) – fresh from urging the privatization of India’s coal-mining sector – in the Economic Times of India today.

“A better investment climate through focus on reforms will steer investors to look towards ventures than just stock up gold.”

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox (Dublin) – The troubles in Europe seem to spillover to the south pacific countries, and despite yesterday’s rally, the kiwi and Aussie has plunged back into declining trend. The Australian dollar has weakened to its lowest this year as Greece status in the 17-nation trading bloc hangs on the balance.

The Aussie is trading at four-month low against the Japanese currency as the Asian stocks continued with their downward trend for almost a week. The kiwi has weakened for the fourth day, despite technical indicators showing the recent decline has been excessive. The decline came after Fonterra Cooperative Group Ltd indicated that the milk export prices have continued to decline and it’s at two-and-a-half-year low.

Derek Mumford of Rochford Capital said that the current decline in south pacific dollars is due to the general risk aversion in the forex market. He added that the current trend is not only caused by the Greek situation, but the whole euro-zone situation has added to fears in the regions ability to adhere to austerity measures. He also went ahead to predict that Aussie will drop to as low as 97.50 US cents with in the coming weeks.

The Greek and French elections sparked risk aversion in the market, and this has continued as Greece struggles to form Unity Government. Finance ministers from the region have been meeting to discuss the issue where they have warned that the rescue fund will not be tampered with unless Greece forms a government. The Milk prices have compounded the situation for the New Zealand dollar.

The Australian dollar closed the Asian session 98.92, after it had touched 98.90 US cents, the weakest it has been since December 19. The Aussie was 0.5 percent lower from the close in New York. Aussie slid to 79.39 yen which the lowest since January 17, before it appreciated to 75.50, which was lower than yesterday’s close of 79.67. the kiwi declined 0.5 percent against the dollar to trade at 76.56 US cents after it slid to its lowest since December 20 of 76.48.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By TraderVox.com

Tradervox (Dublin) – Bank of America has indicated that the dollar might be forming a base to surge against the Japanese currency over the longer-term. Recently, the dollar has declined bellow the two month resistance of 80.22 yen. However, according to MacNeil Curry who is the head of Foreign Exchange and Interest Rates Technical Strategy at Bank of America, a close above the 80.22 yen level would signal the start of the dollar’s uptrend against the yen.

Despite the bearish trend of the USD/JPY cross, the US currency has been on the uptrend in the Standard & Poor’s 500 Index, this is one of the reasons why analysts believe that the pair will overturn the current trend. Curry indicated in an interview that the dollar/yen pair is moving against expectations and suggested that the market is about to see an overrun. According to strategists at Bank of America, the dollar may appreciate to 84 yen, which would open door to 85 and 88 levels which may be attained by the end of the year. In the banks long term forecast, the dollar may move to 101 to 125 levels in the next two years as the market moves to higher yielding assets.

However, this trend would be limited if the appetite for risk comes back into the market. So far, the dollar has gained against the yen reversing the decline it had experienced at the start of the week. The greenback has gained 0.4 percent against the yen to trade at 80.18 yen. The dollar has advanced 0.7 percent since May 9. Positive sentiment from the US economy and Japanese economy are propelling these two currencies against other major currencies in the world. Risk appetite has declined in the market as Europe struggles with political changes that are taking place in the euro zone.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.