May 2011 – Page 29 – InvestMacro FX

May 4, 2011

Is SM Prime Holdings, Inc. (SMPH) In Trouble?

Are the bears about to take control of the shares of SM Prime Holdings, Inc. (SMPH)? I am confronted with this question now because it appears that SMPH is indeed primed (no pun intended) for a major correction in the near term.

In my opinion, there is a good chance that the bears might take over SMPH’s driver seat. As you can see from the chart above, SMPH has rallied quite handsomely after hitting a low of just about PHP 10.00 from a high of PHP 13.16. After bouncing off the said low, SMPH has sprung back to life as it reached the PHP 12.00 level. The PHP 12.00 resistance, though, seems to be holding pretty well. On a closer look, the PHP 12.00 marker happens to perfectly fall in line with the 61.8% fibonacci retracement level using the aforementioned high and low points as swing high and low. Moreover, the recent run-up in prices turns out to form a rising wedge pattern. As some of you might know, a rising wedge is considered as a bearish formation for technical analysts since it merely represents a temporary rally in prices.

If such is the case and a breakdown from the rising wedge occurs then SMPH could immediately fall towards PHP 11.00. A breach of that level could further send it down to PHP 10.00. On the positive note, a move past PHP 12.00 could send it towards the PHP 13.00 area.

Swiss Franc Bid As Dollar Struggles

Swiss Franc Strongest Of Currencies Basket

The Swiss Franc is topping the relative strength daily chart as can be seen below.

USD/CHF, in particular, is in a decisively strong downtrend due in part to differing interest rate expectations for the US dollar and Swiss franc. The safe haven status of the Swiss franc is also proving to be important in the current climate.

The Swiss Franc has also seen major gains against sterling with a breakout of recent lows looking ominous for the pound.

However, todays price action has printed a doji on USD/CHF which could be indicating a temporary loss of momentum after the recent unidirectional moves to the downside.

For further updates please see this Forex trading analysis blog.

May 4, 2011

Silver Bull Market to run to $60? Elliott Wave Analysis suggests buying on pullbacks

David Banister- www.MarketTrendForecast.com

Last August I told my subscribers to prepare for a monster rally in Silver, which at the time of my forecast was $18.73 per ounce. I drew up a chart and predicted a huge rally to $29 an ounce, and we ended up at $31 or so just a few months later. This was entirely a crowd behavioral move that I foresaw in advance, based on patterns that R.N. Elliott developed in the 1920’s and 1930’s. My theory was besides the crowd pattern (a 20 month odd Triangle consolidation), that investor’s would begin to view Silver as “Poor man’s Gold” and buy it. Literally, the idea is as simple as investors will simply think that “Gold is too expensive, but silver is cheap”. That is the explosion power that is behind this move from $19 to $50 an ounce since late August 2010.

Below is the original chart I sent to my subscribers outlining this triangle pattern and the likely move:

After Silver ran hard and fast, it left a lot of talking heads on CNBC and everywhere else scratching their heads and wondering what just happened. If you learn and understand the basics of Elliott Wave Theory, you can begin to foresee what is about to happen and stop scratching your head all the time. Watching the analysts on CNBC is like watching the Monday morning quarterbacks following an NFL Sunday. After that massive silver run from $18 to $31, it was time for a correction and I called for $25 to $26.50 as likely in a normal pessimistic crowd wave 2 pattern down. Once that completed, I sent my subscribers the chart below outlining another Bull wave to $39-$45 per ounce:

Silver then eventually ran to $45 per ounce in April of 2011 and had a brief spike to near $50 to test the all time highs just in the past week or so. The action has been wild since then, because after a wave pattern from $18 to $31, then back to $26, then up to $47… the crowd will begin to turn mildly pessimistic in a current “wave 4 “ correction pattern. This is when you will begin to hear excuses for Silver dropping, including believe it or not blamed on the death of Osama Bin Laden. In truth, whatever happens near term to explain the current correction in Silver is simply Monday morning quarterbacking. Using the current days headlines to explain the action that I already know is coming. Other excuses are the change in margin requirements on silver contracts and the squaring of positions at end of month etc.

