Month: February 2011

Berkshire Hathaway (BRK.A, BRK.B) and Wesco Financial (WSC) announced that they entered into a definitive merger agreement, whereby Berkshire Hathaway will acquire the remaining 19.9% of the shares of Wesco’s common stock that it does not presently own in exchange for cash or shares of Berkshire Hathaway Class B common stock, at the election of each shareholder. Based on the estimated shareholders’ equity of Wesco as of January 31, 2011, the transaction values the 19.9% of Wesco not owned by Berkshire Hathaway at approximately $547.6M.

Oil futures are up this morning on concerns that political unrest in Egypt could spread to other oil-producing countries in the Middle East and north Africa. Light sweet crude for delivery in March gained 23 cents to $89.26 a barrel at last check. Copper for March delivery gained $0.046 to $4.6255. The metal reached a record high of $10,122 a ton in London Monday. Gold for April delivery fell $.01 to $1348.0. SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, said its holdings slipped to 1,228.864 tons on Feb. 4 from 1,229.277 tons a day ago.

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that futures speculators continued to add to their short positions of the US dollar against the other major currencies while increasing long positions in favor of the euro. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $24.9 billion against other major currencies as of February 1st. This is a rise from the total short position of $18.2 billion on January 25th, 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 added to their net long positions in the euro against the U.S. dollar for third week in a row with a total of 39,934 long positions as of February 1st. This is a sharp turnaround for euro positions that were long by 22,901 contracts on January 25th and were short by 45,182 contracts as recently as January 11th. The graph below overlays the EUR/USD spot closing price of the Tuesday of COT trader positions reporting.

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 increased their net long British pound sterling positions as of February 1st to their highest position since November 16th. Pound sterling contracts rose to a total of 22,659 long positions after totaling 7,888 long positions as of January 25th.

JPY: The Japanese yen net long contracts edged lower as of February 1st to a total of 31,481 long contracts. Yen positions had totaled 32,218 net long contracts reported on January 25th.

CHF: Swiss franc long positions increased after drifting lower for a three straight weeks to a total of 10,441 long contracts as of February 1st. Franc contracts totaled a net of 6,594 long contracts on January 25th.

CAD: The Canadian dollar positions edged higher to a total of 33,814 net long contracts after two straight weeks of declines. CAD long positions had registered 31,719 net longs on January 25th.

AUD: The Australian dollar long positions rose back higher from the previous week. AUD contracts totaled a net amount of 60,077 long contracts as of February 1st from 45,458 long contracts on January 25th.

NZD: New Zealand dollar futures positions rose to a total of 10,270 long positions as of February 1st. NZD large speculator long positions had fallen the previous week to a total of 8,627 long contracts on January 25th.

MXN: Mexican peso long contracts continued to rise for a fourth consecutive week as of February 1st to 103,117 net long positions after totaling 95,245 longs the week prior on January 25th.

COT Data Summary as of February 1, 2011
Large Speculators Net Positions vs. the US Dollar

Euro: +39,934
British pound sterling: +22,659
Japanese yen: +31,481
Swiss franc: +10,441
Canadian dollar: +33,814
Australian dollar: +60,077
New Zealand dollar: +10,270
Mexican peso: +103,117

Go to the Commitment of Traders CME raw futures data

Further COT Resources from around the web:

• Forecast The FX Market With The COT Report

• The Only Indicator You Will Ever Need

By CountingPips.com

Monday:

Australian retail sales
Japan coincident index
Canada building permits
Euro zone Sentix

Tuesday:

Germany retail sales
Switzerland unemployment rate
Canada housing starts

Wednesday:

British trade balance report

Thursday:

Australian employment report
Chinese trade balance
Switzerland consumer price index
Bank of England interest rate decision
USA new jobless claims report

Friday:

Germany consumer price index
British producer price index
USA trade balance
USA University of Michigan survey

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The price action during the Asia session was subdued relative to the frenetic activity seen after Friday’s payrolls report, with USDJPY locked in a particularly tight range. However, the dollar did surrender some of Friday’s gains overnight. EURUSD traded 1.3547-1.3624, USDJPY 82.16-82.29. On Friday, the headline payrolls number only gained +36k in January, falling well short of consensus expectations for a +146k increase. But the market seemed content to attribute the weaker print to inclement weather, and focused instead on the lower unemployment rate which unexpectedly fell sharply to 9.0% (cons. 9.5%). In response, the US 10-year Treasury yield climbed significantly higher, and peaked just above 3.66%, reaching levels not seen since May 2010. The S&P 500 finished 0.29% ahead. Given the scale of the surprise, our US economists have lowered their end-2011 unemployment rate forecast, and now expect it to fall to 8.8%, instead of 9.0% previously. They also now see upside risks to their 4.2% forecast for Q1 GDP growth. These latest developments bode well for our view that the dollar is poised to become a growth currency. The long-awaited semi-annual Treasury report on International Economic and Exchange Rate Policies was finally published, having been delayed since October. No major trading partners of the US were deemed to have manipulated their currencies to gain “unfair competitive advantage in international trade”.
EUR

