Month: February 2011

By Sara Nunnally, Editor, Smart Investing Daily, taipanpublishinggroup.com

This week, I want to do something a little different than just run a guest article… I want to take apart a recent article from WaveStrength PowerSignal editor Adam Lass, with contributions from Jared.

Earlier this month, when gold prices were trading below $1,330, Adam released this chart of the Market Vectors Gold Miners ETF (GDX:NYSE).

View Larger Chart

Here’s what he had to say…

The wags have been labeling the recent downward slide in gold prices as the end… a blow-off top… Gold Armageddon… yadda, yadda, yadda.

But when you take a look at the charts for Market Vectors Gold Miners ETF (GDX:NYSE), you can see that gold cyclically retraced within its price channel some 15 times over the past 24 months without challenging the integrity of that rising channel in any way, shape or form.

Right now we have the exact same stacked buy signals — support at the bottom of the rising price channel, a Fibonacci retracement marker and the 200-day moving average, a shift to positive momentum and a positive MACD gap — that have repeatedly yielded upside strokes averaging some 26%.

Now, 26% is a nice average, and Adam’s chart is already starting to pan out. Since Feb. 4, when WaveStrength PowerSignal readers first got this chart in their inboxes, the GDX has climbed 2%. That means there’s still plenty of upside left in this move, and you can find the exact recommendation online, available to all WPS subscribers.

Gold prices themselves have indeed moved higher and were trading back above $1,370 yesterday. This bounce higher is perfectly in line with what we’ve talked about here in Smart Investing Daily.

But let’s take a closer look at those “stacked buy signals” that Adam talked about.

What are they, and what do they mean?

(By the way, investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let my fellow editor Jared Levy and I simplify the stock market for you with our easy-to-understand investment articles.)

Gold Miners ETF Finds Support

Adam talks about the Market Vectors Gold Miners ETF finding support at “the bottom of the rising price channel, a Fibonacci retracement marker and the 200-day moving average.” This “node” of support is clearly marked on the chart, not only just before Adam’s predicted movement for Market Vectors Gold Miners ETF over the next couple months, but in two other instances that both yielded results better than 25%.

These individual supports are powerful in and of themselves, but taken together mark the beginning of a big move higher.

Bottom of a Rising Price Channel — When prices move higher within a channel, it represents the natural price corrections of the company or asset without significant changes to the fundamental value of that company. It’s really just investors deciding if the company or asset is overbought or oversold.

So long as the asset makes higher highs and higher lows, the integrity of the channel remains strong; and when prices trade down to the bottom of that channel, it can signal a good time to buy.

Fibonacci Retracement Marker — Many technical analysts use something called Fibonacci retracements. These are scales drawn on a specific — and significant — price movement… from a bottom to a top, or a top to a bottom. For Market Vectors Gold Miners ETF, the bottom started back in late 2008, and ends at the most recent top in late 2010.

This scale is measured from 100% at the bottom to 0% at the top (when using them on a rising price). The purpose is to find specific percentages of the price move that could provide support for prices during a price correction. Fibonacci retracements have four key markers: at 23.6%, at 38.2%, at 50% and at 62.8%.

Analysts who use Fibonacci retracements find that when prices correct from a high peak, these percentages offer points of support. The inverse is true when prices have fallen significantly… and the retracement markers become points of resistance.

200-Day Moving Average — Moving averages show the average price of a stock or asset over a specific time frame. For the 200-day moving average, this shows the average price of the stock over the past 200 days. These averages kind of smooth out the price movements of a stock, which makes it easier for investors to see how much an asset really is moving. Moving averages, particularly when they survey a larger number of days, can be key indicators of support or resistance.

In Market Vectors Gold Miners ETF’s case, prices climbed quickly between August 2010 and December 2010, which pushed prices farther away from the 200-day moving average. When prices corrected back down to that average, they found support.

Investors also use moving averages to gauge momentum. A rising 200-day moving average is more likely to provide support than a falling 200-day moving average, and Adam’s mention of rising momentum as a specific indicator itself is another level of support.

The convergence of these support points is what Adam calls “stacked buy signals,” because all have appeared to have halted the Market Vectors Gold Miners ETF’s price decline.

These buy signals are then combined with another indicator: MACD.

Moving Average Convergence Divergence — This indicator measures two separate moving averages as compared to a third moving average that functions as “zero.” Sound confusing? It is, but it’s worth understanding, as MACD can provide investors with key buy and sell points.

