Month: February 2013

Despite a late bullish run by the Australian currency last week, the Canadian dollar was still able to capitalize on its early gains and post a weekly profit for the first time in six weeks. Price activity looks to replicate last week’s start to the trading week, as a steep drop in the AUDCAD can be observed from the 1.0408 price mark.

Stronger-than-forecast growth in the Maple Leaf contributes to the Loonie’s appreciation, not to mention hikes in crude oil prices. Canadian Real GDP rose by 0.3 percent in November, following a 0.1 percent increase in October. “For the loonie, it was a decent week and we did see it find support from better-than-expected growth data for November,” Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, said in a telephone interview. “We’ll have a better idea when we see the jobs data (this) week and if unemployment can hold near a four-year low that would keep the Bank of Canada on a path to eventually raise interest rates.”

Meanwhile, speculations of a surprise rate cut by the Reserve Bank of Australia are putting a damper on the Aussie’s advances. The Australian central bank holds its first policy meeting of the year tomorrow. The Aussie dollar has been on a robust hike in recent weeks, and currency strategists are presupposing that the RBA could use the opportunity to deliver a surprise interest-rate cut to underpin the economy and dent the Aussie’s strength. Its latest move was a quarter-point cut in December and was recent enough for many economists to say the RBA will hold its fire this month. Markets put the chances of a rate cut this week at just 18 percent. Some analysts say that with inflation benign and data still pointing to weakness in some sectors of the economy, further monetary easing should not be ruled out.

Should market speculation on a probable rate cut by the RBA continue to spur the currency pair’s price action, a sell bias is advised for the AUDCAD today. It would be wise to keep watch for probable technical price corrections though.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions.

By www.CentralBankNews.info

The last burst of market optimism?

By Elliott Wave International

When do investors love stocks the most?

The simple answer is: After a long-term bullish trend has matured.

The S&P 500 recently stood near 5-year highs. And speaking of “recent,” consider this investor behavior.

Equity mutual funds recorded the second-highest inflows on record in the first week of the year. … About $22 billion flowed into equity funds around the world.

Bloomberg, Jan. 11

A red flag? Not to a well-known market newsletter writer quoted in this CNBC (1/11) headline:

Money Pours Back in Stocks: ‘Have to Take This as Bullish’

Well, investors were also bullish on Oct. 9, 2007, just before the Dow’s all-time closing high. Just days earlier (the third week of September 2007), equity fund inflows hit an all-time record of $23 billion. Look at the chart.

So: Almost as much money just went into stock funds as what occurred just before the Dow’s all-time closing high.

Far from being bullish, the September 2007 Elliott Wave Financial Forecast provided subscribers with this warning:

Stocks remain at the forefront of a long decline.

As we know, that warning came just in time. October 2007 began the worst bear market since 1929-32.

And now, stock fund inflows provide evidence of similarly high levels of market optimism. The facts speak for themselves: the public is jumping into stocks now, after being reluctant to do so for most of the uptrend since March 2009.

Extreme opinions, shared widely, constitute the single most reliable indicator of an impending change of direction for a market. If virtually everyone is thinking one way, they have already acted, so the market has extremely limited potential to continue on its old path and huge potential to go the other way.

The Elliott Wave Theorist, July 2006

Almost no one expects the degree of change that Elliott Wave International anticipates. It’s time that you start thinking independently of the crowd and prepare for a psychological change that will be reflected in the price patterns of U.S. markets.

Learn to Think Independently You’ll get some of the most groundbreaking and eye-opening reports ever published in Elliott Wave International’s 30-year history; you’ll also get new analysis, forecasts and commentary to help you think independently in today’s tumultuous market. Download Your Free 50-Page Independent Investor eBook Now >>

Source: ForexYard

The US dollar fell to a fresh 14-month low against the euro on Friday, following a disappointing Non-Farm Payrolls figure which reaffirmed speculations that the Fed will leave in place record low interest rates for the foreseeable future. This week, news out of the euro-zone is forecasted to have the biggest impact on the marketplace. Traders will want to pay attention to today’s Spanish Unemployment Change, the German Factory Orders figure on Wednesday, and Thursday’s Minimum Bid Rate and ECB Press Conference. Any disappointing data may cause the euro to reverse its recent bullish trend.

Economic News

USD – Dollar Rebounds after US Manufacturing Data

While a worse than expected US Non-Farm Payrolls report resulted in the US dollar turning bearish during mid-day trading on Friday, the greenback was able to rebound later in the day following a positive ISM Manufacturing PMI. The USD/CHF, which traded as low as 0.9021 during the first half of the day, gained more than 60 pips during the afternoon session to eventually close out the week at 0.9076. The USD/JPY was able to gain more than 100 pips during US trading, eventually reaching as high as 92.95, before dropping back to 92.77.

