This morning, Goldman Sachs downgraded shares of Wal-Mart (WMT) from buy to neutral the improving economy is expected to hurt the discount retailer. Goldman speculates that some shoppers will migrate away from discount retailers, like Wal-Mart, as the need to chase savings diminishes.
Chevy Volt, Ford Explorer Win Car & Truck of the Year
The global automotive industry has all eyes on Detroit today, as the North American International Auto Show kicks into high gear. General Motors (GM) electric Chevrolet Volt won the top honors as the North American Car of the Year.
Apple, Verizon Trade Higher on iPhone Speculation
Apple (AAPL) and Verizon (VZ) shares are trading higher today on speculation that Verizon Wireless will announce tomorrow that it will now offer iPhone service to its customers. Media have been invited to a Verizon event for an undisclosed announcement in New York Tuesday.
Stock Trading: Is it time for long trades in SP500, Dow, Nasdaq and Russell 2K?
By Chris Vermeulen, GoldAndOilGuy.com
It was a great first week in the market for 2011. Volume picked up as traders slowly return from holidays focusing on the markets again. Looking forward volume should continue to expand because there will be more traders in front of their terminals excited to see what type of money they can make in 2011.
Let’s jump into what happened last week. On Friday the market generated a short term trading signals to go long SP500, Dow, Nasdaq or Russell 2k. This trade seemed to fall on a perfect day because if we look back over last year’s weird trading characteristics typically if you were to buy on a Friday and hold a position until Monday it would have netted you a profit. Well on Friday the market had a very nice intraday pullback to a level which there was strong support so we bought in with a small position.
Let’s jump into the charts for a visual of what I am talking about…
SPY – Daily Chart & Moving Averages
This chart shows the big picture. Currently we are in a strong uptrend and looking to buy significant pullbacks to key levels of support, and that is exactly what we had last week.
The market pulled back to a level which has support:
1. It pulled back to the 14 day moving average
2. It pulled back to the previous weeks high
3. It pulled back to a support trend line
Each of these levels happen are at the same level and each type of support will attract a different type of trader, meaning there should be a lot of individuals covering their shorts and or buying at that point.
Friday’s 1 Minute Madness Chart
This is a 1 minute chart of just last Friday scrunched together so I can fit everything into the chart. What I want to show here is how the short term time frame can help you spot a bottom as it is forming. This actually is a little more complicated that I’m showing here but I hope you get the point.
Every day there is either a short term top or bottom which forms usually between 10am – 2pm ET. When the daily chart is in an uptrend you should focus on only trying play bottoms as the bias is up and even if your timing is off a little the overall larger trend typically will save your butt.
The chart below shows how a morning support level was broken and the market started to fall. That is the first time in the day which stops get triggered and the start of a new trend was born. The jump in volume was from traders who were long and used the morning support as a level to exit the position if it was broken in order to cut their losses. Bearish traders on the other hand would have been shorting on the breakdown anticipating lower prices.
Usually after a break there is a test of the breakdown level and we got that a few minutes later as which point more traders took short positions hoping for a continues selling. That wave of selling led to a sharp drop and then the first real bounce.
My general rule is you can trade the first pullback after a breakout or price surge. Now this can be taken two ways. You can trade the first test of a breakout which in my opinion carries the lowest risk and then you can still trade the first real bounce which comes after strong and steep price movement.
When looking for the bottom I like to see multiple new lows with price spikes as it means stops are being triggered, and more traders keep shorting the new lows. Once the herd is heavily weighted on the short side and the chart forms an ABC retrace then I know a bottom is near and all those shorts will be covering sooner than later.
Market Sentiment Trading Indicators – 10 Minute Charts
Top Chart: SPY etf shows a possible ABC correction on the 10 minute chart along with panic selling as there we 3 sell orders to every 1 buy order. Everyone was running for the door.
Middle Chart: NYSE Advance Decline line was showing stocks were oversold on the short term basis and it’s just a matter of time before the price stabilizes or bounces.
Bottom Chart: Put/call ratio was telling me even the options traders were buying leverage to the down side. All of this tells me the majority of traders are selling and I like to do the opposite which you will learn over time.