As expected at Friday’s EU Summit, no concrete decisions were taken regarding the future of Europe’s financial rescue mechanisms. EU Council President Von Rompuy pledged that a comprehensive package of anti-crisis measures would instead be adopted in March.
Germany’s Chancellor Merkel said a special summit of Eurozone-only states would be held at an unspecified date after March 9.
ECB Executive Board member Gonzalez-Paramo said that the ECB would have to hike rates if CPI inflation did not begin to drop again by year-end.
France’s Finance Minister Lagarde said Eurozone leaders are “politically determined to defend the zone and the currency”.
JPY

BoJ Governor Shirakawa said further asset buying could be conceivable if the performance of the domestic economy fails to match the BoJ’s forecasts. He also sounded cautious on Japan’s deteriorating fiscal position, noting that the lesson of history is that no country can continue to run a deficit forever. However he noted that JGB yields have been relatively stable, partly on the belief that Japan is determined to carry out the necessary fiscal consolidation.
AUD

December retail sales grew by only +0.2% m/m, falling well short of the consensus expectations of +0.5% m/m growth. The AUD was briefly hit on the numbers but soon steadied and spent the rest of the Asia session creeping higher. Our Australian economics team expects a soft print in January too, as sales are likely to be significantly hurt by the Queensland floods. Our economists continue to see the next lift in the cash rate in H2, probably in either August or September.
CAD

USDCAD fell sharply to a low of 0.9832 on Friday, reaching levels not seen since May 2008. A particularly strong employment report was the trigger for the move. In January, 69.2k new jobs were created, well above expectations of only a 15.0k gain. The unemployment rate unexpectedly rose to 7.8%, but a corresponding increase in the participation rate was largely to blame.

TECHNICAL OUTLOOK
USDJPY clears 81.31
EURUSD BULLISH Move above 1.3741 is required to refocus towards 1.3862 recent high while support lies at 1.3482.
USDJPY BEARISH Violation of 81.31 has exposed 80.93 ahead of 80.54. Resistance at 82.93.
GBPUSD BULLISH Push above 1.6279/99 resistance zone would expose 1.6379. Initial support is defined at 1.6037.
USDCHF NEUTRAL Rise above 0.9526 has exposed 0.9623, support is at 0.9451/0.9396 zone.
AUDUSD BULLISH Focus is towards 1.0256 key resistance. Support lies at 1.0083.
USDCAD BEARISH The pair targets 0.9832/20. Near term resistance at 0.9932.
EURCHF BULLISH Rise above 1.3069 would open up the way towards 1.3118. Support at 1.2781.
EURGBP NEUTRAL 0.8533 and 0.8377 mark the near term directional triggers.
EURJPY NEUTRAL Remains neutral; 112.92 and 110.32 mark the near term resistance and support level respectively.

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.

By Anton Eljwizat

The EUR has dropped significantly versus the CAD in the last week, and it is currently traded around 1.3440. And now as evident in the data, the 8-hour chart is giving bullish signals, indicating that EUR/CAD pair might go up, as a bullish cross has taken place on the Slow Stochastic and the cross may raise another 50-100 pips in the coming 2 days. Traders are strongly advised to take advantage of the trend at an early stage. Therefore, why not open long positions at an excellent price?

• The next resistance levels are found at the 1.3470, 1.3500 and 1.3530 levels.

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 Greg Holden

Expectations this week for the world’s primary currency pair, the EUR/USD, may be summed up by viewing the daily chart’s technical formation. Beginning with last year’s record low price of 1.1875, this pair has been developing a long-term, upward angled, “head-and-shoulders” candlestick formation.

As this formation appears to have finalized over the last few trading days, can we now expect a long-term retracement back towards the 38.2% Fibonacci support line at 1.3034?

If you look at the chart below, it is possible to see supporting indicators of such a move. The MACD/OsMA reveals a clear bearish cross near the 0.0100 level, typically a solid indication of an impending downward turn.

The Relative Strength Index (RSI) and Stochastic (slow) also show a sharp cascading price movement, suggesting added momentum to last week’s bearishness.

What is worth noting, however, is the speed of the descent being experienced in these latter two indicators. This movement will likely see both indicators reaching the over-sold territory rapidly, adding upward pressure to this downward correction and potentially halting the long-term retracement expected from the head-and-shoulders formation.

