Month: June 2013

By www.CentralBankNews.info

By Chris Vermeulen, thegoldandoilguy.com

Over the past couple week’s investors and traders have been growing increasingly bearish for the US stock market. While I too also feel this rally is getting long in the teeth there is no reason to exit long positions and start shorting.

My followers know I do not pick tops and I do not pick bottoms. This I explained in great detail in my previous report. There are more cons to that tactic and on several different levels (timing, volatility, emotions, lack of experience, addiction) than there are pro’s.

Keeping things simple, short and to the point here is my thinking for today and this week on the broad market. Remember my analysis is 100% technical based using price, volume, cycles, volatility, momentum and sentiment. I try not to let any emotions, gut feel, or bias flow into my projections. I say “TRY” because I am only human and at times when the market and emotions are flying high they still take control of me but that is few and far between.

So let’s get to the charts shall we!

SP500 Index Trading Daily Chart – SPY Exchange Traded Fund

The SP500 index continues to hold up within its rising trend channel and the recent pullback is bullish. Remember the trend is your friend and it can continue for very long periods of times ranging from days, weeks, and even months…

The US Stock Market MUSCLE Indexes

The charts below show and explain my thinking… But in short we need these two indexes to be strong if we want to see another major leg higher in the SPY, or to at least test the recent highs.

Today the market opened slightly higher and push up in the first 30 minutes with strong volume. Overall the market looks as though it needs a day pause/pullback before taking another run higher.

Small cap stocks are the ULTIMATE Risk On play and generate ridiculous gains in very short periods of time. I focus on these with my trading partner exclusively at ActiveTradingPartners.com where we have been making a killing on trades like: NUGT up 21% in 1 day and IOC up 11% in 2 days

Bullish Index Price, Volume & Candles

The SP500 has been very predictable the past couple weeks for both intraday trading during key reversal times in the market when price has pullback to a support zone, and also for swing trading. Last week we myself and followers bought SSO ETF when the market pulled back and we exited the next day for a 3.5% profit.

Yesterday was a perfect intraday example with the SP500 bottoming out at my 11:30am morning reversal time zone with price trading at support. Price then rallied into the close posting a 12 point gain on the SP500 futures for a simple momentum play pocketing $600.

US Stock Market Mid-Week Conclusion:

In short, I still like stocks as the place to be and will not get bearish until proven wrong. Once price reverses and the technical clearly paint a bearish picture with price, volume, momentum, cycles and sentiment will I start shorting the bounces.

This week is a pivotal one for the stock market so expect increased volatility and possibly lower lows still until the counter-trend flushes the weak position out before moving higher.

If you like my simple, clean and profitable market analysis join my NEWSLETTER: www.thegoldandoilguy.com/signup.php

Chris Vermeulen

EURUSD – The EURUSD Increases to 1.3107

It seems that the EURUSD has managed to form the basis near the support of 1.2825, since the pair’s decrease was limited by 1.2944 and 1.2955. Starting from 1.2955, the pair managed to resume its increase yesterday and hiked above 1.3020 again, overcame the 1.3070 resistance and tested the 1.3107 level. The recessions are limited by the 1.3057 support, where the pair remains in demand. If the EURUSD manages to hold above 1.3020-1.3000, then the pair may continue increasing towards the 1.3172 resistance. The drop below 1.2944 would mean the downtrend resumption.

The GBPUSD pair’s situation has become improved – the pair continued increasing almost without any rebounds yesterday. On the way to the 53rd figure, the bears habitually tried to return the pair downwards. But they failed to do it, since the pair was bought from 1.5237 – this level provided the pair with an opportunity to break through the 53rd figure and maintain the uptrend up to 1.5375 before the British pound dropped back to 1.5313. The pair is in demand at this level as well, but the bears continue their sluggish attempts to break downwards. If the support near 1.5310-1.5280 withstands, this will confirm the basis formation near 1.5040, as well as uptrend formation, whose target will be highs near the 56th figure.