I expect Silver to correct to the 40 to $42.75 areas based on my Fibonacci work and Elliott Wave views, and after this 4th wave consolidation we will see a surge to as high as $60 per ounce. Any pullbacks in Silver should be bought here and same with the Silver stocks post haste. Below is my latest chart forecast on Silver:

If you would like to stop scratching your head, get more comfortable where the markets are heading in both Gold , Silver, SP 500 etc in advance, then take a look at www.MarketTrendForecast.com, and take advantage of a 24 hour coupon special to subscribe, or just sign up for the occasional but not always timely free updates. Our subscribers learn and earn!

By David Banister- www.MarketTrendForecast.com

May 4, 2011

Fed Policy to continue push Dollar lower, Stocks, Commodities even higher?

By JW Jones, optionstradingsignals.com

“The warning signs were all
Dismissed or shouted down
So it goes
The kings all failed to tell us
The madmen failed to sell us
On what would then become
The only life we know.”

“Were they burning signal fires
To guide us to the fields?
Or building funeral pyres?
The outcome of a final appeal.”

– Rise Against “Endgame” –

The single biggest news event this week besides the Royal Wedding (who actually cares) was Federal Reserve Chairman Ben Bernanke’s televised press conference. The Federal Reserve is attempting to appear more transparent after coming under pressure from the United States Congress because of their obscure and potentially nefarious operation. For most Americans, Ben Bernanke is someone they likely have never even heard of, but on Wednesday Mr. Bernanke got to bask in the sunlight that is generally only reserved for public elites such as celebrities, pro athletes, and the President of the United States.

While Chairman Bernanke had his brief moment of publicity, his answers to seemingly pre-screened questions were vague, misleading, and rather contrived. He answered questions using very long responses which generally obfuscated rather than clarified the situation. In my estimation, Mr. Bernanke solidified what many market participants already believed; he is nothing more than an academic.

Mr. Bernanke and the Federal Reserve have based every decision they seemingly make on antiquated models and algorithms which work in a classroom and fail in real time. To the average man (myself included), he blathered on speaking about things that most people do not even understand. It is almost as if he did this to prove his intelligence and ability.

For long time readers, my disdain for the Federal Reserve is relatively easy to recognize. While the U.S. Congress is nothing more than charlatans, the Federal Reserve is the greatest thief in American history. Through the debasement of the U.S. Dollar and a long time track record of reacting too late or not at all to economic events, the Federal Reserve has stolen purchasing power from the American people. The inflation that has been unleashed over the past 10 years has been tremendous and the long term impact on the standard of living in the United States has been negatively altered. In essence, the Federal Reserve took from everyone and “we the people” got nothing tangible in return.

Mr. Bernanke made comments about the U.S. Dollar including “that it fluctuates.” The only direction it has fluctuated since he has been in charge at the Federal Reserve is lower. If lower and fluctuation are synonyms, I wish my weight would fluctuate!

Where were the hard questions from reporters? Where were questions about gold and silver rallying to new highs nearly every day? Where was the question about the Fed’s credibility when it totally missed the sub-prime crisis and referred to it as a contained event? What has the Federal Reserve done a good job at besides causing inflation based bubbles immediately followed by nasty busts. However, the real question still remains, what does the future hold for financial markets?

What I’m about to say may surprise readers, but history supports my thought process. If the Federal Reserve continues on the same path it is possible that the U.S. Dollar could go through a real currency crisis. The potential for such an event is intensified by the fact that Asia and Europe are raising interest rates due to inflationary pressures. Time will tell, but gold and silver remain strong, however I would not fall in love with either commodity, or any commodity for that matter. Whether we have a currency crisis or not, there is going to be one nasty sell off in commodities in the future, specifically in silver.