MACD compares a 26-day moving average to a 12-day moving average. Because of the difference in time frames, the 12-day moving average is more sensitive to price changes than the 26-day moving average. That means these two averages oscillate differently, and the changes in their relationship mean a lot.

These two moving averages are then overlaid on a nine-day moving average that becomes a signal line. Its value doesn’t change. It essentially becomes zero — just a way to compare the movement of the 26-day and 12-day averages to something static.

Those are the basics… Here’s how to interpret those movements.

In general, when both moving averages cross above the signal line, it’s a bullish signal. When they cross below, it’s considered bearish. But the relationship between the two moving averages — the convergence and divergence — is even more important.

Because the 12-day moving average oscillates faster than the 26-day moving average, when the two meet or cross, it becomes a powerful indicator. When the 12-day moving average converges with the 26-day moving average, it could signal the end of a trend. When the 12-day diverges, it could signal a big price move is in the works.

With GDX, the 12-day moving average crossed above the 26-day moving average and was quickly moving higher. That means the immediate downtrend in GDX’s prices was over and that investors could expect a big move higher.

That this divergence happened at the same time the GDX found support on three different levels with rising momentum is a huge indication that the Market Vectors Gold Miners ETF is headed north.

As I said before, the GDX has jumped 2% higher, but could climb as much as 26% higher. This move is just beginning, and Adam and Jared’s recommendation on this move could realize even more gains. WaveStrength PowerSignal subscribers can immediately access this alert online.

And those interested in joining WaveStrength PowerSignal can learn more about Adam’s options-trading service.

About the Author

Sara is Managing Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country. Most recently, Sara co-authored a book with Sandy Franks called, Barbarians of Wealth.

As Senior Research Director, global correspondent and managing editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

By CountingPips.com

The US dollar has been trading lower the past three days against the Japanese yen in forex trading after the USD/JPY bounced off the 200-day moving average. The dollar/yen pair has been rallying for most of February with a top culminating at the 83.96 exchange rate on February 16th following up-and-down January trading.

The pair tested (for the first time since June 2010) but failed to hold above the 200-day moving average (in black) and instead has bounced off and descended lower.

The pair currently trades just above the 50.0 Fibonacci retracement level (on the move down from 85.92 to 80.17) with a previous support/resistance line below near the 82.50 level. Further down the line the 38.2 Fibonacci level lies at 82.35 while upside barriers are presented near 83.50 and the 61.8 retracement level which closely coincides with the 200-day moving average.

The recent statement by the ECB representatives gives a serious blow to US dollar. Dollar closed at a lower rate at the end of the last trading week. The roots of this decrease can be traced back to the upsets in Chinese market. At the beginning of this trading week, China introduced some measures that stabilized dollar to some extent. But, the statement from the ECB personnel is telling something more. They are trying to convince the world that China is not the sole competitor against US dollar in Forex trading. Europe’s Euro has also got the potential to disturb the market and to set new trends.

Smaghi’s statement that ECB could raise interest rates is unjustified to much extent. ECB has been setting new records in lending money with the help of overnight lending plans. Critics find no reason to increase the interest rates in this scenario. The causes they have ascribed for the rising inflation are also subject to great controversy. Smaghi’s statement in these circumstances is just meant for exerting the power of ECB and the Euro to the whole world. The continuous down trend in dollar is alarming. Seems that a series of factors that may influence dollar directly or indirectly, are unleashing one after the other. Even Americans are now criticizing Bernanke and his dual policies very seriously. They are blaming him to penetrate dollar too much into the developing countries and making fake claims about the real targets and causes of renaissance policies.

The ECB statement has made Euro very volatile as well, as is evident from Friday’s trading session. But, experts are not much worried about this fluctuation. However, US dollar is going to give tough time to the traders and the experts as well.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

The US dollar advanced versus the Japanese Yen on Friday’s overnight trading session. The greenback surged 0.17 percent to 83.45 against the Japanese currency in European trading session. The pair USD/YEN is expected to find support at 83.10 however could witness resistance at 83.97 level which also happens to be day’s high on Wednesday.

The US dollar traded on strong sentiments and surged versus single currency too. The Euro declined 0.24 percent against the greenback to 1.3576.

