FOREX Update: Canadian Retail Sales rise in February. Loonie lower in trading

By CountingPips.com

Economic news out of Canada today showed that retail sales rebounded in February after sales declined in January. Canadian retail sales increased by 0.4 percent to a C$37.3 billion total in February after a decrease by 0.4 percent in January, according to the report by Statistics Canada. The rise in sales was slightly less than expected as economic forecasts were predicting a 0.5 percent increase for the month.

On an annual basis, February’s retail sales level was 3.7 percent higher than the February 2010 level.

Core retail sales, excluding automobile sales, climbed by 0.7 percent in February following a decline by 0.2 percent in January. The rise in core sales surpassed market forecasts that were expecting a 0.5 percent increase for the month.

Contributing to the gain in the retail sales numbers was an increase in gasoline station sales which rose by 1.3 percent. Also contributing positively to the report were gains in furniture & home furnishing store sales (+2.1%), clothing and accessories store sales (+2.5%), sporting goods, hobby, book & music stores (+1.4%) and miscellaneous store retailers (+1.6%).

Negative contributors to the retail sales report in February included motor vehicle and parts dealers (-0.6%) and electronics a appliance stores (-0.6%).

Canadian Loonie falls in Forex Trading today

The Canadian “loonie” dollar has been weaker today in the currency markets despite the positive retail sales data for February. The Canadian currency is trading lower versus the US dollar, euro, British pound, Japanese yen, Swiss franc, New Zealand dollar and Australian dollar, according to currency data from Oanda.

AUD/CAD Chart -The Australian dollar increasing higher versus the Canadian dollar for a second day in a row. The AUD/CAD is now over the 1.2000 level.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Drive Dow Higher

Plenty of strong earnings news out from several Dow Jones Industrial Average components today is driving the market higher. DuPont (DD) reported a 27% increase in earnings, to $1.43 billion, or $1.52 per share.

Weekly Initial Jobless Claims decrease less than expected

By CountingPips.com

U.S. jobless claims decreased by less than expected in the week that ended on April 16th, according to a release by the U.S. Labor Department today. Weekly initial jobless claims fell by 13,000 workers to a total of 403,000 unemployed workers following a revised total of 416,000 jobless claims recorded the previous week. The 4-week moving average of unemployed workers increased by 2,250 workers from the previous week to a total of 399,000.

Market forecasts were expecting jobless claims to decline to a total of 390,000 workers.

Workers seeking continuing claims for unemployment benefits for the week ending April 9th also decreased for the week. Continuing claims fell by 7,000 workers to a total of 3,695,000 unemployed workers following a total of 3,702,000 workers seeking continuing claims the week prior. The 4-week moving average of continuing claims dropped by 17,500 workers to a total of 3,716,750.

EUR/USD Checks Rise after German Ifo Data

By Greg Holden

Germany’s publication of its Ifo Business Climate report was roughly as expected on Thursday. Analysts were expecting a reading of 110.6 making today’s 110.4 figure anti-climactic. Interestingly, the EUR/USD met solid resistance shortly after this report even though such a reading would typically boost the euro.

Today’s thin market conditions ahead of this weekend’s Easter holiday may be interfering with normal currency values. A number of investors have been anticipating a reevaluation at the start of next week as normal volume levels are reintroduced to the market.

Comments from the president of the European Central Bank (ECB), Jean-Claude Trichet, recently hinted at a softening of the central bank’s position in regards to monetary policy. The dovish sentiment has pulled down on the EUR in short-term trading with many traders beginning to shift away from the 17-nation single currency in anticipation of a fall.

The EUR/USD checked its recent rise towards 1.4650 and is now trading downward with a current price near 1.4570. The data out of Germany may have less to do with this movement than the ECB’s softened stance in regards to monetary policy adjustments. Traders may want to anticipate a downturn in this pair at the beginning of next week should the current environment remain unchanged.

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.

Why Stock Investors Are at a Major Disadvantage

Over the weekend, I had the pleasure of spending some time with a friend — we will call him “Greg.” Greg is a true “stock investor.” He has been investing for years and has done well for himself through diversification and other methods.

We were talking about his stock portfolio, and he was expressing some of his frustration with the amount of money he had at risk as well as the fact that his stock portfolio was not performing to his expectations.

It’s not that he owned the wrong stocks necessarily. He was just using the wrong vehicle and strategy to invest in them.

Uncertain Times

I think that about sums up the current global situation, geopolitically and economically, and in the stock and bond markets. Experts can’t agree at all on which way the stock market is going, nor do they seem to know what the fate of the U.S. housing market or economy for that matter will be. The market is choppy, trendless and volatile at times.

