Month: May 2013

The one-day sell-off last week in Japan’s equities market with the benchmark Nikkei 225 plummeting more than seven percent in one day should not be ignored; in fact, the drop may be a harbinger of things to come. I don’t have a crystal ball, but my market sense is tingling.

The reality is that the sell-off in the equities market was not a surprise, given that the Nikkei has advanced 70% over the past six months. And this advance was driven largely by Prime Minister Shinzo Abe’s aggressive 10-year stimulus strategy to jumpstart the dormant Japanese economy.

Yet what was more concerning was the lack of a follow-through by the Nikkei equities market after the sell-off, as the index rallied a mere 0.9% the following day.

Chart courtesy of www.StockCharts.com

The market’s fear is that if the selling continues on the Nikkei, this could drive down confidence in the equities market and trigger deeper losses on the horizon, including declines in domestic trading.

The Japanese equities market could easily go lower, given the advance so far.

For Prime Minister Abe, should the Japanese equities market reverse course and decline, the move would likely erode confidence in Japan and test Abe and the country’s resolve.

In my view, as I have discussed in these pages in my previous commentary on Japan (read “Japan Not Home-Free Despite Strong GDP”), the country’s aggressive fiscal and monetary policy is not a sure bet to get Japan out of its economic abyss.

In fact, the aggressive printing of money in Japan will create a bloated national debt level on the country’s balance sheet, which is already one of the weakest in the world.

The ability to drive the economy by spending trillions may work in the upcoming years, but I wouldn’t feel good about amassing the amount of debt that Japan is.

The sell-off in the Nikkei equities market could make investors uneasy on this side of the Pacific.

Domestically, the market is concerned about the Federal Reserve looking at a possible reduction of its bond-buying program as early as June during the Federal Open Market Committee (FOMC) meeting that is scheduled for that month.

The fear is that more selling in the Nikkei equities market may trigger deeper losses to come not only in Japan, but elsewhere; so there may be some apprehension to jump into stocks at this point.

The chart of the S&P 500 below suggests that a possible correction may be in the works, as shown by the ovals. Note also that in 2012, the S&P 500 gained a mere seven points from May 1 to October 31—historically the weakest six months for stocks, according to the Stock Trader’s Almanac—but advanced 13.4% for the year, so we could be headed for some slack.

Chart courtesy of www.StockCharts.com

I would want to see a bigger sell-off here before considering injecting new capital into stocks.

Again, while the advance has been financially rewarding, I still feel a correction is on the horizon. A big sell-off could be an opportunity to buy.

Article by profitconfidential.com

By MoneyMorning.com.au

Most people don’t realise their car is actually a powerful computer. Computers in modern cars control the multimedia system, sat-nav, dashboard and engine. And approximately one third of all computing in cars is just to tell you what’s going on.

Have you ever wondered…how does the car start after pushing the start button? How does it know there’s 24km left to empty? How does it know the rear left tyre is at 34 psi?

Because as a car moves through the production line, sensors, computers and millions of lines of computer code are installed.

Mercedes Benz claims their new S-Class model has over 30 Million lines of code. And that’s just for the multimedia system.

In comparison, the F-35 Joint Strike Fighter Jets uses about 5.7 Million lines of code to operate its on-board systems. A Mercedes is more complex than a fighter jet!

But there’s more to these car-computers than just sat-nav and MP3′s. One of the aims of car makers is using technology for safety. Companies like Mercedes, Volvo and Audi are all working on their own version of a revolutionary safety project…

Automated Driving!

The World Health Organisation estimates 1.24 million people die every year as a result of car accidents. The most common cause of these accidents is human error. Worryingly, half of the fatalities are pedestrians, cyclists and motorcyclists.

Further to this, the US Center for Disease Control and Prevention estimates car related injury and death has a lifetime economic impact of over $70 billion.

That’s why the need for auto-cars and auto-safety is so important. It will help eliminate human error from car-accidents. It might even eliminate car-accidents completely. That’s the real goal of auto-car technology.

It’s closer than you might think too. Mercedes said they could have put automated driving in the new S-Class. But they weren’t 100% confident the system would pick up everything, just yet.

They’re so close it means within the next 12 months we could see an auto-car on the market.

It’s not just car makers that are working on auto-cars either. Google gets a lot of press about its driverless cars. And for good reason. They’re doing great things with the technology.

Google fitted a Lexus with a complex array of lasers and sensors. With this technology, the driver can sit back, relax and let the car drive itself. The Google Lexus has logged thousands of driverless miles. And a fleet of Google Priuses with the same tech has logged over 500,000 driverless miles.