Support and resistance levels for the pair EUR/USD are expected at 1.3429 and 1.3627 respectively. The single currency remained under selling pressure against the British Pound and Japanese Yen on worries over euro zone’s sovereign debt situation. The Euro declined 0.34 percent versus the British Pound to 0.8385 while fell 0.13 percent against the Japanese Yen to 113.22 in overnight trading.

The British Pound however surged versus the greenback on stronger United Kingdom’s economic data. According to the official report released in UK the country’s retail sales increased to seasonally adjusted 1.90 percent for the month  of January which not only surpassed all expectations which hovered around 0.50 percent but also was substantially high as compared to retail sales growth figure of -1.40 percent in the prior month.

The Pound Sterling gained 0.24 percent to 1.6213 against the US dollar. The pair GBP/USD is likely to experience support at 1.5982 while its resistance is expected at 1.6232 levels.

The British Pound gained 0.38 percent to 135.25 versus the Japanese Yen in European trading session.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By CountingPips.com

Euro strength today is capping off a rebound week against the US dollar with the EUR/USD pair reaching 1.3650 in Friday’s forex trading. The pair is demonstrating renewed bullishness this week after a retreat from the 1.3861 February 1st high to a February 14th low of 1.3428. Today’s action has seen the pair ascend with a break through the 20-day moving average (in red).

Further follow-through is likely to encounter resistance around the 23.6 Fibonacci retracement (from 1.1876 to 1.4281) near the 1.3715 exchange rate and with the February 1st high at 1.3861 looming on a break above.

Below we have potential support and pivot studies hanging around the 1.3575 area. Further below we have the 1.3500 support level, a monthly low point at 1.3426 and the 38.2 Fibonacci retracement level sitting at 1.3365.

By Greg Holden

Shifting regional dynamics have helped move capital away from the various Arab states in the Middle East and into the relatively more stable countries in the region, such as Turkey. This appears to be pushing the Turkish lira higher.

The USD/TRY has been range-trading for the last few days between 1.5700 and 1.6200. However, the longer-term technical signals appear to be suggesting an impending upturn for the lira.

On the technical side, we can see on the chart below that the pair recently breached the 61.8% Fibonacci line, but has so far failed to find sufficient support to remain above that price mark. The pair has already begun to descend back towards the now-support level of 1.5612.

Our technical oscillators also support this downturn. The Relative Strength Index (RSI), shown below, has the price floating deep within the over-bought region, suggesting downward pressure is building. The Stochastic (slow) also shows a fresh bearish cross followed by a descending price pattern, highlighting the momentum of the downswing.

On the fundamental side, regional investment flows appear to be fleeing the unstable regimes of Egypt, Tunisia, Yemen, Iran, and Bahrain and giving an added edge to the more stable countries in the Middle East, predominantly Turkey.

Moreover, analysts appear to be in agreement that Turkey will cease hiking lending rates as its central bank has remarked on its alignment with other international interest rates and growth targets. Various Turkish organizations, such as Acerlik and Halkbank, have also posted respectable levels of quarterly profits (31% and 18% growth, respectively).

If the current movement continues bearish below the 61.8% level, the next downward target rests just above 1.4800, marked by the 50% retracement line.

USD/TRY – Weekly Chart

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.

Source: ForexYard

The combination of Middle East tensions, renewed euro zone debt concerns and a poor US Unemployment Claims figure have led to substantial gains for the Swiss franc over the last 24 hours. It appears that the safe haven CHF will likely remain bullish as long as these three factors continue to dominate the headlines.

Economic News

USD – Dollar Likely to Remain Bearish to Close Out the Week

The US dollar tumbled against virtually all of its main currency rivals yesterday and in the overnight session, following the release of a disappointing Unemployment Claims figure. Losses were particularly sharp against the Swiss franc, which has recently gained traction as investors search for safe haven assets. Currently the USD/CHF is trading around the 0.9500 level, down over 100 pips in the last 24 hours.

Against the euro, the greenback lost around 70 pips yesterday before staging a minor correction during Asian trading. Currently the pair is hovering just below the 1.3600 level.

As we close out the week today, traders will want to pay attention to economic news out of the UK to judge where the USD will be heading. The UK Retail Sales figure is expected to come in at 0.6% which, if true, would signal a substantial increase over last month. Sterling has recently turned bullish against the dollar and if today’s indicator comes in as predicted, it will likely extend that trend.

In addition, traders will want to focus on a speech expected from the Fed Chairman, set to occur at 13:00 GMT. Should Bernanke decide to comment on yesterday’s unemployment figure, investors are likely to continue shifting their assets to the USD’s main currency rivals. The dollar is therefore unlikely to reverse its losses before markets close for the weekend.