The U.S. dollar was decreasing even in pair with the Swiss franc yesterday. The increasing attempts were interrupted at 0.9623, from which its rate dropped to 0.9407, having pulled back to 0.9495. Thus, the dollar is steadily moving down below the resistance line – this doesn’t make the bulls happy about it. Consequently, the bulls may wait until the pair drops to the 93rd figure. However, the 100-day MA is running near the 94th figure on the daily chart – it can provide the pair with the support. In this case, one can miss the correction completion, as well as growth resumption of the dollar while waiting and doing nothing.

The USDJPY was decreasing yesterday as well, which eventually caused the breakthrough of the 100.70-100.40 support proximity, as well as decrease to 98.86. There, the dollar faced a good demand, due to which it managed to return to 99.94. The punched support will act as the resistance level to opening shorts from. The pair is trading below all the moving averages on the daily timeframe, the Parabolic SAR is above the price chart. Thus, given the breakdown of the above mentioned support, it is safe to involve the downward correction development along with the following target at the 97th figure (in case 98.86 is passed). The increase above 101.60 will make you forget about the correction and recall the uptrend.

provided by IAFT

London Gold Market Report
from Adrian Ash
BullionVault
Tues 4 June, 08:00 EST

The WHOLESALE gold price slipped back below $1400 per ounce Tuesday morning in London as world stock markets rose and the Indian government tightened restrictions on gold importers once again.

After Monday’s weak US manufacturing data gave gold what Commerzbank calls “sufficient fuel” to touch the $1415 level – identified by some technical analysts as key resistance – the gold price dropped $8 in 15 minutes mid-morning.

With immediate effect, “Any import of gold on consignment basis [where the buyer has yet to pay for the gold] shall now be permissible only to meet the needs of exporters of gold jewellery,” the Reserve Bank of India said in a statement.

The world’s #1 consumer market for physical gold, India recorded a trade deficit worth $17.8 billion in March – equal to 11% of economic output.

Some 40% of March’s deficit was due to gold bullion imports.

“There’s no doubt that India is a strong demand market for gold,” says Manne Rasmussen, an analyst at the $650 million Vontobel Belvista Commodity Fund in Zurich, quoted by the Wall Street Journal yesterday.

Rasmussen says India’s surging gold demand was a reason Vontobel recently closed a bet on the gold price falling.

India’s government yesterday corrected the 262 tonnes of gold imports reported for May by Finance Minister P. Chidambaram to 162 tonnes.

That was still more than all Indian gold imports during April to June 2012, however.

“Physical buying in India [was already] virtually non-existent” Tuesday morning, said brokers Marex Spectron in a market note, “and Chinese demand is much smaller above $1400.”

“A recovery in the stock market is [also] currently a negative factor for gold,” Peter Fertig at Quantitative Commodity Research Ltd told Bloomberg today.

With developed world stock markets gaining 14.5% so far in 2013, according to Reuters data, the gold price has dropped 15.7% and silver bullion is down more than 25%.

Western households cut their demand for physical gold in May from April’s 16-month high, but remained positive according to Bullion Vault’s latest Gold Investor Index.

“There is a case to be made for a short-covering rally in the near term,” says TD Securities in Toronto, pointing to the record-large bearish betting by speculative traders in US gold futures and suggesting a possible move “into $1500 per ounce territory.”

Thursday’s interest-rate decisions in London and Frankfurt, plus Friday’s US jobs data, “[are] likely to keep price action choppy,” says Credit Suisse.

“Add in a dash of short-covering and it would not be too surprising to see gold reach the next technical resistance level of $1422/24 in the next few days, perhaps even $1445/50.

“However, we think that any short-term rally will be limited.”

Fellow London market maker UBS agrees, saying that “Gold is seemingly becoming less relevant in the current environment…prompting specs to take an aggressive short position in gold.”

If Friday’s US non-farm payrolls report is weaker than analysts expect, “The dominance of shorts increases the risk of a short-covering rally” in the gold price.

Stock markets rebounded worldwide meantime Tuesday morning, with Japan’s Nikkei index regaining half of Monday’s near-4% drop.

Turkish equities also rose sharply, as did the Lira and Ankara’s government bond prices, despite fresh anti-government protests across the country.

One protester died Monday in the city of Antakya, near NATO member Turkey’s border with war-torn Syria.

