Month: July 2011

July 22 (Bloomberg) — Paul Dietrich, chief executive officer of Foxhall Capital Management Inc., talks about the U.S. and Chinese economies, corporate earnings, U.S. and Brazilian stocks, and some of his picks. He speaks with Matt Miller, Lisa Murphy, Julie Hyman, Sheila Dharmarajan and Adam Johnson on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

The twenty ninth trading week of the year comes to a close as investors fret about the ongoing debate regarding raising the debt ceiling in the United States, and an explosion in Oslo that may be linked to a terrorist group.

What is Fibonacci confluence?

The various Forex currencies frequently journey in measured moves.  A strong sustained move for a certain direction will typically retrace a percentage of the move before seeing a continuation higher.  Forex traders will use the Fibonacci retrace tool to map out the common ratios for retraces which include the following: 23.6, 38.2 and 61.8%.  50% is another common level as the half way point of a move but does not fall under the Fibonacci sequence levels.  Traders use these levels to attempt to forecast the extent of a pullback retrace.

Fibonacci extensions are also popular and these occur as the currency pair moves further than the 100% level of a preceding wave. The main Fibonacci extension points are 1.618 and the 1.272 measurement of price.

The attached chart shows how a combination of retrace and extension levels can be very powerful when the points happen at the same time.  This GBP/USD chart has a Fibonacci confluence of 1.272 and 1.618 extensions and a 38.2 retrace.  There is also a Fibonacci harmonic price pattern highlighted on the chart but this is beyond the scope of this article.

These points have been highlighted on the attached chart.  They are all pointing towards the level that price turned from a sustained down trend and moved hundreds of pips higher on this occasion.  It goes without saying that this confluence won’t always provide winning trades but you may want to look into this area further if you haven’t before.

See further Fibonacci Confluence examples at the authors blog.

By forex-fx-4x.com

The past week in monetary policy was relatively quiet, with just five central banks announcing interest rate decisions.  The only central bank to adjust rates was the Banco Central do Brasil, which increased its Selic rate by 25 basis points to 12.50%.  The other banks that held rates unchanged were: Canada at 1.00%, South Africa at 5.50%, Turkey at 6.25%, and Egypt at 8.25%.  Elsewhere in central banking, Taiwan’s central bank increased commercial bank minimum liquidity requirements as part of an ongoing program to strengthen risk management in the banking system.

So for the central banks that reviewed monetary policy settings it was very much a case of wait and see, with the banks largely viewing current settings as appropriate.  Indeed if holding rates steady was the theme, the BRIC economy Brazil was consistent with this even though it increased rates, in that the Brazilian central bank slightly altered the tone of its statement; perhaps hinting that it is near the end of its tightening cycle.  Another theme within this was strong vigilance of risks, particularly those emanating from the Euro area, with still high levels of uncertainty as to how the crisis will unfold.

Listed below are some of the key quotes from central bank monetary policy statements and media releases from the week ending 23 July 2011:

• Bank of Canada (held interest rate at 1.00%): “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2.0 percent inflation target.  Such reduction would need to be carefully considered”.
• Banco Central do Brasil (increased rate +25bps to 12.50%): “evaluating the prospective scenario and the balance of risks for inflation, the Copom decided, unanimously, at this moment, to raise the Selic rate to 12.50% p.a., with a neutral bias.”
• South African Reserve Bank (held interest rate at 5.50%): “The MPC is not complacent and will remain vigilant and continue to monitor closely any indications of second-round effects on inflation emanating from these cost pressures as well as the changing risk profile of the inflation outlook.”… “The view of the MPC continues to be that the underlying inflation pressures are mainly of a cost push nature, notwithstanding signs of a possible moderate increase in underlying inflation.”
• Central Bank of Turkey (held interest rate at 6.25%): “it would be appropriate to narrow the interest corridor gradually should the sovereign debt problems regarding some European economies and the concerns on global growth continue to have adverse impact on the risk appetite.  The Committee has also stated that all policy instruments may be eased should global economic problems intensify and lead to a contraction in domestic economic activity.”
• Central Bank of Egypt (held interest rate at 8.25%): “the slowdown in economic growth should limit upside risks to the inflation outlook. Given the balance of risks on the inflation and GDP outlooks and the increased uncertainty at this juncture, the MPC judges that the current key CBE rates are appropriate.” 