With all this confusion, do you think it is a good idea to invest a good portion of your stock portfolio in anything but cash (or maybe precious metals)? Probably not. But at the same time, you don’t want to park the bulk of your investments in cash, which is going to suffer the effects of low interest rates and inflation…

You must at least keep up with inflation to grow your nest egg or at least keep your current retirement stable, because the way things look right now, Social Security and Medicare will look quite different in 10 years.

Augment Your Risk

I was looking at some of Greg’s positions and noticed that he had 500 shares of McDonald’s (MCD:NYSE), currently trading at about $78. He had bought them at $72, so he was making a good profit of about $3,000. The problem was that almost $40,000 of his stock portfolio was tied up in that investment.

This obviously wasn’t his only position, but many of them had the same dollar amounts tied up and he had little cash to make other investments or in case of emergency.

What if I told you that you could use options to essentially control 500 shares of MCD, but at less than 10% of the cost and still have unlimited profit potential and limited risk? Would you be interested? Greg was.

Call options can provide you with an investment vehicle that can reduce risk drastically and still allow you just about all the benefits of owning stock.

Now, I will say that it will take a bit of education, practice and some guidelines to know how to do this. So let me explain how to use options without increasing your risk.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

Call Options Explained

A call option is similar to a coupon to purchase any item, only a call is a coupon to purchase 100 shares of stock. Just like a coupon, a call option has a price at which you can buy the stock and an expiration date. If you had a coupon to buy a Sony DVD player for $100, which expired in September 2011, you essentially have a September 100 call option on that DVD player.

Obviously you have to pay for a coupon in one way or another. Follow me on this one…

  • Let’s assume you paid $2 for the Sunday paper and cut the coupon out.
  • In that case, the DVD player should be selling for at least $102 for it to even be worth it to you. (If you have the right to buy it for $100, but you paid $2 for the coupon, that is your “breakeven” point, meaning you wouldn’t be paying anything else out of pocket, nor would you be making a profit.)
  • But what if you went into the electronics store and the DVD player was selling for $120?
  • How much value does your coupon have then? ($20, right!)
  • If you paid $2 to get the coupon, theoretically you just made $18 on a $2 investment!

We all know that you can’t just waltz into the electronics store with a coupon that is worth $20 and demand cash. But you can in the equity options market!

A common misconception is that you must “buy the stock” to make money on your options, but that is simply wrong. Call options can be bought or sold at any time! It’s like being able to sell your coupon for the DVD player back to the store and capture your profits!

Another rule of thumb is that you can only lose what you pay for a call option and you DON’T have to have the money to buy the stock.

For many people, that’s reducing their risk already, because they don’t have to have $40,000 tied up in a single stock.

How Else Can They Reduce Risk?

Using MCD as an example, imagine Greg sold the 500 shares of stock at $78, for a profit of $3,000. With the profits he made, he decided to replace the costly stock with coupons (call options), which gave him the right to buy the stock at $75 until September.

In the current market, those calls will cost about $4.20 ($420) apiece, which means he can afford to buy seven.

(Options contracts are sold in blocks of 100, meaning one call option contract gives you the right to buy 100 shares of the underlying stock. This means a call option with a price of $4.20 will actually cost you $420 to buy.)

But since your original investment in the stock was 500 shares, you might only buy five call options. That total investment would cost $2,100 (pocket the other $900 as a guaranteed profit on the trade no matter what happens).

So now (with the five calls) you have control of 500 shares at a cost of $2,100, which is the most you could ever lose, even if MCD dropped to $10 per share!

Essentially you have locked in a $900 guaranteed profit, and if MCD moves higher, you can continue to make an unlimited amount of money. Remember, the calls give you the right to buy MCD at $75 per share, so if MCD were to rise to $85 by September, the calls would be worth at LEAST $10 (or $1,000, because remember, contracts give you access to 100 shares of stock)…

And guess what: Since you paid $4.20, you would make 161% on your call options!

Not only is that cool, but you are reducing your risk from $40,000 to $2,100, pocketing $900 in guaranteed gains and still giving yourself unlimited profit potential until that option expires. All the while you are taking risk OFF the table in this uncertain market!

No investor could do this just by investing in stocks.

One of Many Techniques

This is just one of the hundreds of different strategies that option traders have at their disposal. You may be taking unnecessary risk in your portfolio and you may be able to reduce that risk, amplify returns or increase your probability of success by learning the options markets.

If this strategy interests you or you want to learn more about options and techniques to strengthen your portfolio, pick up a copy of my new book, Your Options Handbook. There are over 430 pages of tips and tricks like this, for a very low price.