Despite prime minister Erdogan flying out to a planned meeting in Morocco, police today deployed water cannon around his official residence.

Turkey imported 43.5 tonnes of gold in May, according to the Istanbul Gold Exchange, just shy of April’s 5-year record.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

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 and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

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 HY Markets Forex Blog

West Texas intermediate crude futures dropped as it traded lower on Tuesday, moving back from the yesterday’s session on the weakness in the U.S dollar. WTI crude futures pushed back by 0.41% to $93.07 per barrel, as Brent Crude futures stood at 0.24% to $101.82 per barrel.

The US dollar index increased by 0.13% to 82.762. The Oil market is reacting to the fluctuations of the currency than the supply and demand mechanism, according to the market analysts.

An estimated 650,000 is expected to drop in stockpiles, according to reports from the government inventories released on Wednesday, declining from the 82-year high.

For the July settlement, Brent crude slid 24 cents to $101.82 a barrel on the ICE Futures Europe exchange. Increased from yesterday’s grade of $8.61, Europe’s benchmark grade rose to $8.77 to WTI Futures.

The U.S refineries boosted the operating rates, rising 0.6 percentage points to 87 percent of capacity, according to the Bloomberg survey.

The survey also indicated a possible increase of 1.2 million barrels in gasoline supplies last week, while inventories may have gained an estimated 1.5 million barrels.

The Institute for supply management (ISM) index of manufacturing activity for the month of May closed at 49.0, while this month’s ISM manufacturing purchasing managers’ index (PMI) indicates that it’s at its lowest since June 2009.

The post WTI drops after Monday’s session appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

According to over four thousand analysts’ predictions assembled by Bloomberg, Topix index profits rose 57 % to 74.78 yen a share this year , compared with the global 19 percent .

Toyota Motor, the world largest car-makers, stated that the profits and sales will increase to it highest in the next six years in the 12 months ending March 2014. The shares have nearly doubled and the Topix 30-biggest companies, increased by 4.1 percent on April 30^th.

An estimated $1.24 trillion was added to the value of Tokyo-traded shares since Nov 14.

Bloomberg reports showed that 52 percent session since then lifted most of the 33 industry groups and companies. Japan is the biggest country from the markets among the 72 countries led by MSCI’s benchmark global indexes.

The Chinese manufacturing growth is indicating signs of slowing down and the U.S Federal Reserve are considering reducing bond purchases that would improve the economy, have impelled the biggest Topix  price sway  .

“It’s natural that stocks will move randomly,” Abe adviser Koichi Hamada told reporters in Tokyo on May 30. “Excessive upward or downward moves can happen any time.”

The profits for the Japanese companies are growing at a fast rate than other countries. An estimated 57 percent growth rate came after the expansion in 2012, according to the analysis taken in the MSCI All-country World Index, compiled by Bloomberg.

The Japanese industrial production increased by 1.7 percent, exceeded its highest estimate in April from March, according to a survey taken by Bloomberg news. Falling for the sixth month in April , was the National consumer prices , at the same time a price weighed for Tokyo city increased on May for the first time in four years .

The post Rise in Tropix Profits appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

One sector we haven’t looked at in quite some time is the big pharmaceutical stocks sector. Exposure to this sector is always welcome in a long-term stock market portfolio.

Like every company, big pharmaceutical companies experience their own business cycles, but dividend payments within the group are significant and worthy of attention.

Bristol-Myers Squibb Company (NYSE/BMY) was one of the higher dividend paying stocks within the group.

The company got a major Wall Street upgrade from Citigroup, based on its Phase 3 development program for “Nivolumab,” a new cancer treatment.

The company recently experienced renewed stock market momentum after a period of consolidation. Its dividend yield is approximately three percent now because of the run-up. It was closer to five percent not too long ago.

I’m still a fan of combo pharmaceutical companies for long-term portfolios. By this I mean companies with other business lines, rather than pure-play drug development stocks. I’m referring to companies like Johnson & Johnson (NYSE/JNJ), which has pharmaceuticals, consumer products, medical devices, and diagnostics business lines. There’s also Abbott Laboratories (NYSE/ABT), which sells drugs, eye-care products, nutritional products, and dog food.