Next week is set to be relatively busy in terms of monetary policy decisions, with at least 8 central banks scheduled to review policy settings. Many of the banks are in emerging market countries so it will be timely to get an update on what they are thinking about and concerned about:

• ILS – Israel (Bank of Israel) – expected to hold at 3.25% on the 25th of July
• HUF – Hungary (Magyar Nemzeti Bank) – expected to hold at 6.00% on the 26th of July
• INR – India (Reserve Bank of India) – may increase rate 25bps to 7.75% on the 26th of July
• NGN – Nigeria (Central Bank of Nigeria) – may increase rate 50bps to 8.50% on the 26th of July
• KES – Kenya (Central Bank of Kenya) – expected to hold at 6.25% on the 27th of July
• NZD – New Zealand (RBNZ) – expected to hold at 2.50% on the 28th of July
• PHP – Philippines (Bankgo Sentral ng Pilipinas) – expected to hold at 4.50% on the 28th of July
• PKR – Pakistan (State Bank of Pakistan) – expected to hold at 14.00% on the 30th of July

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/07/monetary-policy-week-in-review-23-july.html

By Pradeep Soni

Indian Share market is known for the volatility and this only makes it the place for interest of masses. The movement in the market is due to several reasons it can be the result of economic variations or crisis, ups and downs in the political scenario, relationship of India with other neighboring countries or may be due to some natural disaster that has shook the world. Our stock market works under the rules and regulations of SEBI that is securities and exchange board of India.

There are various guidelines and rules and regulations being formed by SEBI which are regulated in order to protect the rights of the investors. The directives of SEBI are very effective as they help in promoting and regulating the stock market. There are two stock exchanges in Indian stock market which are NSE and BSE. National Stock Exchange includes all the blue chip companies which are known as large caps. Bombay Stock Exchange is also known as the SENSEX which means sensitive index, and include about 30companies in 1986 but with the consistent performance it has jumped to about 4000 by 1992. Both the stock exchange has their headquarters in Bombay.

Indian share market is considered to be the safest place for investment as it is becoming the most demanding market nowadays. It has all the substance to encounter the factors responsible for financial crisis. Indian share market deals with a variety of shares that are considered to be the potential shares from the trading point of view. The market include blue chip companies or organizations which are having regular growth record and work with the huge amount of capital for paying off the dividends.
Indian Share Market also includes defensive stocks which are considered to be the best running stock amongst all the stocks. These stocks have the prices which are stable even in the conditions of recession. Thus avoid the risk of less liquidity.

Due to so many advantages of Indian Share Market people are getting attracted towards investment in it. There are people who invest daily in share market and making good money by analyzing the market through various software and analysis techniques. The market is divided into Equity and Commodity market. This also includes Future and options. There are various myths that are related to Share Market but all these are things that should not be followed but instead those who are investing the market should go through the deep analysis or should take the help of experts or of some the advisory companies who are working in this direction.

Summary:- The article is based upon The Indian Share Market and its unique features which are becoming the growing reason for the attraction of the large amount of people.

Pradeep Soni MBA(E-commerce) CapitalHeight Financial Services is one such company which is having a prominence in providing tips which are having an accuracy rate of 85-90%. We are having a team of experienced research analyst.http://www.capitalheight.wordpress.com

About the Author

Pradeep Soni MBA(E-commerce)

July 22 (Bloomberg) — Willem Buiter, chief economist at Citigroup, discusses European efforts to end the 21-month sovereign bond crisis. He talks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

July 22 (Bloomberg) — James Murdoch’s testimony to U.K. lawmakers was challenged by two former employees of News Corp.’s U.K. newspaper unit, while the law firm whose phone-hacking probe he said he had relied upon for three years was only tasked with looking into the actions of one jailed employee. Erik Schatzker reports in today’s Movers and Shakers on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

The masses and major media are making it seem that all is well in the markets. Over the past few weeks the Dow and S&P made strongly bullish moves and the Nasdaq reached 11-year highs.

Even with all this positivity, something is very concerning… and it’s not our government’s battle over our debt.

When I was trading on the floor of the exchange, I paid close attention to large orders trading in the option pits. These orders were coming from heavy hitters such as Goldman Sachs, JPMorgan or another large firm. If they were buying huge quantities of put options (which give them the right to sell a stock at a set price), I would trade along with them or find out why they were bearish.

When a big player like Goldman makes a move, it is for good reason.

The knowledge tucked inside these trades is invaluable, but is next to impossible to find. So I want to show you a little trick.

Volume Is the Cause, Price Is the Effect

Volume drives price. When there are more buyers than sellers in the marketplace, prices rise. When the sellers are in control, prices fall.

To find what the “smart money” is doing, some investors monitor large trading blocks of stock to see whether it was a buy or sell order. Unfortunately, the boys on Wall Street have tricks up their sleeves that make it hard for us to know what is really going on.

If a Wall Street player were to place a market or limit order (like most of us do through our brokers) to buy an extremely large quantity of shares, the price might go through the roof or vice versa when they want to sell.

That’s because the trade would be visible to everyone in the market.

The “Smart Money” (hedge funds, top traders, insiders) on Wall Street does EVERYTHING it can to hide its orders. Just like Texas Hold’em, the best bluff with a brain wins… and these guys play every second of every day.

