Month: October 2010

Good day stock market lads! Here’s a technical update on the shares of Hewlett-Packard Company (HP). HP’s shares or HPQ as they are traded in the New York Stock Exchange appear to be bound for a move north after declining to a low of just below $38.00 during the last week of August. After finding some support at the $38.00 level, it then rallied and moved on to form whats appears to be a cup and handle pattern. As some of you might know, such formation usually indicates a likely bullish reversal. Therefore, if and when HPQ is able to make a move past the neckline around $43.00, HP’s shares would more likely hit $48.00 or even $49.00. A failure to break the necline, on the other hand, could send the company’s stocks back to its low at $48.00.

Hewlett-Packard Company, by the way, is a US-based multinational IT corporation. The company specializes in both hardware and software computer development and manufacturing. Its line of products include personal computers and notebooks. In August 6, its CEO, Mark Hurd, resigned from his office amid claim of sexual harassment by actress Jodie Fisher. While he was not found guilty of the said claim, several expense-irregularities were found during the company’s investigation. His resignation then led to a broad-based selling of the stock (represented by the long red candle on August 6).

More on LaidTrades.com …

By FxNewsChina.com

China’s gross domestic product continued to grow at a robust pace in the third quarter of 2010, according to the latest data released by the National Bureau of Statistics. The Chinese GDP increased by 9.6 percent in the third quarter of 2010 from the third quarter of 2009. Despite the rapid GDP growth pace, this is the third straight quarter of decline in the GDP following the 10.3 percent advance in the second quarter and the 11.9 percent growth in the first quarter.

Economic analysts were expecting the GDP numbers to register a 9.5 percent gain for the third quarter.

Sheng Laiyun, the Spokesman for National Bureau of Statistics of China, stated that, “In the first three quarters of 2010, faced with the complicated and volatile domestic and international environment and various grand challenges, under the correct leadership of the Central Party Committee and the State Council, all regions and departments consistently carried out the packages of policies dealing with the impacts of international financial crisis and other policies and measures, and proactively pushed forward the transformation of economic development mode and the adjustment of economic structures.”

“As a result, the good developing momentum of economy was further consolidated, and the national economy kept moving towards the expected direction of macro economic control.”

Government report highlights

• According to the report, China’s GDP grew by 10.6 percent for the first three quarters of 2010 on an annual basis to a total 26,866.0 billion yuan.

• Industrial production in China had growth of 13.5 percent in the third quarter of 2010 following 15.9 percent growth in the second quarter and 19.6 percent growth in the first quarter.

• Chinese retail sales data rose by 18.3 percent through the first three quarters of 2010 on an annual basis to a total of 11,102.9 billion yuan. The data shows that furniture sales decreased by 38.4 percent while motor vehicle sales advanced by 34.9 percent and household appliances and audio video equipment sales rose by 28.1 percent.

• Consumer price inflation, a worry for the Chinese economy, increased by 2.9 percent in the first three quarters of 2010. Food prices were higher by 6.1 percent while tobacco, liquor and articles prices rose by 1.6 percent, health care prices increased by 2.9 percent and housing prices gained by 4.1 percent. Clothing prices fell by 1.1 percent, transportation take medication prices declined by 0.3 percent and household facilities & and maintenance services fell by 0.3 percent.

• Producer prices rose by 5.5 percent on an annual basis while the September annual change was an increase by 4.3 percent. The August to September month on month change was an increase of 0.6 percent.

Read the full report from the National Bureau of Statistics.

About the Author

By FxNewsChina.com

The equities market reversed to the upside Wednesday posting a light volume broad based rally. Remember light volume tends to have a neutral to upward bias on stocks, But it was mainly the sharp drop in the dollar which spurred stocks and commodities higher.