I agree with many market prognosticators in that we are in a commodity bubble. The weekly chart of silver futures below illustrates just how parabolic the move has been:

At some point the U.S. Dollar will bottom, and when it does a significant rally will take shape. When the U.S. Dollar rallies it has the potential to be sharp and fast. Silver would be hit hardest as the chart above shows the parabolic move higher that has transpired over the past few months. The timing of the U.S. Dollar’s bottom is difficult to quantify, and picking bottoms is a fool’s game. Nevertheless, the commodity charts will tell us when it’s time for the rally to unfold, but for right now prices will likely continue higher for commodities and equities.

While I think longer term precious metals investors might be able to withstand the impending selloff, the other side of that selloff will likely see gold and silver work higher still. Longer term gold and silver will likely perform well, but traders must be aware that a sharp pullback is not only likely, but would be considered healthy by many market participants. The Dollar Index weekly chart illustrates the sharp selloff in the U.S. Dollar the past few months.

While several articles have been proffered by authors I respect deeply, they have not offered a means to determine when the Dollar has bottomed. While nothing is full proof, the longer term SPX chart may be a guide as to when the U.S. Dollar will begin to bottom. The SPX weekly chart shown below illustrates the long term ascending channel that the S&P 500 has been trading in for some time.

My “educated guess” as to when the Dollar will begin to bottom will likely coincide with a test of the ascending trend line. In previous articles, I opined that I thought we would see the S&P 500 rally and we are in that process now. My guess is that about the time the S&P 500 tests the rising channel, we will see the U.S. Dollar begin to bottom. The short opportunities that will be presented from a risk / reward perspective could be outstanding. Cycles typically line up, particularly when one particular asset, in this case the U.S. Dollar, are driving markets in one particular direction for a long period of time.

Typically business cycles end when commodities and commodity based stocks such Exxon or Barrick Gold rally. We are in that stage of the business cycle right now, and typically when that stage has been reached it is indicative that the economy is starting to overheat. Cyclicality in financial markets has been discussed for years, but often times technical analysis will align with the business cycle. While I may not be exactly right as to the timing, it certainly gives a solid framework for risk-based decisions going forward.

Conclusion
I believe that the actions taken by the Federal Reserve for the past 2-3 years are going to result in additional selling pressure in the future for the U.S. Dollar which will propel commodity prices and equity futures prices higher than what many will expect. While the selloff may occur within the confines of a short to intermediate term time frame, the U.S. Dollar will eventually bottom and a nasty selloff in commodities and stocks will transpire and the next leg of the secular bear market will begin. The business cycle and the technicals are aligned at this point, the question is really how long it is going to take to get there.

The end game will likely result in the Federal Reserve looking foolish while the American people and the global economy will suffer from the Fed’s ineptitude. The possibility that the Federal Reserve is forced to raise interest rates to slow down inflation at the same time the U.S. Dollar bottoms is a recipe for a potential economic disaster.

Slowing economic conditions based on higher oil prices and inflationary pressures paired with higher interest rates will result in another recession fueled by the Federal Reserve’s Keynes based economic models and decision making. Ben Bernanke was right about one thing, the Federal Reserve uses educated guesses based on their models when setting monetary policy. I posit to readers, what happens if the Federal Reserve Chairman and Governors’ price models and educated guesses are completely false?

Get My Free Trade Setups: http://www.optionstradingsignals.com/profitable-options-solutions.php
JW Jones

May 4, 2011

Lee Says China Internet Sites Replicate, Then Innovate

May 4 (Bloomberg) — Kai-Fu Lee, a former Google Inc. executive whose Beijing-based venture fund Innovation Works invests in startups, spoke with Bloomberg’s Robyn Meredith about China’s internet market. China’s economy is projected to grow three times faster than the U.S. and about two-thirds of the population is not yet online. Lee said Innovation Works, founded in 2009, now has investments in 28 projects, mostly related to mobile-Internet technology. (Source: Bloomberg)

May 4, 2011

EUR Weathers Storm, Continues Gaining

The euro has surprisingly held its ground lately, despite the sell-off during this morning’s Asian trading sessions, which saw a downturn in commodity-linked currencies like the Aussie (AUD), Kiwi (NZD) and Loonie (CAD).