This week, dollar traders will want to pay attention to a number of potentially significant US economic indicators. Tuesday’s ISM Non-Manufacturing PMI, Thursday’s Unemployment Claims figure, and Friday’s Trade Balance can all give the dollar an additional boost if they show any kind of improvements in the US economy. Conversely, if the US news signals that the US economic recovery is slowing down, the dollar could take losses against its main currency rivals.

EUR – Euro Extends Gains vs. Safe-Haven Rivals

The euro saw gains against both the safe-haven US dollar and Japanese yen on Friday, following a worse than expected Non-Farm Payrolls figure which reaffirmed speculations that the Fed will leave in place record US low interest rates for the foreseeable future. The EUR/USD advanced more than 100 pips during the mid-day session to trade as high as 1.3710, a new 14-month high. A downward correction later in the day resulted in the pair closing out the week at 1.3642. The EUR/JPY gained close to 200 pips toward the end of the European session before peaking at 126.96

Euro traders will want to pay attention to several economic indicators over the course of this week. Perhaps the most significant piece of news will be Thursday’s Minimum Bid Rate and ECB Press Conference. While the European Central Bank is not expected to adjust interest rates, any indication that the situation in the euro-zone is improving may help the euro extend some of its recent gains. Additionally, today’s Spanish Unemployment Change and Wednesday’s German Factory Orders figures could give the euro a short-term boost if they come in above their forecasted levels.

Gold – NFP Report Leads to Temporary Gains for Gold

Gold prices spiked more than $15 an ounce to trade as high as $1681.86 on Friday, following a worse than expected US Non-Farm Payrolls report. That being said, the gains were only temporary, and by the afternoon session the precious metal had dropped back to $1670 and eventually finished out the week at $1666.93.

This week, gold traders will want to pay attention to the US ISM Non-Manufacturing PMI and Trade Balance figures. If either of the indicators comes in below their forecasted levels, the dollar could turn bearish, which would likely lead to an increase in gold prices.

Crude Oil – US Manufacturing Data Boosts Oil Prices

While the price of crude oil fell close to $1 a barrel following the US Non-Farm Payrolls report on Friday, better than expected US manufacturing data led to a bullish recovery later in the day. The commodity, which fell as low as $96.50 during mid-day trading, peaked at $98.10 during the afternoon session before closing out the week at $97.56.

This week, oil traders will want to pay attention to the US ISM Non-Manufacturing PMI, EU Minimum Bid Rate and US Trade Balance figure. If any of the data indicates growth in the global economy, investor risk taking is likely to boost oil prices.

Technical News

EUR/USD

The weekly chart’s Slow Stochastic is close to forming a bearish cross, indicating that a downward correction could occur in the near future. Additionally, the same chart’s Relative Strength Index has crossed into overbought territory. Opening long positions may be the smart choice for this pair.

GBP/USD

The Williams Percent Range on the weekly chart has fallen into oversold territory, indicating that an upward correction could occur in the near future. Furthermore, the MACD/OsMA on the daily chart appears close to forming a bullish cross. Traders may want to open long positions.

USD/JPY

The Relative Strength Index on the weekly chart has cross into overbought territory, indicating that a downward correction could occur in the coming days. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the smart choice for this pair.

USD/CHF

While the weekly chart’s Williams Percent Range has crossed over into oversold territory, most other long-term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

The Wild Card

GBP/JPY

The Williams Percent Range on the daily chart has crossed over into overbought territory, indicating that a downward correction could occur in the near future. This theory is supported by the Slow Stochastic on the same chart, which has formed a bearish cross. Opening short positions may be the best choice for forex traders today.

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 MoneyMorning.com.au

‘”Mate, I haven’t had two brass razoos to rub together in about four years,” said one broker, from Bell Potter. “No sign of a bonus, no brokerage, but the last two weeks have been great, so it’s time to enjoy the good times again.”‘ – The Age

The phrase ‘off to the races’ springs to mind.

The Australian share market closed last Friday at 4,921. That’s just 81 points below the 5,002 target we had predicted for the end of the year close.

In short, the bull market has begun. And we’re afraid to say that so far a lot of investors have missed out. We know that, because a lot of people are emailing us to say so.