This multifaceted business approach that includes the expensive, but also rewarding business of drug development creates a nice bit of diversification as the business cycle changes.

Like virtually everything else in the large-cap space, Abbott has done great on the stock market over the last couple of years. The company only experienced two long periods of flat performance since 1999. Abbott’s stock chart is featured below:

Chart courtesy of www.StockCharts.com

In its latest quarterly report, the company’s earnings from continuing operations improved substantially to $545 million, up from $351 million.

Global revenues grew 3.5% on an operational basis to $5.4 billion. Currency translation knocked this back to 1.8%. The company’s strongest growth was in its nutrition division, followed by diagnostics, and then established pharmaceuticals. (See “Why DuPont’s Earnings Results Are So Typical for This Stock Market.”)

Like Johnson & Johnson, Abbott is now trading at an all-time record-high on the stock market. In terms of valuation, however, Abbott has a price-to-earnings (P/E) ratio of approximately 11.5. Johnson & Johnson’s is around 23.

For many years, I’ve seen countless stock market portfolios hold either of these two companies—sometimes both. With the stock market and these positions at all-time record-highs, it is difficult to make the case that they’re worth accumulating at this particular point in time. But with a major retrenchment in the stock market, these stocks would certainly be worthy of consideration for long-term retirement portfolios.

Both companies backed their previously stated 2013 full-year outlooks.

A big pharmaceutical company that’s diversified into other complementary business lines is the way to go if you’re looking to make an investment in this sector. I’m a big believer in the long-term wealth-creating effect of dividend reinvestment. A company with partial dividend reinvestment is also attractive.

The stock market has shown it likes to stick with its winners. With any more upside, these two pharmaceutical giants—Johnson & Johnson and Abbott Laboratories—should keep ticking higher.

Article by profitconfidential.com

May was supposed to a dud, according to the Stock Trader’s Almanac. In 2012, the month of May was a disaster, with the Dow and the S&P 500 plummeting 6.21% and 6.23%, respectively. The technology and small-cap sectors fared even worse, with the NASDAQ and Russell 2000 giving up 7.19% and 6.74%, respectively, in May 2012.

Fast-forward a year, and this May has been blooming for the stock market. The key stock indices recorded excellent gains, with the NASDAQ staging its best month in over a year.

The reality is that in spite of several days of selling in mid-April, the current upward move in the stock market this year really hasn’t faced any hurdles, which is a surprise.

In fact, we have yet to see sustained selling or a down month this year, with the exception of the 0.42% decline posted by the Russell 2000 in April. Small-caps came back with a vengeance in May, advancing nearly five percent.

And there will likely be more highs and records in the stock market to come as long as the Federal Reserve and other global central banks continue offering easy money and driving down interest rates. And if 2012 is any indication, it’s looking like full steam ahead.

In 2012, the stock market staged a strong rally following the May meltdown, reporting gains in each month from June to September.

Now, I’m not totally convinced this pattern will happen again this year, but the investment climate as far as the economy and easy money is better than it was in 2012.

The only thing that concerns me is that I just don’t see the current rate of the stock market advance keeping pace. If this were to happen, the Dow would end up with a 41% gain, while the S&P 500 would have advanced 38%. Honestly, I don’t see this happening, which means we could likely see some hesitancy over the next several months—or at least a stock market correction of some meaningful magnitude.

I would view a stock market correction not as a red flag, but as a buying opportunity to jump in and accumulate additional positions. My belief is that this stock market is heading higher.

The only thing that could derail the bull market is the Fed, especially if it decides to pare down its bond buying, which would force longer-term yields higher.

In addition, I’m concerned about the bubble-like conditions in the Japanese stock market, where I feel stocks are extremely vulnerable to more selling. (Read “Why Nikkei Sell-Off May Foreshadow Things to Come.”)

Since trading at a high on May 22, the benchmark Nikkei index has faltered 10.7% and has breached its 50-day moving average, as shown in the chart below, based on my technical analysis.

Chart courtesy of www.StockCharts.com

What concerns me in Japan is the lack of solid buying following the 7.3% correction on May 23. Of course, Japan’s situation is vastly different from the U.S., since Japanese stocks were up 70% in just six months.