There’s a good chance if you live in the US you’ve passed one and didn’t even know.

You’ll continue to hear a lot about Google’s driverless cars, but don’t expect to be heading down to a Google dealership anytime soon. Remember, they run a search engine. They don’t make cars.

The other car maker that might put out a complete auto-car is Tesla Motors. Elon Musk, the CEO of Tesla, has been talking with the team at Google about automating the Tesla range. As reported by Bloomberg, Elon thinks, ‘autopilot is a good thing to have in planes, and we should have it in cars.’

Tesla has been working on the technology in house but aren’t quite at the stage of Mercedes or Audi. That is, they don’t actually have a test model yet.

When I look closer at the tech involved in auto-cars I see opportunity. But the opportunities might not necessarily lie with the car companies themselves. It might be with manufacturers of the tech used for these systems.

Take for example a company like nVidia. It makes cutting edge graphics hardware. It’s likely there’s nVidia tech in your smartphone or tablet.

You see nVidia have partnered with Audi, Tesla and a number of other car makers. They use nVidia technology mainly for multimedia functions. But one of the key partnerships is with Audi.

Audi use nVidia tech in new safety systems. nVidia say their hardware can detect pedestrians, read speed limit signs, improve navigation and avoid collisions. All functions crucial for an auto-car.

Its companies like nVidia that may benefit from auto-cars as more adopt the technology. And the future might just be a world with no road accidents ever again.

Sam Volkering
Technology Analyst, Money Morning

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From the Archives…

The Day Japan and China Shook the Aussie Market
24-05-2013 – Kris Sayce

Why the Only Thing That Matters in the Markets is Japan
23-05-2013 – Murray Dawes

When Soros Buys Gold Stocks, You Better Take Note…
22-05-2013 – Dr Alex Cowie

Look for Small-Cap Resource Stocks with Plenty of Cash
21-05-2013 – Dr Alex Cowie

Why Bank Stocks have Outperformed Resource Stocks…
20-05-2013 – Kris Sayce

GBPUSD failed to break above the upper line of the price channel on 4-hour chart, suggesting that the pair remains in downtrend from 1.5605, the price action from 1.5014 could be treated as consolidation of the downtrend. Range trading between 1.5014 and 1.5156 would likely be seen in a couple of days. Key resistance is now at 1.5156, as long as this level holds, we’d expect the downtrend to resume, and one more fall to 1.4900 is still possible. On the upside, a break above 1.5156 will indicate that the downtrend from 1.5605 had completed at 1.5014 already, then the following upward move could bring price to 1.5400 – 1.5500 area.

Daily Forex Analysis

By MoneyMorning.com.au

Dr Alex Cowie
Editor, Diggers & Drillers
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Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks

By Chris Vermeulen – TheGoldAndOilGuy.com

Precious metals and their related mining stocks continue to underperform the broad market. This year’s heavy volume breakdown below key support has many investors and trader’s spooked creating to a steady stream of selling pressure for gold and silver bullion and mining stocks.

While the technical charts are telling me prices are trying to bottom we must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices). Right now and for the last twelve months when looking at precious metals cash has been king.

Since 2011 when gold and silver started to correct the best position has been to move to cash or to sell/write options until the next trend resumes. This is something I have been doing with my trading partner who focuses solely on Options Trading who closed three winning positions last week for big gains.

In 2008 we had a similar breakdown in price washing the market clean of investors who were long precious metals. If you compare the last two breakdowns they look very similar. If price holds true then we will see higher prices unfold at the end of 2013.

The key here is for the price to move and hold above the major resistance line. A breakout would trigger a rally in gold to $2600 – $3500 per ounce. With that being said gold and silver may be starting a bear market. Depending what the price does when the major resistance zone is touched, my outlook may change from bullish to bearish. Remember, no one can predict the market with 100% accuracy and each day, week and month that passes changes the outlook going forward.

The chart below is on I drew up on May 3^rd.  I was going to get a fresh chart and put my analysis on it but to be honest my price forecast/analysis has been spot on thus far and there is no need to update.

Gold Daily Technical Chart Showing Bottoming Process:

Major technical damage has been done to the chart of gold. Gold is trying to put in a bottom but still needs more time. I feel gold will make a new low in the coming month then bottom as drawn on the chart below.