If we are to understand this expected technical move, we may be better off breaking it into two phases. The first phase may see the price of the EUR/USD descending to the 50% Fibonacci level at 1.3391, at which point it is going to meet strong support. This phase should see some range-trading behavior between 1.3390 and 1.3500 over the course of several days as major investors test the resolve of the head-and-shoulders pattern.

If the bears can outbid the bulls during this first phase, then we should see the head-and-shoulders formation continue for the next few weeks as the price retraces towards the neckline (highlighted on the chart below). The 38.2% Fibonacci support level represents the long-term target of this pair. But short-term traders should keep their trades focused on the first phase, which will no doubt be shakier than the second.

EUR/USD Daily 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 dollar was up versus the major currencies following disappointing non-farm payrolls numbers, highlighting the difficulties the Federal Reserve faces in reducing US unemployment.

Economic News

USD – Non-Farm Payrolls Sends Dollar Higher

Disappointing employment data released on Friday sent the dollar higher versus the major currencies as the report from the Labor Department showed a significantly less than expected number of jobs were added to the US economy in the month of January.

Traders were buying dollars as the less than forecasted job numbers did not support expectations of an improving US economy and employment picture. The Bureau of Labor Statistics reported US added 36K new jobs in the month of January. However, economists forecasted payrolls to come in at 138K.

Following Friday’s report, the Federal Reserve is expected to complete its $600 billion quantitative easing program. Despite a strong rally in equities this week with the S&P 500 rising 0.29%, traders were rumored to be hesitant of holding risky positions over the weekend with protests continuing in Egypt which may have contributed to the dollar buying as traders took profits on short dollar positions.

While it may be premature to call a top in the euro’s recent rally, the failure of the pair to move above the 1.3860 combined with falling momentum point to further declines in the pair. Support will be found at the 1.3540 mark, not far from the 100-day moving average. A natural target for the decline may be 1.3480 which is the 38.2% Fib retracement from this year’s bullish move. This level looks to be bolstered as it coincides with the mid-December high. Should the pair continue to fall, the next target would be the 61.8% Fib at 1.3250.

EUR – Debate Rages at EU Summit

European Union leaders disagreed over this weekend’s EU summit after a proposed plan by Germany to increase the competiveness of EU nations on the periphery ran into a roadblock.

In exchange for increasing the European Financial Stability Facility (EFSF), Germany proposed increasing the retirement age in the euro zone, ending the indexing of wages to inflation, and synthesizing taxes at both the individual and corporate level across EU member nations.

As expected, many of the periphery nations disagreed with the proposals that were supported by both Germany and France as the proposed legislative additions to the EFSF goes against many of the social welfare principals that the EU nation’s governments are built upon. Harsh criticism was received from Spain, Portugal, and Austria.

The disagreement among EU members headlines the risk in the euro as the European debt crisis remains largely unresolved. However, traders have been willing to look beyond Europe’s fiscal difficulties and a lack of a political solution while focusing on rising interest rate differentials between Europe and the rest of the developed nations that are still carrying out dovish monetary policies.

JPY – Yen Sells-Off On US Jobs Report

Following the US Non-Farm Payrolls report, the yen was immediately bought versus the dollar with the USD/JPY falling to its lowest level in one month. However, shortly after the data release the pair came off of its lows to trade as high as 82.45, squeezing many traders who were short on the pair.

As the pair sold off earlier in the session, the USD/JPY reached the bottom channel line of the downtrend and reversed its direction a full 180 degrees. A move below the channel line will target the 2011 low of 80.90. Resistance is found in a range between the early December low of 82.30 and Friday’s high of 82.50. Further resistance is located at the falling trend line off of this year’s highs. The levels of 83.70 and 84.50 also stand out.

Oil – Crude Declines Sharply After Payrolls Data

Spot crude oil prices continued their decline following a failure of the commodity to breach above the $93 resistance level after unrest in Egypt sparked fears of supply disruptions in the Middle East.

On Friday the price of spot crude oil fell to its lowest level since January. The declines came after the release of disappointing US Non-Farm Payrolls report presented a bleaker picture than expected. After the release of the employment data traders sold spot crude oil with the price falling to a low of $88.40.

Crude prices may continue to ease should tensions in the Middle East subside. However, a natural gas pipeline that carries gas from Egypt to Jordan was sabotaged and the pipeline remains closed until repairs can be completed.

Support for spot crude oil comes in at the 86.50-87.00 range. Resistance is located at this year’s high of $93.00.

Technical News

EUR/USD

While it may be premature to call a top in the euro’s recent rally, the failure of the pair to move above the 1.3860 combined with falling momentum point to further declines in the pair. Support will be found at the 1.3540 mark, not far from the 100-day moving average. A natural target for the decline may be 1.3480 which is the 38.2% Fib retracement from this year’s bullish move. This level looks to be bolstered as it coincides with the mid-December high. Should the pair continue to fall, the next target would be the 61.8% Fib at 1.3250.