Article by profitconfidential.com

While an economic slowdown is looming over the global economy, no one seems to care, as stock markets continue to reach new record-highs—giving investors false hopes of economic growth. But how long can this mirage actually last?

The economic slowdown in the global economy I’m talking about is a worldwide pullback in growth. Take India as the first example. According to India’s Central Statistics Office, the Indian economy is growing at five percent—its slowest pace in a decade! The director general of the Confederation of Indian Industry was quoted late last week as saying, “With no visible pick-up in any key levers of the economy, the situation remains grim.” (Source: Mallet, V., “India records slowest growth in a decade,” Financial Times, May 31, 2013.)

China, the second-biggest economic hub in the global economy, is facing headwinds, as its economy is growing at its slowest pace since 2009. Japan has undergone the largest per-capita quantitative easing program in history (its debt-to-gross domestic product [GDP] is running above 200%), and that country is back in a recession.

The unemployment rate in the eurozone was reported last week at 12.2% for April. It was 12.1% in March. The unemployment rate in Spain stood at 26.8 % and in Portugal, it stood at 17.8%. (Source: Eurostat web site, May 31, 2013.)

And industrial metal prices, which are supposed to be a leading indicator, are all heading downward.

Take a look at the chart below of the Dow Jones-UBS Industrial Metals Index. This index provides an overall picture of the performance of industrial metals.

Chart courtesy of www.StockCharts.com

Since the beginning of the year, this industrial metals index has declined about 14%. And, as it has been well-documented in these pages, copper stockpiles are increasing, up significantly since the beginning of the year.

But large nations facing economic slowdowns and industrial metal prices facing sell-offs aren’t the only indicators flashing warnings for what’s ahead in the global economy. Other key indicators like the Baltic Dry Index are suggesting demand is bleak and depressed in the global economy.

I can’t stress this enough, dear reader: the global economy witnessing an economic slowdown means difficult times ahead for us here in North America—it’s a major global economy now, where what happens in one part of the world has ramifications for other countries worldwide.

The U.S. economy is broken. According to a survey conducted by Pew Research, 24% of Americans said in the past 12 months that they had difficulties “putting food on the table.” In 2007, just before the Great Recession struck the U.S. economy, this number stood at 16%. (Source: Pew Research, May 24, 2013.)

We can’t fight another economic crisis in an environment in which our central bank has run out of arsenal to fight an economic slowdown and the government has already raked in a huge amount of national debt. That is why I believe this coming downturn will be significant and not so easy to recover from.

Michael’s Personal Notes:

As I have written in these pages many times before, economic growth in a country happens when people are finding jobs, real wages are rising, consumers are spending, businesses are expanding and seeing their inventories decline, and the general standard of living is rising.

But all of these events are missing in the U.S. economy.

The jobs growth we have witnessed following the Great Recession has been in low-wage-paying sectors. Despite the politicians telling us we have economic growth, we still have a significant number of Americans unemployed or working part-time because there aren’t any full-time jobs for them. The underemployment rate, which I consider to be a better measure of the jobs market situation, still stands around 14%, and it’s been at that number or higher for years.

In periods of economic growth, businesses spend their money, creating higher-paying jobs as they do. In the current U.S. economy, businesses are still shying away from spending; rather, they hold a pessimistic view on the economic growth potential of the current U.S. economy. Many companies have taken to the process of buying their shares back in order to make their per-share corporate earnings look better.

According to the Bureau of Economic Analysis, personal consumption expenditure, a measure of consumer spending in the U.S., decreased 0.2% in April after a dismal rise of only 0.1% in March. (Source: Bureau of Economic Analysis, May 31, 2013.)

Disposable income (what Americans have left after paying taxes) also declined in April, shedding 0.1% in the month.

Even with all the gains in the key stock indices and politicians saying we have economic growth in the U.S., the wealth of Americans is nowhere close to what it was before the financial crisis and recession hit the U.S. economy. According to the Federal Reserve Bank of St. Louis, adjusted for inflation, Americans have gained back only 45% of the wealth they lost during the Great Recession. (Source: Wall Street Journal, May 30, 2013.)