Today’s bounce was not much of a surprise for several reasons…
• Overall trend is up, one day sell offs are generally profit taking
• Panic selling on the NYSE tipped us off that the market was oversold
• I don’t think they will let the market fall before the November election
• Intermediate cycle is turning up this week, 3 weeks of upward momentum…

US Dollar Index – 4 Hour Chart

The dollar put in a big bounce this week filling its gap window… Remember most gaps get filled with virtually every investment vehicle so when you see them remember this chart….

SPY ETF – Daily Chart

SP500 has been riding the key moving average up and Tuesday’s sell off tagged the 14MA along with extreme market internal readings telling intraday traders that a bounce is about to take place.

Gold Futures – Daily Chart

You can see gold has done much the same… A sharp profit/stop running sell off, which took the price back down to support. We took a long position to catch this bounce and hopefully a larger move going forward.

Market Sentiment Readings

Tuesday’s pullback was a great reminder of just how over extended the equities market was. These heavy volume sell offs are typical in a bull market. Without regular pauses in price, traders tend to place trailing stops moving them up each day. With traders chasing stocks higher bidding them up instead of waiting for a pullback we get a very large number to stop orders following the price up each day. Then, it’s only a matter of time before a key short term support level is broken at which point the flood gates open and everyone’s stops turn to market orders flooding the stock exchanges with sell orders causing a rapid decline and panic selling. This is exactly what happened on Tuesday which I show in the chart below.

Understanding how to read market internals provides great insight for short term traders looking to make quick high probability trades every week… Market internals are just part of the equation but very powerful on their own with proper money/position management. Both of these intraday extremes were bought on Tuesday in the advanced chatroom (FuturesTradingSignals.com).. We quickly booked profits and moved our stops up in order to protect our capital as the market surged higher.

Mid-Week Market Trend Analysis:

In short, the US Dollar is still in a down trend overall. The Fed’s I would think will continue to hold the market up into the election. It works well for them… they print money which devalues the dollar, and in return boosts stocks and commodities, plus they get trillions of dollars to spend… I’m sure its like kids in a candy store over there.

While everyone is trying to pick a top in this over extended market I think it is crucial to stick with the overall trend and to not fight the Fed. Using the key moving averages on the daily chart as shown in the charts above, continue to buy on dips until the market closes below the 20 day moving average at which point you should abandon ship.

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Chris Vermeulen

By Dan Eduard – Over the last several weeks, the Canadian dollar has been steadily losing ground to the Japanese yen. The yen, widely considered to be a safe-haven currency, has been making gains across the board as investors continue to shy away from risk taking. Since October 7th, the CAD/JPY pair has gone down over 250 pips. As we will demonstrate through a number of technical indicators, the pair may be due for an upward correction.

We will be looking at the daily chart for CAD/JPY, provided by Forexyard. The technical indicators we will use are the Williams Percent Range, Stochastic Slow and the Relative Strength Index (RSI).

1. The Williams Percent Range is currently right above the -80 level. Should the indicator drop below -80, traders could take this as a sign that the pair is in oversold territory and due for a bullish correction.

2. Traders will notice the bullish cross formed below the support line on the Stochastic Slow. Typically when a cross, such as the one shown here forms, an upward correction takes place.

3. Finally, in what may be our strongest signal yet of an impending bullish move, the RSI is floating in oversold territory, and has been for some time. Traders can take this as a sign that the pair will see an upward correction in the very near future.