GBP/USD

The failure of the GBP/USD to close above the downward sloping trend line on the weekly chart does not bode well for the pair. However, the daily chart shows the pair found support at the 1.6040 level. The rising short term trend line from the late January lows should also prove supportive. A breach below this could take the pair to the late January pivot at 1.5750. Resistance will be the 2011 high at 1.6280.

USD/JPY

The pair reached the bottom channel line of the downtrend and reversed its direction a full 180 degrees. A move below the channel line will target the 2011 low of 80.90. Resistance will be found in a range between the early December low of 82.30 and Friday’s high of 82.50. Further resistance is located at the falling trend line off of this year’s highs. The levels of 83.70 and 84.50 also stand out.

USD/CHF

The Swissie has come off its 2011 high and the USD/CHF and is currently pressing the 0.9590 level that coincides with a long term trend line which falls from the May 2010 high. A breach of the trend line next week will first target 0.9690, followed by 0.9780. Should the pair fall in-line with the long term trend line this week’s low of 0.9320 will be in play.

The Wild Card

Silver

Spot silver prices have recovered from a 15% decline since reaching an all-time high at $31.20. Forex traders should be looking at an initial resistance near the $29.50 level. A breach of this resistance and the commodity may head higher to the all-time high once again. Support comes in at $28 and $26.40.

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 James McKee

From bakers to lawyers to everything in-between, everyone needs oil. The rise and fall in the price of oil not only affects the price of gasoline but the price of transporting goods, to that end it increases the cost of everything. No good can be moved without factoring in the cost of gasoline and thus the cost of crude oil. With the price of oil topping $103.00 a barrel there are looming changes due throughout all western countries. Prices in the United States are sure to rise causing a decrease in purchases and an increase in scarcity as companies begin to match production to purchases.

The USD will suffer due to an increase in prices occurring at the same as rampant inflation in the US brought on by moves at the Federal Reserve Bank. The recent round of quantitative easing has served to prop up the stock market and thus the USD but in time inflation will take hold. Much of the price increases have been a direct result of the conflict in Egypt that does not show any sign of slowing down. The fact that President Obama is showing support to both revolutionaries and those currently in power does serve US foreign relations well.

Those involved with the Forex currency exchange should stay up to date on both the price of oil and the conflict currently going on in Egypt. Chances are that in the near future Egypt will see even more violence since the current regime’s supporters are taking to the streets violently. Reports of Molotov cocktails being hurled at protestors are commonplace and it is only a matter of time before both sides become increasingly violent. While the stock market just begins to recover from the initial shock of the Egypt conflict it is far from over and Syria is degenerating into a similar state.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

By James Woolley

There are many people out there who invest their own money into the stock market. However a lot of these people will ultimately lose money and end up handing over control to a fund manager. The main reason why people fail is simply because they do not have the patience to wait for the very best entry and exit points.

There are plenty of examples of this. First of all there are often occasions when you do some research and you suddenly find a stock that looks hugely undervalued. Now some people will then rush out and buy the stock regardless of it’s current price. They may get lucky and the price may continue rising, but in most instances they would have been better off waiting for the stock to be temporarily oversold, for example when the RSI technical indicator is below 30.

Another example of a poor investing technique is when an investor will find a decent stock that goes up in value, but sells far too early. For example you may have set a target of 20%, which you think is perfectly realistic in the next few years, but you are so happy to see a profit you sell your holding after it has risen just 5%.

Lots of investors sell too early, and one of the common reasons why they do so is if they are fully invested and want to free up some cash so they can invest in another stock. This is a good tactic if you have money tied up in stocks that are simply going nowhere, or falling slightly, but it is quite a risky strategy if you sell stocks that are already performing strongly themselves.

Another area in which investors can come unstuck is when they use technical analysis to time their entry and exit points. For instance if you are a long-term investor, you have to try and ignore technical indicators because they will often tell you a stock is overbought, and therefore encourage you to sell. This is fine if you are trading in and out of stocks all the time, but if you want to hold on for the really big gains, you have to ignore them and think about where the share price will be in a couple of years time.

If you are a short or medium-term investor you can also come unstuck if you ignore your technical indicators. For example if you are trading breakouts, it is imperative that you wait for confirmation of an actual breakout, rather than anticipating a breakout in the hope of getting in at a better price. If you don’t, you will have invested in stocks right at the top of the market.

So the message I want to get across is that you have to have a great deal of patience if you want to be a successful stock market investor. You only have to look at Warren Buffett for evidence of this. He holds on to stocks for years and years and he is one of the greatest investors of all time.

About the Author

Click here to read a review of Stock Trading Nitty Gritty, the new training course that teaches you how to successfully trade individual stocks.