SP500 Futures – 5 Minute Chart of Friday
This shows where our entry point was using all the above indicators and trading analysis. Because the broad market has been rising for so long and showing signs of correcting any day now, a trader must be very picky/timely with their entry point and the amount of money put to work in these trades. But just because the market feels like it’s ready to roll over it does not mean we should be looking to go short. I strongly believe we buy the dips but keep our position sizes much smaller than normal. For all we know this uptrend could go on into May…
During an overbought/overextended market condition which I think most of us agree we are in, I am not willing to risk much capital in new positions and also the reason why I am really zooming in on the charts to get us the best possible price to reduce risk.
Weekend Broad Market Trading Conclusion:
Last week’s entry point required us to be very timely, but keep in mind this is not the norm. During a new trend we sometimes have 2-3 days to enter a position before the market starts to really move and it is those larger swing trades which make some decent money and last weeks at a time.
Anyways, thought I would share this info with a little more detail. As you can see there is a lot of information and timing that must come together for a trade setup and entry point.
If you would like to get more of my daily analysis to join my newsletter at www.GoldAndOilGuy.com
Chris Vermeulen
FOREX: Large COT Currency Speculators increase short positions against US Dollar
By CountingPips.com
The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that futures speculators increased their short positions of the US dollar against the other major currencies. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $12.4 billion against other major currencies as of January 4th. This is a rise from the total short position of $8.85 billion on December 28th, according to the CFTC data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.
EuroFx: Currency speculators slightly trimmed their short positions of the euro against the U.S. dollar. Euro positions were short by 24,201 contracts from a total of 26,479 short positions registered on December 28th. The December 28th level was the largest short position in the euro since July 2010.
The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar.
GBP: Speculators added to their British pound sterling short positions for second straight week to a total of 14,133 short contracts on January 4th. The previous week had short positions of 13,121 contracts. Pound sterling contracts have now been short for six straight weeks dating back to November 30th.
JPY: The Japanese yen net long contracts increased for a second straight week as of January 4th with 39,065 long contracts from 29,641 net long contracts reported on December 28th.
CHF: Swiss franc long positions dipped slightly after four straight weeks of rising long positions. Swiss franc positions fell to a total of 13,032 long contracts as of January 4th after totaling a net of 14,002 long contracts on December 28th.
CAD: The Canadian dollar positions increased for second consecutive week as of January 4th. CAD long positions registered 38,340 contracts after totaling 34,787 net longs on December 28th. This is the highest level for Canadian dollar contracts since November 16th.
AUD: The Australian dollar positions dipped after a streak of gains for four consecutive weeks. AUD contracts decreased to a net amount of 62,513 long contracts as of January 4th from 64,316 long contracts on December 28th.
NZD: New Zealand dollar futures positions rose for a second straight week to a total of 10,731 long positions as of January 4th. NZD large speculator long positions had risen to a total of 8,115 long contracts on December 28th.
MXN: Mexican peso long contracts edged lower as of January 4th to 74,310 net long positions from 82,246 longs the week prior. The latest data breaks up a string of three straight weeks of increases for the Mexican peso speculative positions.
COT Data Summary as of January 4th, 2010
Large Speculators Net Positions vs. the US Dollar
EuroFx: -24,201
British pound sterling: -14,133
Japanese yen: +39,065
Swiss franc: +13,032
Canadian dollar: +38,340
Australian dollar: +62,513
New Zealand dollar: +10,731
Mexican peso: +74,310
Go to the Commitment of Traders CME raw futures data
Further COT Resources from around the web:
USD/CHF Testing 7-Month Trend Line
By Russell Glaser
A sharp rise in the price of the USD/CHF has taken the pair above the intermediate trend line and has the price testing an 7-month trend line.
With the breach of the December to January trend line last week, the pair may soon take out the downward sloping trend line that begins on June 1st, 2010 and served as support in early December. Should the pair close above this trend line the next resistance levels would be found at 0.9730, followed by 0.9915, and the December 1st high of 1.0065.
Support comes in at 0.9500 and the low at 0.9300.
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.