If this is what economic growth looks like, then I don’t even want to think about how horrible a slowdown in the U.S. economy will appear—which will happen because of what is going on in the global economic conditions.

If the Federal Reserve starts to move away from quantitative easing and its easy monetary policies, the actual economic growth picture for the U.S. economy will deteriorate quickly—and that’s why I believe the Fed can’t pull back on its paper money printing anytime soon.

Where the Market Stands; Where It’s Headed:

We are in a stock market that is severely overbought. The bear market has done an excellent job at convincing investors the stock market is safe again…and this time, the bear had a helping-hand—the policies of the Federal Reserve.

Even I’m surprised at how far this market has risen. But the fundamentals behind a real, sustainable stock market rally are missing. The higher this stock market goes, the further the fall. Then what? Let me guess: the Fed will buy stocks to support the crash?

What He Said:

“In 2008, I believe investors will fare better invested in T-Bills as opposed to the stock market. I’m bearish on the general stock market for three main reasons: Borrowing money in 2008 will be more difficult for consumers. Consumer spending in the U.S. is drying up, which will push down corporate profits.” Michael Lombardi in Profit Confidential, January 10, 2008. The year 2008 ended up being one of the worst years for the stock market since the 1930s.

Article by profitconfidential.com

As I have written in these pages many times before, economic growth in a country happens when people are finding jobs, real wages are rising, consumers are spending, businesses are expanding and seeing their inventories decline, and the general standard of living is rising.

But all of these events are missing in the U.S. economy.

The jobs growth we have witnessed following the Great Recession has been in low-wage-paying sectors. Despite the politicians telling us we have economic growth, we still have a significant number of Americans unemployed or working part-time because there aren’t any full-time jobs for them. The underemployment rate, which I consider to be a better measure of the jobs market situation, still stands around 14%, and it’s been at that number or higher for years.

In periods of economic growth, businesses spend their money, creating higher-paying jobs as they do. In the current U.S. economy, businesses are still shying away from spending; rather, they hold a pessimistic view on the economic growth potential of the current U.S. economy. Many companies have taken to the process of buying their shares back in order to make their per-share corporate earnings look better.

According to the Bureau of Economic Analysis, personal consumption expenditure, a measure of consumer spending in the U.S., decreased 0.2% in April after a dismal rise of only 0.1% in March. (Source: Bureau of Economic Analysis, May 31, 2013.)

Disposable income (what Americans have left after paying taxes) also declined in April, shedding 0.1% in the month.

Even with all the gains in the key stock indices and politicians saying we have economic growth in the U.S., the wealth of Americans is nowhere close to what it was before the financial crisis and recession hit the U.S. economy. According to the Federal Reserve Bank of St. Louis, adjusted for inflation, Americans have gained back only 45% of the wealth they lost during the Great Recession. (Source: Wall Street Journal, May 30, 2013.)

If this is what economic growth looks like, then I don’t even want to think about how horrible a slowdown in the U.S. economy will appear—which will happen because of what is going on in the global economic conditions.

If the Federal Reserve starts to move away from quantitative easing and its easy monetary policies, the actual economic growth picture for the U.S. economy will deteriorate quickly—and that’s why I believe the Fed can’t pull back on its paper money printing anytime soon.

Where the Market Stands; Where It’s Headed:

We are in a stock market that is severely overbought. The bear market has done an excellent job at convincing investors the stock market is safe again…and this time, the bear had a helping-hand—the policies of the Federal Reserve.

Even I’m surprised at how far this market has risen. But the fundamentals behind a real, sustainable stock market rally are missing. The higher this stock market goes, the further the fall. Then what? Let me guess: the Fed will buy stocks to support the crash?

What He Said:

“In 2008, I believe investors will fare better invested in T-Bills as opposed to the stock market. I’m bearish on the general stock market for three main reasons: Borrowing money in 2008 will be more difficult for consumers. Consumer spending in the U.S. is drying up, which will push down corporate profits.” Michael Lombardi in Profit Confidential, January 10, 2008. The year 2008 ended up being one of the worst years for the stock market since the 1930s.

Article by profitconfidential.com