EUR – Debt Concerns Continue to Weigh Down on the Euro

While the euro was able to make moderate gains against the US dollar yesterday, the currency was virtually flat against the Japanese yen and British pound. Furthermore, against the Swiss franc the EUR saw a steep decline throughout the day.

Analysts attributed the euro’s sluggish behavior to a combination of global events that are keeping investors away from riskier assets. Chief among these events is the prolonged doubt the euro zone will be able to effectively tackle its sovereign debt woes.

Today, a lack of significant news from the euro zone is unlikely to help draw investors back to the troubled currency. Still, traders will want to pay particular attention to the speech from the US Federal Reserve Board Chairman, Ben Bernanke. If he sounds a pessimistic note with regards to the US economic recovery, the dollar is likely to drop in value. This may give the euro an opportunity to extend its current bullish trend against the greenback.

JPY – Yen Sees Mixed Results Yesterday

The yen saw moderate gains against the greenback yesterday following a disappointing US Unemployment Claims figure. The USD/JPY dropped over 50 pips following the release of the figure, reaching as low as 83.15. The pair was able to stage a slight upward correction during the Asian session, and is currently trading just above the 83.30 level.

Against the Swiss franc, the yen remains decidedly bearish. Investors have been turning to the franc as a safe haven due to a number of global events. In the last 24-hours, the CHF/JPY has shot up close to 70 pips, and is currently trading right around the 87.70 level.

Today, traders will want to pay attention to a speech from the US Fed Chairman. While it is not known exactly what he will say, any mention of the poor state of the employment sector in the US will likely lead to further downward movement for the USD/JPY pair.

Crude Oil – Middle East Concerns Drive Oil Prices Higher

The price of crude oil took off yesterday, as turmoil throughout the Middle East has increased worries about whether supplies will be in any way affected. Over the last 24 hours, the price of crude has gone up almost $2, and the commodity is once again trading about the $89 a barrel level.

Today, crude oil traders will want to continue to pay attention to any news out of the Middle East. Major oil producing countries like Libya and Iran have been rocked by protests in recent days. If these protests continue, the price of oil is likely to continue to rise as investors continue to worry about production capabilities.

Technical News

EUR/USD

Most technical indicators are showing that this pair is overbought, and is likely to see a downward correction in the near future. On the 8-hour chart, the Williams Percent Range has crossed into the overbought zone, while the daily chart’s MACD shows a bearish cross has formed. Going short appears to be the wise choice today.

GBP/USD

The Stochastic Slow on the 4-hour chart has formed a bearish cross, indicating that downward movement is likely to occur. This theory is supported by the Williams Percent Range on the 8-hour chart, which is currently well into overbought territory. Traders will likely want to short this pair today.

USD/JPY

Technical indicators are showing mixed signals for this pair. While the daily chart’s Relative Strength Index is in overbought territory, the 4-hour chart’s Stochastic Slow has formed a bullish cross. Traders may want to take a wait and see approach today, as a clearer direction is likely to present itself later on.

USD/CHF

Virtually all technical indicators are showing this pair in oversold territory, meaning an upward correction is likely to occur in the near future. The Williams Percent Range on the 8-hour chart is at -90 while the Stochastic Slow on the 4-hour chart has formed a bullish cross. Going long may be the preferred strategy today.

The Wild Card

GBP/CHF

The Williams Percent Range on the 8-hour chart of this pair is currently in oversold territory, indicating that an upward correction is likely to take place. This theory is supported by the Stochastic Slow on the same chart, as well as the 4-hour chart’s Relative Strength Index. Now may be a great time for forex traders to open up long positions before the upward breach occurs.

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.

US Dollar.
Our bias NEUTRAL, we’re on the sidelines until a clearer picture emerges.

• U.S. Dollar recovered sharply against all G10 counterparts last week
• Slew of U.S. eco data this week includes; Retail Sales, TIC Long Term Purchases, Building permits, Producer Price Index, FOMC Meeting Minutes, CPI & Unemployment Claims
• Fed Chairman Bernanke has little intention of reducing QE2 amid sluggish employment growth
• Greenback may have established an important low against Euro Dollar, Sterling & commodity currencies
• FXMW strategy is to sit on sidelines for a clearer picture to emerge e.g. NEUTRAL.