Smart traders are always looking for ways to take advantage of less informed investors. The best hide their buy and sell orders so that they can get in and out unnoticed and without influencing the price of the stock too much.

Back in the ’80s and ’90s, markets were extremely inefficient. There were a slew of ways traders could game the system. Remember, computers and the Internet were still new and not widely used.

Trades happened much slower.

I recall being a trader in the Wild West days of the SOES bandits. These day traders would use lightning-fast computers and skill to take advantage of the Small Order Execution System that was designed to make small trades. They could “hide” and “flash” their orders to take advantage of investors who were trading small amounts of shares in low volume stocks.

Billions of dollars were made by these bandits (and lost by the “little guy”) before the rules and systems were changed.

High-frequency traders can be thought of as modern-day SOES bandits, but the exchanges and regulatory agencies are stepping in to make their lives difficult.

Hiding Out

Market efficiency and technology have improved by leaps and bounds. Today it is extremely difficult to take advantage of “the system.” Most of you have access to tools and information that cost a trader thousands per month.

The one thing that professional investors still do is “hide” their trades. Not in an illegal way, but in a place that most people don’t think to look…

In the option markets!

Options are becoming more and more popular, but are still relatively unknown to the average investor. They are also a great way for a big-time money manager to take a very large position in a stock while having much less visibility and effect on the stock.

To the layman these “smart money” option trades seem to blend in. In my eyes, the option chains tell a story; I can see the irregularities and the trades that often go unnoticed.

Traders Always Leave Footprints

Take Apple (AAPL:NASDAQ) for example. In the month of August, the amount of options currently held is enough to control almost 61 million shares of stock! The average daily volume of the stock is about 14 million shares, which means that August options alone could control almost 4 1/2 days of trading.

Apple’s options started indicating a bearish bias as soon as the earnings report was out and sure enough, the stock has come way off its highs.

But the secret is not just in the amount of shares that options can quietly control, but whether traders are buying or selling them.

The truth lies within something called implied volatility. Options that are being purchased have higher volatility. Ones that are being sold have lower volatility.

By examining this phenomenon called “skew” I can see just how bullish or bearish the “smart money” is. I talked about this gauge in Smart Investing Daily in early June.

Should You Be Concerned?

In my trading service, WaveStrength Options Weekly, I use this data to help find long and short candidates. If the puts are getting much more expensive than the calls, the smart money could be secretly creeping in with a short position. That might give me a bearish bias in the stock.

One index that is seeing this sort of action is the NASDAQ-100 index. The top holdings in this 100 stock index include AAPL, Google (GOOG:NASDAQ), Microsoft (MSFT:NASDAQ), Qualcomm (QCOM:NASDAQ) and Oracle (ORCL:NASDAQ).

The Nasdaq-100 (NDX) has rallied since mid-June, but lately I have noticed there are many more calls being sold and puts being bought. It is not what you would see if the NDX were going higher.

It looks like traders are positioning themselves for a sharp move lower before August’s options expiration date.

If you look at the NDX volatility chart below, you can see the increase in bar size along the bottom that measures the difference between put and call prices; this shows puts (in black) are getting more expensive than calls (in green).

We saw the same pattern in February… just before a March sell-off.

View larger chart

Although it is normal to see skew, I am wary of the recent increase. We may be in for another big sell-off.

These subtle observations can give us a true look at what the market really feels. Right now, I see nervousness.

The phenomenon is taking place in many individual stocks as well.

Another way to think of this would be if a lot of meteorologists and scientists started buying abnormal amounts of hurricane insurance in your hometown.

Would that scare you? Of course it would.

When the insiders make a move… it’s usually a good idea to follow. Or at least dig deeper.

My warning for investors is simple: use caution. Do your homework before jumping into the market at these levels.

Finally, my first ever podcast went live this morning. In it, I talk about one of my most successful moneymaking tactics… buying stock with other people’s money. If you have ever thought about getting paid to buy your favorite stock, follow the link.

Publisher’s Note: Jared will not admit it, but he is one of the sharpest minds in the options industry. How else can you explain his stellar track record and cult-like following?

What’s even better is his dedication to sharing his knowledge. You have seen what he does every week in Smart Investing Daily. It’s impressive. But Jared’s true talent is putting his finger on the best trades of the week. It is exactly why people are lined up for WaveStrength Options Weekly. It is one of our best-selling services… ever.

To read a recent sample of Jared’s work, follow the link.

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Other Related Sources:

July 21 (Bloomberg) — Robert Breza, analyst at RBC Capital Markets LLC, talks about Microsoft Corp.’s fourth-quarter earnings and outlook. Breza speaks with Emily Chang and Jon Erlichman on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

July 22 (Bloomberg) — Bloomberg’s Lizzie O’Leary reports on proposed legislation to discontinue the U.S. Presidential dollar coin program. (Source: Bloomberg)