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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar briefly strengthened sharply during the Asia session on wire headlines citing US Treasury Secretary Geithner as telling the Wall Street Journal that there is no need for the dollar to sink further against the euro and the yen. However, given the lack of a supporting quote, the market came to doubt the accuracy of the remark, and the dollar gave back most of its gains against the yen. EURUSD traded 1.3872-1.3983, USDJPY 80.99-81.83. Asian equities closed slightly weaker, despite a strong finish in New York that took the S&P 500 over +1% higher. Gold continued to lose ground, and it is changing hands for $1341.98/oz at the time of writing. During the US session, the dollar hit a sizable weak patch, which was variously attributed to German Chancellor Merkel’s comments or the appearance of an early draft of a G20 statement. The draft suggested the group may take a clear stand against what has been called a global “currency war” as the G20 economies vow to “refrain from competitive undervaluation” of their currencies. But the move may have been due more to market talk of a US think-tank saying that the Fed will, at its Nov. 3 meeting, launch $500 bn worth of QE over three to six months. QE2 expectations remain firmly in place as the latest Fed Beige Book said economic activity continued at a modest pace, though the tone was slightly more positive than previously, and investors paid no heed to Philadelphia Fed President Plosser being somewhat disinclined to pursue further easing. Richmond Fed President Lacker, an FOMC voter in 2012, said the dollar seems to be responding to shifting expectations about policy in different countries. Initial jobless claims are due and the Fed’s Hoenig and Bullard are likely to sound more hesitant on QE2 prospects.
EUR

German Chancellor Merkel said fiscal problems persist in the Eurozone but that rescue mechanisms cannot run beyond 2013. Merkel added that the euro is still being shielded by the various rescue packages. While near-term dollar weakness is the overwhelming factor supporting EURUSD, Merkel’s comments underscore our concern for the medium-term prospects for the euro.
PMIs are in focus for the Eurozone today as they are expected to ease slightly in October but the recent euro strength will likely not deter growth prospects in the near term.
GBP

The minutes from the October 7 MPC meeting revealed a three-way split in the policy vote. As expected, MPC policymaker Sentance voted for a policy rate hike and at the other end of the spectrum MPC policymaker Posen voted to begin another round of quantitative easing. Sterling fell slightly on the split vote and the size of the asset purchases Posen had in mind was a factor as he voted for £50bn more, a substantial sum that would have increased the BoE’s stock of Gilts by 25%. The minutes also noted most MPC members stood ready to alter policy in either direction although some felt that the chances of more stimulus being needed had increased. November’s Inflation Report was explicitly mentioned as providing the next opportunity to review the economic outlook thoroughly.
The Comprehensive Spending Review (CSR) provided few surprises, as the budget deficit forecasts were held unchanged. The lack of surprises and continued dollar weakness overcame any hangover from the latest BoE MPC minutes and cable remained supported. But while the CSR was as expected, it still means the UK faces a significant period of austerity, which keeps us cautious on sterling in the medium-term.
M4 money supply made another all-time low, coming in well below expectations at +0.9% y/y. BoE Governor King said M4, pay, and demand growth are likely the best guides to the inflation path and this print could be concerning.
JPY

Finance Minister Noda repeated that excessive FX moves are undesirable and that Japan will take decisive action on FX, including intervention when needed. Noda went on to say that the yen’s appreciation against other Asian currencies puts Japan’s trade at a disadvantage.
CAD

The BoC MPR provided more details on the forecast changes mentioned in the earlier policy statement. But the report did mention that the inflation forecast assumes a “gradual” rise in rates and in the ensuing press conference Governor Carney sounded less dovish on the domestic economy than the policy statement reflected, which helped support the Canadian dollar during the session.

TECHNICAL OUTLOOK

EURJPY break of 111.77 exposes 110.66
EURUSD BULLISH Break of 1.3775 reaction low exposes 1.3637/1.3559 support zone.
USDJPY BEARISH Next support at 79.75 ahead of 77.91. Upside potential capped at 83.03.
GBPUSD BULLISH Look for a break below 1.5606; till then pullback is seen as a correction. Resistance at 1.5942 ahead of 1.6107.
USDCHF BEARISH Rise through 0.9729 exposes 0.9918 breakout low. Next big support below 0.9463 at 0.9225.
AUDUSD BULLISH Upside gains held at 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.
USDCAD BEARISH Tough resistance in 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.
EURCHF BULLISH While 1.3494 continues to cap recoveries, support lies at 1.3265 ahead of 1.3072.
EURGBP BULLISH Momentum is positive; expect gains to target 0.8840 with scope for 0.8894 and 0.9039 next. Near-term support holds at 0.8689.
EURJPY BULLISH Move below 111.77 exposes 110.66 ahead of 107.73. Upside capped at 115.68.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The U.S. dollar on Wednesday gave back most of the gains against major counterparts, dropping against the EUR and felling to a 15-year low against the Japanese yen, as the knee jerk reaction to China’s interest rate hike subsided.