Silver Daily Technical Chart Showing Bottoming Process:

Silver is in a similar as gold. The major difference between gold and silver is that silver dropped 10% early one morning this month which had very light volume. The fact that silver hit my $20 per ounce level and it was on light volume has me thinking silver has now bottomed.

But, silver may flounder at these prices or near the recent lows until its big sister (gold) puts in a bottom.

Gold Mining Stocks Monthly Investing Zone Chart:

Gold mining stocks broke down a couple months ago and continue to sell off on strong volume. If precious metals continue to move lower then mining stocks will continue their journey lower.

This updated chart which I originally drew in February warning of a breakdown below the green support trend lines would signal a collapse in stock prices, which is exactly what has/is taking place. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for new positions when the time and chart turn bullish or provide a low risk probing entry point.

While I focus more on analysis, forecasts and ETF trading another one of my trading partners who focuses on Trading Stocks and 3x Leveraged ETF’s has been cleaning up with gold miners.

Gold, Silver and Mining Stocks Conclusion:

Precious metals continue to be trending down and while they look to be trying to bottom it is important to remember that some of the biggest percent moves take place in the last 10% of a trend. So we may be close to a bottom on the time scale but there could be sharply lower prices yet.

The time will come when another major signal forms and when it does we will be getting involved. The exciting this is that it could be just around the corner. So if you want to keep current and take advantage of the next major moves in the market be sure to join our newsletters.

Join My Newsletter Memorial Day Special 50% Discount: http://www.TheGoldAndOilGuy.com/

Chris Vermeulen

By www.CentralBankNews.info     Israel’s central bank cut its policy rate by 25 basis points for the second time this month to 1.25 percent to “narrow the gaps between the Bank of Israel’s interest rate and the rates in major economies worldwide, in order to weaken the forces for appreciation of the shekel.”
    The Bank of Israel (BoI) already cut its rate in a surprise move on May 13 when said it would interven in the foreign exchange markets to weaken the shekel which has appreciated in response to due to the start of natural gas production, rate cuts by other central banks, continued quantitative easing in major economies and moderate global growth.
    In its statement today, the BoI said “the expansionary policy of central banks in major advanced economies is expected to continue, according to their announcements, in coming year as well.”
    Other factors cited by the BoI include inflationary expectations that are slightly below the midpoint of the central bank’s target, a lower budget deficit that will moderate the growth in demand, mixed global growth and government measures in the housing sector that are expected to moderate demand in the housing market.
    The BOI said it would continue to monitor economic developments and use its available tool to achieve price stability, encourage employment and growth, support the financial system and “in this regard will keep a close watch on developments in the asset markets, including the housing market.”

By www.CentralBankNews.info

The remarks from FeD-chairman Ben Bernanke last week concerning the US economy and future monetary policy is going to be the dominating investor-theme also in this week, says Jyske Banks Senior Strategist Ib Fredslund Madsen.

Furthermore in this weeks edition of ‘The Week Ahead’ we look back at last weeks minicrash on the japanese stockmarket.

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Video by en.jyskebank.tv

By HY Markets Forex Blog

The Asian stocks drop as the Japanese yen strengthened and Japan’s central bankers signify that the country could cope with the higher rate. The third largest carmakers’ in Asia ,  Nissan Motor , fell by 6.2% as yen gained against the  dollar .While 361 Degrees International Ltd dropped by 9.1% and David Jones Ltd. Slid 1.2%  .

The Chinese Shanghai Composite index increased by0.06 percent to 4,965.60, while Hong Kong’s Hang Seng index rose by 0.11perecent to 22,642.63.Australia’s   S&P/ASX 200 closed down at 0.36% to   4,965.60, while in South Korea, Kospi closed at 0.33percent higher to 1,979.97.

The Japanese Nikkei 225 slid 3.22 percent to 14,142.65, while Topix Index (TPX) dropped 3.4percent to 1,154.07, extending its worst weekly decline in over a year. Both have risen over 30% this year, topping other major equity indexes.

The Japanese market has indicated a record of losses after the Bank of Japan (BoJ) Governor Haruhiko Kuroda said yesterday “no sign at this point of excessively bullish expectations on asset markets or in the activities of financial institutions.”

Some of the board members of the Bank of Japan said in the late April the central bank should continue to consider steps to avoid the decrease in the liquidity in the Japanese government bond market.

“Regarding the effects of JGB purchases on liquidity in the JGB and repo market, a few members … expressed the opinion that it should continue to deliberate on measures to prevent a decline in liquidity,” the summary of the meeting released showed.

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