Remember that there is usually more than one solution to a problem. Think out of the box and you might find them.

Editor’s Note: Inflation is rising rapidly, no matter what the government says. The result could spell doom for your bonds. But if you make one simple move right now, you could inflation-proof your portfolio and thrive as inflation continues to grow. Learn more from Taipan’s Safe Haven Investor.

About the Author

Jared Levy is Editor of WaveStrength Options Weekly, our options trading research service and Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

Mid-Week Trading Trends & Analysis: Stocks and Commodities in favor again?

By Chris Vermeulen, thegoldandoilguy.com

It has been a very interesting week thus far. Monday kick started traders with a heart pounding equities sell off which sent money into the US Dollar, precious metals and bonds as the safe havens of choice.

A lot has happened this week on a technical analysis basis which I can’t really show in a written report like this. But can do so in detail within my video newsletter. There are just to many charts required and layers of analysis to cover… But I can cover some of the points and my thoughts using the charts below:

SPY 30 Minute Intraday Chart
This chart shows the volume traded at various price levels for the SP500 index. These high volume levels act as support or resistance depending if you are above or below them. On Wednesday, we had large gap higher into a resistance level which the market could not break through. So I am expecting to see the market take a pause and fade back down to fill part or all of Wednesday’s gap window.

While most gaps tend to get filled. Gaps that occur right at the beginning of a new trend when momentum is strong. They generally do not fill all the way down to the bottom. I expect a couple days of sideways to lower price action. Buyers should step back in and send the market higher next week if this trend is to continue.

GDX – Gold Miner Stocks – Daily Chart
Gold stocks have been underperforming the price of gold bullion for several months. This typically is not a strong sign for physical gold prices. That being said I do feel the majority of investors are seeking true safety and want to own real gold and not some highly leveraged gold stock. This to me is more of a risk off trade for global investors and it explains the performance.

From the recent price action shown on the GDX chart I am expecting to see prices trade sideways or lower in the coming days. A sideways move would actually be bullish and would signal a possible breakout to upside. So that is what I am hoping will unfold in the coming days/weeks.


US Dollar Daily Chart

The dollar continues to get sold at a tremendous rate and the Fed is devaluing the currency as quickly as they can trying and save the world one dollar at a time…
The trend is strongly down but it’s starting to near a point where we should start to keep a closer eye on it for signs of a reversal to the upside. When the dollar makes a move higher and starts a rally it will put downward pressure on stocks and commodities. We must be prepared to move our protective stops ups and possibly take advantage of falling prices in the near future. Until then remain long equities and commodities.

Mid-Week Trend Conclusion:
In short, it looks as though stocks and commodities are in favor again. Monday’s panic sell off looks to have shaken the masses out of the market and the big money players were buying up all the shares they could. Members and myself are sitting nicely in our long positions and this could be the start of something exciting.

You can get my Pre-Market Trading Analysis Videos, Intraday Chart Updates and Trade Alerts with my Premium Newsletter: http://www.thegoldandoilguy.com/free-preview.php

Chris Vermeulen

Understanding the Fed

EWI’s free eBook explains the common and misleading myths about the U.S. Federal Reserve Bank

By Elliott Wave International

What exactly is the function of the Fed? If it’s to help the U.S. economy grow steadily, then how come in 2007-2009 we had the biggest stock market crash in decades followed by “the Great Recession” and a worldwide financial crisis?

For answers, let’s turn to someone who has spent a considerable amount of time studying the Fed and its functions: EWI’s president Robert Prechter.

This is an excerpt from a free Club EWI eBook, “Understanding the Fed.” Enjoy — and for details on how to read this important 32-page eBook in full, free, look below.

The Fed’s Presumed Inflation Since 2008 Is Mostly a Mirage

Excerpted from Prechter’s December 2009 Elliott Wave Theorist

… We all know that the Fed created $1.4 trillion new dollars in 2008. It has told the world that it will inflate to save the monetary system. So that is the news that most people hear.

But the Fed’s dramatic money creation in 2008 only seems to force inflation because people focus on only one side of the Fed’s action. Even though the Fed created a lot of new money, it did not affect the total amount of money-plus-credit one bit… When the Fed buys a Treasury bond, net inflation occurs, because it simply monetizes the government’s brand-new IOU. But in 2008, in order for the Fed to add $1.4 trillion new dollars to the monetary system, it removed exactly the same value of IOU-dollars from the market. It has since retired some of this money, leaving a net of about $1.3 trillion.

So investors, who previously held $1.3t. worth of IOUs for dollars, now hold $1.3t. worth of dollars. They are no longer debt investors but money holders. The net change in the money-plus-credit supply is zero. The Fed simply retired (temporarily, it hopes) a certain amount of debt and replaced it with money.