Economic News

USD – USD Reverses Gains, Dropping versus Most Currency Counterparts

The USD fell yesterday, reversing Tuesday’s gains, as the knee jerk reaction to china’s small interest hike subsided and a renewed interest in growth linked currencies such as the EUR and Australian Dollar reemerged. The dollar was put under further pressure as the release of the Beige Book showed continued weakness in the U.S economy, intensifying expectations of renewed quantitative easing measures by the Federal Reserve. The dollar plunged to a new 15-year-low against the yen, falling to a low of Y80.84, before recovering to around Y 81.08.

The USD briefly rallied during today’s overnight trading after comments by Treasury Secretary Timothy F. Geithner to the WSJ, reiterating his support for a stronger dollar. The effects, however, were short lived and the greenback has since reversed most of its gains versus its major counterparts.

The dollar is currently at 81.22 yen from 81.09 yen in New York yesterday. It touched 80.85 yesterday, after briefly reaching a high of 81.83 yen. The dollar gained to $1.3917 per euro from $1.3964.

Today traders should follow the release of the Unemployment Claims data at 12:30 as well as the Philly Fed Manufacturing Index at 14:00 GMT which will likely contribute to the debate surrounding monetary easing and provide volatility to the USD pairs.

EUR – EUR Surges on Merkel Comments

The EUR gained broadly against major counterparts Wednesday following optimistic comments by German Chancellor Merkel on the one hand and renewed expectations of continued monetary easing by the Federal Reserve on the other.

Merkel stated that though the global economy has yet to fully recover from the recession, there are “good reasons to turn now to exit strategies” and away from further easing measures. This bolstered expectations of a stronger euro supported by increasing confidence in the European recovery.

The pound rose against the dollar after U.K. Chancellor of the Exchequer George Osborne stated his plan of tackling the nation’s 156 billion-pound ($246 billion) budget deficit. The pound climbed to $1.5851; however, it gave up some of its gains and is currently trading around $1.5820.

A slew of economic data is expected from the euro-zone today which is expected to shed light on the manufacturing and services industries in the euro-zone. Furthermore, retail sales data is expected from the U.K at 8:30 GMT as well as comments by MPC Member Posen at 9:15 GMT. With the abundance of news releases, today is expected to be an exciting day for the EUR and GBP.

JPY – AUD Declines on Lower Equities, Chinese Data

The Australian dollar retreated during today’s early trading as Asian shares fell and following the release of mixed economic data from China. However, the Aussie still remains within two U.S. cents of parity on speculation the Federal Reserve will resume quantitative easing measure, namely injecting more money into the U.S economy, debasing the greenback.

The Aussie is currently at 98.28 U.S. cents from 98.71 cents in New York yesterday. It climbed to $1.0004 on Oct. 15. The Aussie is at 79.92 yen from 80.04 yen, after rising to 81.83 yen on Oct. 7.

Crude Oil – Crude Declines on Growth Prospects

The December contract lost as much as 52 cents, declining to $82.02 a barrel in electronic trading on the New York Mercantile Exchange. Crude declined as the Dollar reversed some of its earlier loses and a report during today’s early trading showed the Chinese economic growth slowed.

Crude oil climbed the most in five weeks yesterday as the dollar tumbled to a 15-year low against the yen and a drop in total U.S. crude-oil and fuel supplies.

Today, traders are advised to follow the numerous data releases from the U.S and Europe as they will likely determine the crude price levels for today.

Technical News

EUR/USD

The pair may see some downward correction today as the RSI for the pair is floating in the overbought territory on the 2 hour chart with a bearish cross evident on the 4 hour chart’s Slow Stochastic. Going short with tight stops may be preferred for the day.