Euro Dollar.
Our bias BEARISH, we’ll be looking to sell the Euro on rallies.

• Potentially major market moving data due this week with German & Euro-zone 2010 4Q GDP reports
• Market will look to Greece, Portugal & Ireland GDP prints for insight to Euro-zone fiscal concerns
• Axel Weber confirms stepping down from Bundesbank on 30th April
• Close below 20 SMA significant
• FXMW strategy to sell rallies into 1.3650-1.3700 or enter short on confirmed close below 1.3550 e.g. BEARISH.

Japanese Yen.
Our bias BEARISH, we’ll be looking to sell the Yen on rallies.

• As U.S. economy stabilizes, Yen expected to lose ground.
• Japan 2010 4Q GDP report due Monday BoJ rate decision due Tuesday
• USDJPY current price testing January highs
• USDJPY remains well bid on dips to 82.00-82.50.
• FXMW strategy to sell Yen rallies e.g. BEARISH.

British Pound.
Our bias NEUTRAL, we’re on the sidelines until a clearer picture emerges.

• Cable tested 1.6000 into Friday close
• CPI due Tuesday, BoE quarterly inflation report Wednesday plus U.K. employment, Retail Sales due Friday
• CPI holds above governments 3% limit
• This weeks data likely to force BoE hand
• Credit Suisse Overnight Index Swaps show BoE to increase rates at least 75bp in next 12 months
• BoE facing tough decision balancing risk of inflation vs. weak economic growth
• FXMW strategy is to sit on sidelines for a clearer picture to emerge e.g. NEUTRAL.

Canadian Dollar.
Our bias BEARISH, we’ll be looking to sell the Loonie on rallies.

• Strong USDCAD push into Friday close
• Loonie price action likely influenced this week by U.S. data & risk sentiment
• Canadian CPI due Friday
• Credit Suisse Overnight Index Swaps pricing in 83 bps of rate hikes over coming 12 months
• FXMW strategy to establish long USDCAD position at Monday open e.g. BEARISH.

Australian Dollar.
Our bias BEARISH, we’ll be looking to sell the Aussie on rallies.

• AUDUSD broke below parity during Friday trade RBA Stevens says central bank not contemplating rate hike at the moment
• Recent natural disasters may lower 2011 Q1 GDP by 1%
• Credit Suisse Overnight Index Swaps, pricing in one 25bp rate hike for the next 12 months
• FXMW strategy to sell Aussie rallies to 1.0065-1.0090 level or short on confirmed close below 0.9950 e.g. BEARISH.

New Zealand Dollar.
Our bias BEARISH, we’ll be looking to sell the Kiwi on rallies.

• Finance minister English says NZ economy might have contracted in 2010 4Q
• Technicals point to NZDUSD sell-off
• Retail Sales due Monday
• FXMW strategy to sell rallies into 0.7640-0.7700 area or short on confirmed close below 50 SMA e.g. BEARISH.

Pepperstone is proud to have Market Forecasts provided by FX Market Watch.

The US dollar further declined in overnight trading versus its major counterpart currencies on sluggish US economic data. The greenback slumped further after the release of US Federal Reserve’s minutes of meetings in which Fed’s officials were confident despite the country’s escalating inflation and unemployment.

The dollar index DXY which measures the greenback’s performances against its six major counterpart currencies declined to 78.17 as compared to 78.24 on Wednesday’s North American trading session.

Experts believe that the US dollar can further fall as US consumer price inflation data is awaited on Thursday. Analysts are expecting increase of 0.3 percent in consumer price inflation and surge of 0.1 percent in core consumer price inflation which could result in further depreciation of the US dollar.

Currency strategist from Credit Agricole commented, “The fact that the core rate of consumer price inflation is expected to remain well below the Fed’s preferred level could undermine the dollar and add a further barrier to the U.S. dollar’s recovery so far in February.”

The Euro traded at 1.3570 against the US dollar in overnight trading as compared to 1.3566 on late Wednesday.  The British Pound advanced versus the greenback as the pair GBP/USD surged to 1.6099 in overnight market as compared to 1.6094 on Wednesday’s trading session.

The dollar remained under pressure in against the Japanese Yen too as the pair USD/YEN declined to 83.57 in Asian trading session as compared to 83.62 on Wednesday last hours trading in North American session.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By CountingPips.com

Friday February 18th

• United Kingdom retail sales

• Canada consumer price index

Weekly Economic Calendar