Evidence for this case is in Figure 4. Even though the Fed has swapped over a trillion dollars of new money for old debt, the banks aren’t lending it. The money multiplier is back in negative territory, which means that there is more debt being retired than there is new money being created. In other words, deflation is winning.

The Fed's new money is simply replacing old debt, not creating new debt

The bottom line is that the Fed hasn’t created much inflation over the past two years. The only reason that markets have been rallying recently is that the Elliott wave form required a rally. In other words, in March 2009 pessimism had reached a Primary-degree extreme, and it was time for a Primary-degree respite. The change in attitude from that time forward has, for a time, allowed credit to expand again.

But the Fed and the government didn’t force the change. They merely accommodated it, as they always have. They offered unlimited credit through the first quarter of 2009, and no one wanted it. In March, the social mood changed enough so that some people once again became willing to take these lenders up on their offer.

When credit collapses again during the wave 3 downtrend, we at Elliott Wave International will no longer have to keep “making the case” that the Fed is impotent. It will be clear once again, just as it was in 2008. (…continued)

 

Read the rest of this important 32-page eBook online now, free! All you need is to create a free Club EWI profile. Here’s what it covers:Chapter 1: Money, Credit and the Federal Reserve Banking System
Chapter 2: What Makes Deflation Likely Today?
Chapter 3: Can the Fed Stop Deflation?
Chapter 4: Jaguar Inflation
Chapter 5: Can’t Buy Enough…of That Junky Stuff, or, Why the Fed Will Not Stop Deflation
Chapter 6: The Fed’s “Uncle” Point Is In View
Chapter 7: Government Thrashing
Chapter 8: The Coming Deflationary Pressure on the Government 

Keep reading this free report now.

This article was syndicated by Elliott Wave International and was originally published under the headline Understanding the Fed. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Super Volcano In First Gen Corporation (FGEN)

first gen corporation, FGEN philippine stocks, lopez, ron acoba, cup and handle, daily stock picks, stock market trading

If my chart reading reading is correct, then First Gen Corporation or FGEN in the Philippine Stock Exchange could be poised for a huge upside. 

FGEN is actually one of the top performers among local equities so far this year with about 11% in YTD return. But its story does not end there as based on its daily chart at least, FGEN could explode like a super volcano. Looking at its price chart over the past 6 years, I noticed that it was bottoming into a huge cup and handle pattern with a neckline at just above PHP 14.00. FGEN is already inching towards the said resistance and when it breaches that level, there’s a good chance that it could swing all the way towards PHP 21.20 (measured by projecting the height of the cup from the point of potential breakout)!

I would, of course, wait for a break out to occur first before I go long to diminish the possibility of getting whipsawed. An entry point of PHP 15.00 would give me a possible 41% upside!

More on LaidTrades.com

Philex Mining Corporation (PX) Digs Up Some Gains!

Despite the 0.56% and 1.14% drop of the PSEi today and the Dow Jones Industrial Average (DJI) yesterday respectively, gold mining companies listed in the Philippine Stock Exchange like Philex Mining Corporation, Manila Mining Corporation and Lepanto Consolidated Mining Company still made it to the top gainers list today. In which case, I chose the stock chart of Philex Mining Corporation or PX in the Philippine Stock Exchange to be the highlight in this post.

On the canvass is the 2-year chart of Philex Mining. By the way, this was one of our stock pick from the Absolute Traders event “BULL pa ba or BEAR na ba??? which I presented last March 25 (kindly check here). Anyway, PX broke out from the 7-month symmetrical triangle chart pattern yesterday and based on the triangle’s size, the target price could be PHP19.00. In the bigger picture, the symmetrical triangle also serves as the handle of the possible 15-month cup and handle formation with the neckline at PHP17.00 and today’s 3.57% gain closed the stocks at PHP17.06. Thus, we could consider PX to have broken out from the cup and handle formation backed up with heavy volume, the MACD heading further north and the 50, 100 and 200-day moving averages being left behind. On the other hand, the cup and handle breakout doesn’t look very convincing so we’ll need tomorrow’s trading session to confirm a complete break above the PHP17.00 marker. Otherwise, it could retrace back down to its immediate support at PHP16.30 before it clears out the PHP17.00 hurdle. In case PHP16.30 won’t hold, the next support could be the 7-month uptrend. On the bright side, gauging the cup’s height and added it to the breakout point, my target price is set to PHP23.00. However, before it reaches that level, the PHP20.00 all-time high will most likely be retested first.

More on LaidTrades.com