Major Events in the current week to affect USD/JPY
The greenback remained strong versus the Japanese Yen in the last week on better than expected US jobs data. The pair USD/JPY surged 2.29 percent in the last week to 83.68 on Friday. The pair is expected to experience support around 81.87 and likely to find resistance around 83.68.
The US dollar remained investor’s favorite as the US unemployment rate dropped to four basis points to 9.4 percent from 9.8 percent.
The next weeks major events that could affect USD/JPY trading are as below:-
As on Monday January 10th, 2010 markets in Japan will be closed due to Coming-of-Age-Day. However the Bank of Japan will release a comprehensive report on country’s lending and current account on January 11th, 2010. On Tuesday index of Japan’s leading economic indicators will also be published. In United States report on wholesale inventories will be published on Tuesday January 11th, 2010.
Japan will report the data on its key indicator of production output also known as core machinery orders on January 12th, 2010 whereas US Federal Reserve will publish its Beige Book and reports on crude oil inventories, import prices and federal budget balance.
On January 13th, 2010 Japan will release its data on machine tool orders where as US will announce its key report on weekly jobless claims and producer price inflation.
On Friday January 14th, 2010 the weekly round-up report on US consumer price inflation, USD industrial production and US consumer spending will be published.
About the Author
Daily forex trading news written by Rehan from DailyForexTrade.com
Forex Daily Market Commentary
By GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
The dollar see-sawed during the Asia session. Some dollar strength at the open eventually gave way to selling after remarks out of China recommended additional FX reserve diversification. EURUSD traded 1.2867-1.2930, USDJPY 82.94-83.29. December non-farm payrolls increased by fewer than expected, rising by only +103k (cons. +150k). The unemployment rate unexpectedly fell sharply to 9.4% (cons. 9.7%, prev. 9.8%), but this was largely due to a contraction in the workforce. Fed Vice-Chairman Yellen offered a spirited defence of the Fed’s decision to embark on quantitative easing in general, and the latest round in particular. She identified three channels through which these purchases could help, citing “a reduced cost of credit to consumers and businesses, a rise in asset prices that boosts household wealth and spending, and a moderate change in the foreign exchange value of the dollar that provides support to net exports.” Yellen was critical of suspicions that the Fed’s asset purchases were designed “to promote U.S. growth at the expense of other nations by depreciating the dollar”. She noted that, by stimulating domestic growth, QE is also likely to boost demand for foreign goods in the US, and thereby promote growth abroad. Chicago Fed President Evans, a 2011 FOMC voter, said the threshold is high for making any adjustments to the Fed’s policy stance, but that he is keeping an “open mind” about whether the Fed needs to go beyond the proposed $600 bn in Treasury purchases. Minneapolis Fed President Kocherlakota also showed little sign that he would vote for a premature end to QE2.
EUR
Reuters cited an unnamed “senior Eurozone source” who claimed that Portugal is being pressured by France and Germany and others to request financial assistance from the EU/IMF. The source noted that no talks on a potential aid package have yet taken place, although Portugal’s bond auction on Wednesday could be a trigger for an activation request for assistance.
Reuters also reported that Portugal is in the process of making a private placement of bonds to diversify its investor base. The report cited an unnamed spokesperson at Portugal’s finance ministry who declined to comment on the identity of the potential buyer. Portugal’s maiden bond auction for 2011 is scheduled for Wednesday.
Germany’s Christian Social Union, an ally of Chancellor Merkel’s Christian Democratic Union, released a policy paper stating that the ECB should focus on its core role of fighting inflation, and that the bond-buying strategy must be capped.
AUD
November retail sales came in exactly in line with expectations, rising only +3% m/m (prev. -0.8%). After the unseasonally wet weather and flooding through December and January, our Australian economists expect only a modest pick-up in retail in the near term. The data reinforces their view that the RBA will be on hold for most, if not all, of H1.
CAD
The December payrolls report was slightly stronger than expected, with payrolls rising +22k (cons. +20k), and the unemployment rate stabilising at 7.6% (cons. 7.7%). Giving his reaction to the numbers, Prime Minister Harper described them as “encouraging” but warned of “significant challenges in the global economy and our export markets … that threaten the global economy and threaten our own recovery”.
TECHNICAL OUTLOOK
EURCHF focus shifts to 1.2402.