If we know anything about stock markets, it tells us one thing – this bull-run could last a while longer yet…

To be honest, we’re a bit skeptical about that broker story from the Age. But even so, it still confirms something we’ve seen many times before in bull markets.

That is, when the share market is at its most scary, many investors are too afraid to put their money on the line and have a punt.

They’d rather keep it all in cash…all in fixed interest investments…or all in gold.

As you know if you’ve read Money Morning for some time, that’s a terrible approach. Since mid to late 2011 we’ve advised you to actively allocate your assets to different asset classes.

We’ve told you to first of all split your wealth into ‘safe money’ and ‘punting money’.

The ‘safe money’ you stick in a combination of cash, term deposits, gold, and dividend-paying stocks.

With your ‘punting money’ you have a crack at trading a blue-chip growth stocks (perhaps using leverage) or our favourite, small-cap stocks. Of course, there are other ways to use your punting money, such as options, futures or CFDs.

Why You Need to Own Stocks

But really, it’s up to you how you do it. If you don’t have the time to trade stocks, then small-caps make a lot of sense because you’re typically in them for at least six months. If you’ve got a bit more time to devote to investing, then trading shares, options or futures might be your thing.

Despite that, it seems some people think, just because we don’t suggest you put 100% of your money in shares, that we’ve cost them money by telling them to sell all their shares.

That’s the last thing we’d do. Sure, for the past year or so we’ve warned that the market is risky…and that you might even want to think about short-selling some stocks.

You can hardly blame us when the chart of the S&P/ASX 200 looked like this for the first nine months of last year:

S&P/ASX 200:January to September

</
center>

Of course, after a brief slump in October and early November, the share market took off. And since then it has almost been a non-stop bull market rally.

The great thing is if you’ve followed our ‘safe money’ and ‘punting money’ asset allocation approach, you should have some good gains in your investment portfolio since last November. And the even better thing is that you should have made a good portion of those gains not with your ‘punting money’ but with your ‘safe money’.

When you buy dividend stocks, you’re hoping for a 5% or 6% dividend yield. Any capital gain is a bonus. But over the past three months, depending on which dividend payers you own, you may have collected a 3% dividend (half the annual dividend yield) plus 10%, 15% or 20% in capital gains.

But that brings us back to the reason why we’ve got a feeling this rally could keep going. As we mentioned, we’ve gotten plenty of emails from folks saying they’ve missed the rally…

This Stock Bubble Looks Like a Housing Bubble

To those people we say this: don’t get mad, get active…follow the advice we’ve given. You shouldn’t put all your cash in the stock market, but as we’ve said for a long time, you should have some exposure, whether it’s with your ‘safe money’, your ‘punting money’, or both.

Even more important than that, our guess is that millions of Aussie investors missed out on the three-month share rally. And as the stock market has continued to climb it will panic many of those investors into piling into the market for fear of missing out on further gains.

It’s a short-term version of what happened in the Aussie housing market over 15 years between 1995 and 2010…the higher Australian house prices went, the more people borrowed and bought. That created an asset bubble (the biggest in Australian history), and there’s a real chance that this could be the early stage of another share market bubble.

That’s another reason why we’re sticking to our ‘safe money’ and ‘punting money’ strategy. Because just as those millions of investors missed out on the share rally, we can almost guarantee that when they do pile into the market they’ll do so with everything they’ve got.

And when the share rally ends and the bubble bursts, we’ll guarantee something else…they’ll send us an email blaming us for their losses!

Cheers,
Kris

PS. It wasn’t just our opinion that investors should have an exposure to stocks. Last November our old pal Dan Denning told his Denning Report readers to buy a particular stock. He told them, ‘I’m making this recommendation out of modesty. We can never know what’s going to happen. This is part of the thinking behind the Permanent Portfolio. Have some money in each of the major asset classes to hedge against what’s unknown. Review, rebalance, and repeat.’ You can find out more from Dan here…

Join me on Google Plus

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning: Debt Delusion: The Bankrupt Financing the Bankrupt

Money Morning: Kris Sayce’s Money Weekend Market Digest

Pursuit of Happiness: The Bad Joke That Saved Your Freedom of Speech

Australian Small-Cap Investigator:
How to Make Money From Small-Cap Stocks

By MoneyMorning.com.au

What’s the most precious metal – gold or platinum?

Ask most people, and they’ll say the answer’s obvious – platinum is the more valuable metal, hands down.

But in recent years, the answer hasn’t been at all clear cut. The price of platinum has regularly dipped below that of gold, sometimes substantially. Even now, gold and platinum are trading at roughly the same price.