GBP/USD

While mostly flat, with most indicators floating in neutral territory, some downward movement may be expected for the pair today as the RSI for the pair is floating in the overbought territory on the 2 hour chart while a bearish cross is evident on the 4 hour chart’s Slow Stochastic. Going short with tight stops may be a preferred for the day.

USD/JPY

The pair seems to be range trading at the moment with most indicators floating in neutral territory. It seems to have found a comfortable range between 80.90 and 81.50. Waiting on a clearer direction for the pair may be advised for today.

USD/CHF

Following a sharp rise over the past few days, the pair seems to be back in its range trading with most indicators floating in neutral territory. Waiting on a clearer direction for the pair may be advised for today.

The Wild Card

EUR/SEK

Following a sharp drop some upward correction may be expected for the pair today. The RSI for the pair is floating in the oversold territory hourly and 2 hour charts indicating upward pressure. The Williams Percent Range for these charts also supports upward direction. Furthermore, a bullish cross is seen on the 4 hour and 2 hour charts’ Slow Stochastic. Forex traders may be advised to go long for today, at a great entry price.

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.

GBP/USD

Daily graph: http://www.real-forex.com/charts-daily/211010/GBP_DAILY_211010.JPG

3 sessions after a vain breach due to reversal candle on a daily graph, the pair started to decrease very sharply and intensively. Until now, a technical correction of exactly 50% occurred. Since the different candles are very strong, the bearish trend should continue, creating opportunities for “Short” trades.

Our prognostics may be confirmed by the identification of a decreasing configuration on a one-hour graph.

Notification: If a hammer appears, it could be possible to start the transaction immediately but, it is always better being careful and wait for the configuration to occur.

Potential trade

One-hour Graph: http://www.real-forex.com/charts-daily/211010/GBP_1H_211010.JPG

The required configuration did not appear for the moment. If the resistance of 1.5881 is crossed upward, it could be better not to enter the transaction. Trade suggestion:

• The “Stop Loss” should be placed at 1.5881.
• “Limit Order” 10 pips below the closest support.

USD/CAD

Daily graph:  http://www.real-forex.com/charts-daily/211010/CAD_DAILY_211010.JPG

The bullish power is strengthened by the long candle from two sessions ago. This candle reached the resistance zone around 1.0376 GBP.

33% of the uptrend started a few sessions ago has been corrected during yesterday’s session. This classical case of correction suggests a high probability for the preceding trend to be renewed. Therefore, our analysts estimate that the pair may reach the following resistance at 1.0513.

This estimation should be confirmed if an increasing configuration is created on a one-hour graph.

Have a profitable day!

Real-Forex team. 

AUDUSD broke below the lower border of the rising price channel on 4-hour chart and reached as low as 0.9661 level, suggesting that the uptrend from 0.8771 has completed at 0.9998 already. Another fall to 0.9500 area is expected in next several days. Resistance is now at 0.9998, only break above this level could trigger another rise to 1.0100-1.0200 area.

Daily Forex Forecast

By Adam Hewison – Following the gold market as we do here at MarketClub, it was amazing that nobody, and I mean nobody, was bearish on this market. This always creates a problem as the markets tend to reverse when everyone is on one side and there’s no one else left to buy.

Another tip-off was on Fox Business News and also on CNBC indicating that gold was going to hit $1400 almost immediately. Well after Tuesday, we know what was to happen to the price of gold. If gold were so strong, should it really have gone down almost $70 in 4 days?

This is where technical analysis and Japanese candlestick charts really shine in my opinion. What happened in gold was a classic candlestick formation that any trader, whether they trade gold or other markets, should be aware of.

In this short video, I illustrate how this formation occurred and how it was confirmed the next day – and I don’t mean on Tuesday.

I also have a free candlestick book that I’m making available along with this video, be sure to stay tuned at the end of the video or visit:

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub