USDCHF remains in downtrend from 0.9314, and the fall extended to as low as 0.8881. Deeper decline is still possible after a minor consolidation, and next target would be at 0.8800 area. On the upside, a break above 0.9040 resistance will suggest that a cycle bottom had been formed at 0.8881 on 4-hour chart, then another rise towards 0.9314 previous high could be seen.
AUD/NZD – Daily outlook 18 October
Since early March we saw the Aussie losing ground against the Kiwi; however since August we’ve seen a very choppy range bound market. Last Friday saw a push up to a strong S&R level at 1.2830 forming bearish pin bar rejection. Monday’s trading session closed as an inside bar just below 1.2830 despite initially moving higher in early trading.
The strength and importance of the 1.2830 area cannot be ignored or go unnoticed. This level has supported the market from falling and has also resisted the market from rising in the past.
In the chart below we can see just how strong this S&R area has been. By zooming out we can see that 1.2830 has played a big role in the AUD/NZD since early 2008.
With last Fridays bearish pin bar rejection and Monday’s inside bar at 1.2830 shorting this market would be favorable. In the chart above you can see that each time the market has tested this level it has always pushed away providing some excellent trading opportunities.
Global markets received a shock today following comments by a highly-placed German official that seemed to run counter to the growing optimism for the upcoming European summit. The meeting, which is scheduled for October 23rd, is expected to produce the final version of the debt relief plan hashed out over the past few months. The plans also likely made up much of the agenda of the G20 Finance Ministers meeting held in Pairs over the weekend.
Steffen Seibert – spokesperson for German Chancellor Angela Merkel – said at a meeting in Berlin on Monday that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled”.
Ouch. So much for daring to dream.
Following Seibert’s comments, the euro fell from a one-month high against the dollar declining by more than a cent to $1.3766 during mid-morning trading in New York today. Market sentiment also moved away from the euro with less than 40 percent of traders holding long positions in the EUR / USD currency pair by 11:00 am Monday morning.
European banks also spoke out against rumors that they could be forced to take a 50 percent loss on Greek debt. While the idea that Greek debt holders would face some degree of “haricut” has long been considered part of an eventual bailout, the banks claim they earlier agreed to cuts of 21 percent; their position is that losing half of their holdings could force them into hardship.
Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog
By Mike Conlon, ForexNews.com on Oct 17, 2011
Over the weekend, G-20 leaders re-iterated their desire that EU leaders pick up the pace and come up with the solution to the Euro debt crisis, essentially giving them a week to finalize the plan. This provided the market with some optimism to start out the day, but that optimism was short-lived as Merkel’s reps sought to lower expectations.
The message was that essentially the “dream” of solving the crisis in the next week was not likely, essentially dousing risk appetite lower. While European leaders believe that they have identified 5 areas that need to be addressed, as always, the devil is in the details.
One of the biggest points of contention is what level of losses will private investors voluntarily accept and whether or not those losses would trigger contagion to the other areas of the Euro zone. The previously agreed upon 21% loss is seen by leaders to be insufficient, so obviously banks are balking at higher figures. If banks are forced to take a larger “haircut”, then logically it makes sense that they will likely need to retain more capital.
News on the docket this week will be highlighted by inflation figures in the US, UK, and EU as well as the release of the minutes from the rate policy meetings at the BOE and RBA respectively. While inflation is seemingly not a problem at this point, it could increase significantly if the cloud of worry is removed from the markets on the potential Euro debt deal.
Tomorrow will bring economic data from China which could have a major affect on both the Aussie and Kiwi. GDP figures will show China’s growth rate and any perceived slowdown could be compounded if the currency manipulation bill here in the US gets more traction. Right now it appears to be DOA, but it’s sometimes hard to gauge what self-serving politicians might do. Regardless of whether the bill passes, the conversation has been turned up with the volume getting louder from both sides.
There is also going to be a bit of Fedspeak this week with the theme likely directed toward the Euro zone and their troubles. Markets here look poised to rally if EU leaders can come up with a decent plan. US corporate earnings have been acceptable so far given the overall economic environment, but so much more needs to be done.
If the risk trade can return in any meaningful way, then we could see higher prices across the board for both stocks and commodities. This is where it gets interesting though, as I could envision a scenario where stocks trade higher but commodities trade lower on overall reduced global growth. How this will all play out is anyone’s guess but I think the markets will react more forcefully to good economic data and less to negative data.
The Pound is likely to see some gains if money flows continue to move from Europe to other areas around Europe (including the Swissie) and tomorrow’s CPI report could put the BOE in an awkward position if inflation continues to rise after they increased the size of their QE program by 75 billion. The minutes released from the rate policy meeting could show what they might do next.
Other than that, it’s really just about risk this week emanating from the Euro zone and whether or not the market believes a solution may be forthcoming. Of course this is all predicated on the belief that there is a solution possible that would not kill the markets and cause further contagion.
This might be the problem that haunts EU leaders and the markets should be careful what they wish for!
Regards,
Mike Conlon,
Senior Forex Mentor
www.forexnews.com
Oct. 17 (Bloomberg) — Arnout Van Rijn, the chief investment officer for Robeco Groep NV’s Hong Kong division, talks about Asian stock markets. Van Rijn also discusses Europe’s sovereign debt crisis and China’s economy. He speaks with Susan Li on Bloomberg Television’s “First Up.” (Excerpt. Source: Bloomberg)
Oct. 17 (Bloomberg) — Bloomberg’s Stephen Engle reports from the Canton Fair in Guangzhou, China, the world’s largest trade fair, on the impact of a strengthening yuan on the nation’s manufacturers.¶ Treasury Secretary Timothy F. Geithner has been pushing China to allow its currency to strengthen, saying that would help support global growth, while avoiding actions that could cause friction with the world’s No. 2 economy and the second-largest U.S. trade partner. (Source: Bloomberg)
Don’t Worry About High-Frequency Trading
by Alexander Green, Investment U’s Chief Investment Strategist
Monday, October 17, 2011: Issue #1622
High-tech, rapid-fire trading is very much in the news these days.
Attendees at financial seminars and conferences tell me it scares them. Market pundits often say it distorts prices, creates an unfair playing field and punishes Mom-and-Pop investors. “60 Minutes” even jumped into the fray recently with an exposé on this new phenomenon.
The good news, however, is that investor fears about high-frequency trading are unwarranted. It’s a boon – not a boogie man – and puts only one group of traders at a disadvantage. And you shouldn’t be one of those types anyway.
Let me explain…
The Influence of High-Frequency Trading
High-frequency traders rapidly buy and sell large amounts of securities with statistics and algorithms that drive electronic-trading strategies. Using high-speed data systems, linkages with underground networks, and locations strategically positioned close to the servers of electronic exchanges, they compete to buy and sell in increasingly smaller fractions of a second.
Their influence is substantial. High-frequency traders now make up nearly half the daily volume on U.S. stock exchanges.
Critics claim that these traders are high-tech pirates who destabilize the markets and cost most market participants money. They’re wrong on both counts.
High-frequency traders are doing something that you aren’t doing anyway. They’re vacuuming up nickels and dimes. Daniel Weaver, Professor of Finance and Associate Director for Whitcomb Center for Research in Financial Services, points out that the average high-frequency trader’s profit is $0.10 on 100 shares traded. I’ll bet that’s not your own investment objective.
High-frequency traders spot and capitalize on very small discrepancies in bid/ask spreads among various exchanges. In the process, they tighten those spreads and increase market liquidity. These are both good things for us ordinary investors.
How about the complaint that high-frequency traders make stock prices more volatile? There’s no doubt that world equity markets have been particularly nerve-wracking lately. But there’s little evidence that this is due to high-frequency trading. After all, this technique didn’t begin with the market turbulence we’ve had over the last three months. This volatility has been driven by fear of a double-dip recession here at home and the currency crisis in Europe.
And, despite popular opinion, high-frequency trading did not cause the flash crash on May 6 last year. The SEC and CTFC have issued a joint report confirming that the crash was caused by a single large sell order on E-Mini futures contracts, a security that mimics trading in the S&P 500 Index.
Understand too that to the extent that stocks are volatile, it creates actionable possibilities. If a stock soars or plunges in the absence of news, it often creates an attractive opportunity to buy or sell. Prices fluctuate more than values. And to the extent that prices are out of whack, it increases your opportunity for gains.
High-Frequency Trading’s Biggest Losers
Who loses out due to this new high-tech trading? Mainly day traders, who are essentially gamblers anyway. I say that because intra-day stock-price fluctuations are almost entirely random. Most day traders would be better off betting on a coin flip. (At least there you have a 50/50 chance of winning.)
Day trading only works when you have a full-blown stock market mania – as we did internet and technology shares a little over a decade ago. When that kind of party ends, as it always does eventually, day traders go back to being bartenders and hairdressers. So to the extent that high-frequency trading deters these individuals, it helps prevent almost certain losses.
The important point is this: As a stock investor or trader, what you should really be concerned about is future earnings and share-price appreciation.
High-frequency trading – which increases liquidity and narrows spreads – does nothing to interfere with either.
Good investing,
Alexander Green
Article by Investment U
The Future of Smart TV Technology: Samsung, Google… Or Apple?
by Justin Dove, Investment U Research
Monday, October 17, 2011
According to a report last week by Topology Research Institute (TRi), smart television sales are poised to double in 2012 to 52.85 million units, and reach 124 million units by 2014. Smart TVs are defined as television sets capable of accessing the Internet, downloading and installing applications, etc…
As displayed in the graph below, smart TV sales should remain above 3D TV sales through 2014.