This is an unusual situation. And we suspect it won’t last. Here’s why…

The Key Difference Between Gold and Platinum

If you sit a bit of platinum and a bit of gold side by side, there’s not that much to tell them apart (other than the colour). They’re both shiny. They both make nice jewellery. They don’t rust. They’re both seen as valuable.

And platinum is also rarer than gold. So it seems to make sense that platinum would generally be the more pricey metal.

But in the past five years, this relationship has broken down. And it’s mainly down to the one critical difference between gold and platinum.

Gold is a monetary metal. It’s been used as a medium of exchange and a store of value for millennia. Its perceived value derives mainly from the idea that gold is money.

Platinum is an industrial metal. It has no history at all of being used as money. Its perceived value derives mainly from how much of it is needed by vehicle manufacturers at any given time.

So when people think the financial system is at risk of breaking down, they want gold. A broken financial system is not good news for trade or industry, which means they don’t want platinum.

This makes perfect sense. And given our own concerns about the global financial system, we’d advise you hold on to your gold.

But now could also be a good time to get hold of some platinum if you haven’t already.

Here’s why.

The Global Supply of Platinum is Very Vulnerable

Two-thirds of world platinum production comes from South Africa. Up until now the platinum companies, like the rest of the mining sector, have benefited from a large supply of relatively cheap labour. This has helped them to keep costs down.

However, it has also given them little incentive to invest in new equipment. As a result, pits and facilities have to use manual labour for tasks that are done by machine elsewhere.

And this has left the mining giants unprepared to deal with a change in the attitude of their workers. Decades of strong economic growth have raised expectations about wages. Trade unions are becoming increasingly assertive and more willing to strike for what they see as a fair wage.

Last summer a dispute over pay in Marikana ended in tragedy when a series of clashes between the police and strikers left 47 dead and 78 wounded.

The mining sector has tried a number of tactics. One option is to simply agree to pay more. After the deaths, the conglomerate Lonmin agreed last September to award hikes of up to 22%.

But others have simply decided to shut down production. In January, Anglo-American Platinum said it would close four large mines that account for nearly 10% of the world’s platinum supply. A huge public backlash has forced the company to postpone the closure. But it still plans to cut production substantially in the near future.

And even before this latest decision, South African production has been falling. Last year, total platinum output was the lowest since 2001 – 19% down from 2006.

Meanwhile Demand for Platinum is Rising

As well as benefitting from falling supply, prices will be pushed up by rising demand for platinum in catalytic converters, which reduce emissions from car engines.

American consumers are finally starting to make the car purchases that they put off during the recession. Indeed, new car sales in the US are expected to be 18% higher in January than they were this time last year.

Meanwhile China, faced with growing anger over the dire air quality, is about to adopt much tougher car emissions standards.

Overall, Eric Sprott of Sprott Asset Management thinks that platinum demand due to cars (which account for just under 40% of overall consumption) will grow by 7% this year.

There’s another source of rising demand, as a result of platinum’s relative cheapness compared to gold. Jewellery already accounts for 30% of overall platinum consumption.

But there are signs that it is making inroads even into areas where gold has traditionally been far more popular. In India, sales of platinum jewellery have grown by 40-50% over the past year. Moves by the government to tax gold imports are only likely to encourage this shift.

How to Profit from Platinum

There are two ways to take advantage of platinum’s strong prospects. If you want to make a direct bet, you can simply buy an exchange-traded fund which tracks the physical price.

However, if you’re willing to take on a little more risk, you might consider shares in a platinum mining company.

Matthew Partridge
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

By MoneyMorning.com.au

Japanese Prime Minister Shinzo Abe and his government’s success in jawboning the yen lower against the U.S. dollar have revived an old hedge fund favorite – the yen carry trade.

A carry trade is when an investor borrows a currency with low interest rates, such as the yen, and uses it to buy assets in another currency with a higher interest rate, such as the Australian dollar.

The yen carry trade had fallen out of favor with traders after the ‘Lehman Shock’ of 2008 as governments attempted to deal with the financial crisis by cutting short-term interest rates and initiating successive rounds of quantitative easing.

In the post-Lehman world, global interest rates converging on zero and massive balance sheet expansion by central banks to combat sluggish economies and deflation have become the norm.

As a result, the yield spread between the currencies being borrowed and the currencies being used to purchase higher-yielding assets has fallen, making the trade riskier and less attractive.

Now that the new Abe government in Japan has succeeded in talking the yen down to two-and-a-half year lows and seems to be looking to push the yen even lower, traders are once again using short-term yen borrowings to fund short-term purchases of assets in other, high-yielding currencies such as the Norwegian krone or the perpetual favorite, the Australian dollar.