EURUSD BEARISH Bear trend remains eyeing 1.2830/1.2796 support. Resistance is at 1.3021.
USDJPY NEUTRAL Break above 83.67 would open up the way towards 84.51 mid-December high; support at 82.63.
GBPUSD NEUTRAL Support is at 1.5345 while resistance is at 1.5665.
USDCHF NEUTRAL Focus on the tough 0.9774 Fibonacci resistance. Support lies at 0.9469.
AUDUSD NEUTRAL Look for a break below 0.9863/31 support zone to trigger the negative tone; resistance at 0.9993.
USDCAD BEARISH Clearance of 0.9917 exposes 0.9889/25 area. Initial resistance is at 1.0004.
EURCHF BEARISH Break of 1.2456 shifts focus to 1.2402, resistance at 1.2564.
EURGBP BEARISH Sharp decline on Friday slashed through 0.8347/35 support area exposing 0.8274; resistance at 0.8335 previous low.
EURJPY BEARISH Push below 107.61 exposes 105.97 key low, resistance at 108.55.
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.
The dollar see-sawed during the Asia session. Some dollar strength at the open eventually gave way to selling after remarks out of China recommended additional FX reserve diversification. EURUSD traded 1.2867-1.2930, USDJPY 82.94-83.29. December non-farm payrolls
EUR Forecasted to Enter Bullish Trend vs. GBP
By Dan Eduard
The last few days have seen the euro drop against most of its main currency rivals, including the UK pound. Since the 4th of January, the EUR/GBP pair has tumbled some 330 pips, and is currently trading at the 0.8303 level. Forex traders will want to pay attention to this pair, as technical indicators are currently showing that a significant bullish trend may occur in the near future.
We will be analyzing the daily chart for EUR/GBP provided by ForexYard. The technical indicators being used are the Bollinger Bands, Williams Percent Range, Relative Strength Index (RSI) and Stochastic Slow.
1. The pair is currently trading just below the lower Bollinger Band, which is typically a sign that an upward reversal is likely to take place.
2. The Williams Percent Range is currently at the -100 level. Typically, when the indicator is between -80 and -100, it is a sign that the pair is oversold and that it may begin an upward trend.
3. The RSI is currently right on the border of being in the oversold region. Traders will want to pay particular attention to this indicator. When it crosses the lower support line, it will likely be a sign of an impending bullish move.
4. The Stochastic Slow is on its way to forming a bullish cross, in yet another sign that the euro is set to move up on its British counterpart. Now is a great time for forex traders to enter into buy positions for this pair, before the upward trend breaks out.
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.
Weekly Outlook for EUR/USD
The Euro remained under extreme selling pressure in the last week due to rising uncertainty over euro zone’s sovereign debt situation. The pair EUR/USD declined 3.4 percent in the last week reaching its lowest since mid September to 1.2904 as on last Friday’s trading session.
The support and resistance level for the pair EUR/USD is considered around 1.2702 and 1.302 respectively.
The US dollar on the other hand remained strong the whole week on the positive US economic data depicting reduced unemployment rate and jobless claims. On the other hand the single currency moved lower on the new of decline in German industrial production numbers.
Following is the list of major events for current week January 10, 2011 to January 14th, 2010 which can affect the Euro trading.
On Monday January 10th, 2010 official data on French industrial production and a report on investor confidence will be released. Moreover ECB president Jean-Claude Trichet will make a speech which is expected to define his future plans for monetary policy.
Official report on US wholesale Inventories will be published on January 11th, 2010 whereas on January 12th 2010 official report on euro zone’s industrial production will be published. On Jan 12th data on import prices, crude oil inventories and federal budget balance will be released.
On January 13th, 2010 the weekly US jobless claims data will announced along with the report on producer price inflation and trade balance. Whereas in euro zone Germany will release its wholesale price data and France will publish a report on its consumer price inflation.
On the last day of the week January 14th, 2010, data on consumer price inflation data, industrial production and consumer spending will be reported by US, whereas in euro zone Germany and Italy will also furnish their data on consumer price inflation and trade balances.
About the Author
Daily forex trading news written by Rehan from DailyForexTrade.com