The rapid sell-off was triggered by an aggressive move against silver by billionaire George Soros, according to the Wall Street Journal. The dip in precious metals prices has pulled down heavily on risk sentiment in Asia, but the EUR appears to have quickly pared its losses at the outset of the European trading session.

As traders prepare themselves for tomorrow’s interest rate decisions out of Britain and the euro zone, the question turns to whether President Trichet and his European Central Bank (ECB) will continue to hold rates steady, as hinted at in late-April, or will another rate hike be expected considering the pace of regional inflation?

Friday’s Non-Farm Payroll data out of the United States also becomes a factor as traders begin to speculate and price-in what impact they are expecting from the American employment sector after today’s less than stellar ADP release.

The ECB is expected to leave its rates unchanged tomorrow, but traders will be listening closely to Trichet’s words to gauge the direction of future monetary policy in the euro zone. Last month’s dovish sentiment put a damper on EUR growth by mid-April, but traders have so far found reasons to continue buying up the 17-nation single currency.

May 4, 2011

Lagarde Says She Would Like to See a Strong U.S. Dollar

May 4 (Bloomberg) — French Finance Minister Christine Lagarde talks about the euro and U.S. dollar. She also discusses Portugal’s bailout package and the outlook for European economies. Lagarde speaks with Bloomberg’s Phillip Yin in Hanoi. (Source: Bloomberg)

May 4, 2011

Get Ready for the American Turnaround

A Note from Editor Sara Nunnally: We talk a lot about the problems weighing down the American economy. One of Smart Investing Daily‘s goals is to tell you what’s really happening in the markets… even if it’s not what government and the mainstream media are telling you.

That means we’ve had a lot to share about how the economy has — and hasn’t — been recovering.

But our goal is also to help you make better investments. That doesn’t just mean protecting your portfolio. It means helping you grow your wealth.

This week’s guest article is about building wealth. I’ll warn you, it’s not for everyone. But for investors that can see just a glimmer of light in the American economy, and a chance at getting in on the ground floor of the “American Turnaround,” Michael Robinson is your man.

Here’s what he told his 180 Trader subscribers a couple weeks ago…

The American Turnaround Is Gaining Ground

This is a great time to be a turnaround stock investor. I can say that with confidence because I have followed this field for more than 30 years.

I covered the great recession of the early 1980s, the stock market crash of 1987 and the recession of the early 1990s. I had a public relations business decimated by the dot-com crash of early 2000.

And if that’s not weather-beaten enough for you, I started picking stocks for the Taipan Publishing Group in late 2008, literally right near the market’s bottom. So, “this ain’t my first rodeo.” Not by a long shot.

Of course, I could take a pessimistic view and focus on the millions of foreclosed homes out there and China’s trade deficit with the U.S. Both are drains on the economy that keep unemployment stubbornly high.

I mention that in passing so you understand I’m not naïve about the challenges this country faces.

And yet… I see signs of economic and political progress coalescing to give us a great environment for turnaround stocks. Like you, when Standard & Poor’s warned about a negative rating for America’s debt earlier this week, I was at first concerned.

Then I got thinking… This is just the wake-up call those politicians in Washington need to get the budget under control and restore at least some confidence in the value of the dollar.

I believe we will finally see some progress in slashing bloated spending in the near future. At the very least, the rate of increase will slow dramatically.

On the economic front, we got two good pieces of news this week. Intel Corp. (INTC:NASDAQ) on Tuesday reported blow-out earnings for the first quarter, a 35% surge. That means businesses are spending heavily on computers, servers and software.

Intel closed Wednesday at $21.41, up nearly 8% for the day. The world’s largest semiconductor company and tech bellwether stock is up 72% from its closing low in March 2009 of $12.41.