‘Using the lowest yielder, the yen, to fund purchases of the Australian dollar could generate a 3% annual yield spread, without leverage and before the expenses of any investment fund used to put on the trade,’ writes Hamlin Lovell in the CFA Institute’s Inside Investing publication.

And David Harden, senior commercial dealer at Global Reach Partners, told CNBC Europe, ‘Not only is the yen losing ground because of Abe’s comments and monetary policy. But also, we’re seeing risk appetite improving across the globe and so the yen is weakening because it was a safe-haven currency and now it’s being sold because people are buying risk again.’

Dangers of Reaching for Yield

Of course, the real question is: How much risk are traders willing to take on?

The monthly volatility of the Australian dollar/yen cross is 4.91%. Is it really worth risking 4.91% a month in order to gain 3.0% a year in excess yield?

It is only if you think the Australian dollar is going to continue to strengthen against the yen. In that case, an investor would make a lot more money from the appreciation of the Australian dollar against the yen than would be made from the higher yield paid by Australian dollar assets.

The problem with carry trades is that they tend to get very popular among the banks and hedge funds that trade them. History shows that these trades tend to move in only one direction as everybody jumps aboard the bandwagon.

This makes the yen carry trade extremely dangerous because interest rates in the three largest economies in the world – the U.S., Europe and Japan (China is excluded because its currency does not trade freely) – are all converging on zero.

Everyone is looking for a few extra basis points. Everyone is taking a lot of extra risk for the small extra returns they can get.

And it will all be OK until, one day, it isn’t. That’s what makes this latest iteration of the yen carry trade so dangerous.

Jeff Uscher
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in Money Morning (USA)

From the Archives…

Make Sure You’ve Updated Your ‘Stock Insurance’ Policy
1-02-2013 – Kris Sayce

Here’s Why We’re Still Buying This Stock Market
31-01-2013 – Kris Sayce

Revealed: Inside the Mind of a Share Trader
30-01-2013 – Murray Dawes

Buy Silver – the War Against the China Bears Begins
29-01-2013 – Dr. Alex Cowie

China’s Economy: Enter or Exit the Dragon?
26-01-2013 – Callum Newman

AUDUSD remains in downtrend from 1.0597, the price action in the trading range between 1.0360 and 1.0475 is likely consolidation of the downtrend. Another fall could be expected after consolidation, and next target would be at 1.0300 area. On the upside, a break above 1.0475 will suggest that a cycle bottom had been formed at 1.0360 on 4-hour chart, and the downward movement from 1.0597 had completed, then further rise towards 1.0700 could be seen.

Daily Forex Forecast

By www.CentralBankNews.info

Types of Ea

Robots trade with a set of ideology and it is important that the user understands it.

In circumstances when the user are unaware of how the robots are traded, the maximum draw-down* will be unknown to them. All profitable trading robots are sure to make losing trades and when the users are faced with 5 consecutive losing trades, they will be experiencing great fear and may stop them from following the system.

(Maximum draw-down: This is the largest overall drop in the investment’s value which occurred in a given period before it returned to its previous high. Large maximum draw-downs indicate higher risk.)

Had they known how the system traded, how it performed the past 10 years and the maximum consecutive losses, they will not have panicked. They will be well aware and mentally prepared to accept the losses. If the system traded for the last 10 years have a maximum consecutive loss of 5, the well-informed user will be expecting for a win with the next trade and not fearing the system may have stop working.

Thus, knowing how the robots trade is crucial to Your Trading.

Here, we examine a few trading ideologies

Scalping Robot

– Work extremely well during certain times of the day only

– Take profit is usually a few pips only

– Stop loss level is set many times more than their take profit level

– Extremely low risk:reward ratio

– However, they are compensated by very high accuracy trades (80% winners)

– Trades made are usually within very shot period of time (in mins to a few hours)

Trending Robot

-High risk to reward ratio

– Low accuracy trades (40% winners)

– Trades are entered whenever there are signs of a breakout (means you will have many losing trades in conditions of a false breakout or ranging conditions)

– Due to high risk to reward ratio, one winning trades can make back all of the losing trades

– Usually do not have a fixed take profit, take profit is trailed by a moving average or 2 bar low/high

– Trade made can last for many days

About the Author

By Warren Seah

Warren examines commercial trading systems. He analyzes to uncover good systems which bring in consistent profits in the long term.

Click Here To Read More On Fx EA Reviews

http://www.FxEAReview.com