Consumers continue to spend heavily on tech products as well. Apple Inc. (AAPL:NASDAQ) smashed Wall Street’s expectations on Wednesday when it said profits nearly doubled in the first quarter. Sales of iPads were below expectations but iPhones and Mac computers flew off the shelves in record numbers.

Apple’s stock trades above $342 compared with a closing low in March 2009 of $85.30, for a 300% turnaround.

I list these two companies as proxies of overall U.S. economic liquidity. Consumers and businesses are confident enough in the recovery to open their wallets and propel corporate earnings.

(By the way, I’m contributing to Smart Investing Daily today, but regular editors Sara Nunnally and Jared Levy are always simplifying the market with their easy-to-understand articles.)

Earlier I mentioned my concern about the value of the dollar, which declined this week on heavy volume. But 180 Traders are profiting from that trend.

During the beta-test of this new service that went to Millionaire’s Circle members, I recommended Endeavour Silver Corp. (EXK:NYSE). Since entering the 180 Trader test portfolio on Jan. 10 the stock is up 85% as of deadline today.

We’re also doing well on our energy position. Calpine Corp. (CPN:NYSE), which operates natural gas and geothermal plants, is up nearly 14% since it entered the portfolio on Jan. 31.

And we benefited from good timing on our uranium position. I recommended selling Denison Mines (DNN:AMEX) on Friday, March 10, for a gain of roughly 35%.

The very next day, Japan suffered an earthquake and tsunami that caused extensive damage to nuclear reactors. Denison stock got killed; it’s down 25% since we exited the position.

Meantime, new subscribers to this service got a special report on MoneyGram International Inc. (MGI:NYSE). The stock is enjoying strong support.

It closed Wednesday up nearly 3% to $3.53, which is above both its 50-day and 200-day moving averages, a bullish sign. More importantly, the turnaround curves show solid momentum, indicating investors are waking up to MoneyGram’s turnaround story.

The company recently said it has completed a $540 million recapitalization plan. A small-cap leader in global payment services for underbanked consumers, the company is in a sweet spot for the global recovery.

Millions of U.S. borrowers still need non-traditional sources of financing. As unemployment slowly ebbs, workers are getting back on their feet but still have spotty credit histories.

In emerging economies millions more need to send or receive money across borders but don’t have bank accounts. So, the long-term economic trends here and abroad favor MoneyGram.

Let me close by saying thank you for subscribing to this new service. I’m a veteran turnaround reporter and remain excited about this field. I hope you like the results and that we can have a long-standing relationship.

Editor’s Note: I hope you enjoyed Michael’s guest article. For your reference, the gains he talks about were accurate as of April 21, 2011. If you’re interested in more information on Michael’s service, 180 Trader, you can learn more by following this link.

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.

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Other Related Sources:

Turnaround Stock Investing

Should You Stay Invested in Financial Stocks?

Selling Dollar Versus Euro ‘Makes Sense’

May 4, 2011

Elliott Says India `Growth Frontier’ for Steel: Video

(Corrects spelling of Elliott.) May 4 (Bloomberg) — Mike Elliott, Sydney-based global mining and metals leader for Ernst & Young LLP, talks about the outlook for global steel production. Steel production may rise 7 percent this year, spurred by demand in China and India, the world’s fastest-growing major economies, Ernst & Young said in a report. Elliott speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

May 4, 2011

FX Technical Analysis – EUR/USD Bullish Flag Trade

By Russell Glaser

The EUR/USD has consolidated its gains over the past week, creating a bullish flag pattern on the daily chart. Given the Momentum-14 indicator is moving higher, a breakout to the upside is expected.

The bullish flag pattern has been formed between the prices of 1.4750 and 1.4900. Before entering long on a breakout of the bullish flag pattern, traders should wait for confirmation of the breakout. A move above 1.4910 should suffice. A protective stop should be placed inside the chart patter below 1.4840.

Judging from the chart pattern, a move following a breakout should take the pair roughly 400 pips to 1.5300. A take profit level can be placed near this level below the May and June 2008 lows.

EURUSD_Daily

Forex Market Analysis provided by ForexYard.

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.