Consumers, Manufacturers and Smart TV Technology
But a recent article from Wired.com doesn’t inspire much confidence in that trend. It mentions that ViewSonic abandoned smart televisions altogether. Intel (Nasdaq: INTC), not mentioned in the article, also recently abandoned its foray into the world of smart TVs.
“What’s happening in the connected TV space is it’s not really about what consumers want, it’s about what manufacturers are making,” Forrester principal analyst James McQuivey told Wired. “Simply having a connected TV doesn’t mean you’ll actually use it.”
According to Gartner Research Vice President Van Baker, most people who do purchase the Internet connection don’t even use it. With such a big investment, they just want to be assured they won’t need a new TV later.
“In most cases consumers are buying a television with Internet connectivity as insurance. In other words, they are buying them just in case they need it in the future,” said Baker. “Less than half of Internet-connected televisions actually get connected to the Internet, so clearly consumers don’t yet see this capability as a must-have feature.”
McQuivey makes another good point…
“Nobody has designed these devices to be inviting, to work quickly,” said McQuivey. “We’ve found there are at least 10 activities that 50 percent or more people do on their iPad, which is very unusual. The iPad beckons you to try these things.”
However, with a smart TV, people mainly just… sit and watch TV.
The Next Step in Smart TV Technology
Most likely, the next step in smart televisions won’t be as a standalone device, but to use its connection to interact with other devices.
That’s where companies like MOVL come in. MOVL is a private company based in Atlanta that has created a platform for developers to make applications that take advantage of multiple smart devices.
“Some of the multi-screen applications that developers are creating on our platform have simply blown us away,” said MOVL CEO Juan Pablo Gnecco. “We have seen ideas ranging from basic living room interactive games and second screen TV viewing experiences, to restaurant trivia networks and even in-stadium interaction with a team’s JumboTron!”
This type of connectivity is the same idea Nintendo (OTC: NTDOY.PK) is trying to tap with its next generation Wii, the Wii U.
While MOVL’s platform supports Google’s (Nasdaq: GOOG) Android and Google TV, Samsung is the company most active in leveraging its technology. And so far, Samsung is a leader in the smart TV department, with more than 1,000 apps and more than one million downloads already.
Smart TV Tech’s 300-Pound Apple in the Room
According to the TRi report, there are three main camps dominating smart TV technology and sales thus far:
(Courtesy: TRi, Cens.com)
One competitor not listed here is the one that could grow to dominate all three – Apple (Nasdaq: AAPL).
Rumors have long swirled that Apple was thinking about turning its struggling Apple TV set-top box product into a standalone smart TV.
If connectivity with multiple devices is the future, Apple would certainly be well positioned. As the leading smartphone manufacturer with its iPhone, the leading tablet manufacturer with its iPad, and the upcoming iCloud to connect it all, it seems inevitable that Apple will connect it all within the home with a hub. Why not a smart TV?
Although McQuivey is totally bearish on smart TVs ever becoming a big thing, he’s still “100 percent convinced that the Apple rumor is true.”
Smart TV Technology’s Bottom Line
The numbers seem to indicate that even people who are buying the smart TVs don’t seem to be using them. Considering most connected TVs so far have just been a weaker version of a computer, it’s not surprising that people continue to use the television for viewing and the computer for the Internet.
As noted by Wired, there needs to be something new in order for company’s smart TVs to penetrate the market. That something new could be the connectedness that smart TVs could offer as a hub for the whole family. Imagine recording a video on a smartphone and seamlessly “slinging” it to the television for the whole family to watch. Or playing card games where each individual’s “hand” could be on his or her smartphone screen.
It remains to be seen, but it seems like companies such as Samsung and Google are headed this way. Apple, which entered the smartphone and tablet markets after learning from other companies’ failures in PDAs, may choose that same course of action. Let the innovators stumble through mistakes and when the future becomes apparent, offer the best product. Only time will tell.
Good investing,
Justin Dove
Article by Investment U
Oct. 17 (Bloomberg) — Guy Verhofstadt, former prime minister of Belgium, talks about options for euro-area lawmakers aiming to solve the sovereign debt crisis, including bank recapitalization and the creation of a common euro-area bond. He speaks from Brussels with Maryam Nemazee on Bloomberg Television’s “The Pulse.”
Oct. 17 (Bloomberg) — Richard Kinder, the ex-Enron Corp. president who parlayed its pipelines into a multibillion-dollar enterprise, is betting on record natural-gas demand in Kinder Morgan Inc.’s $21.1 billion purchase of El Paso Corp. Nicole Itano and Owen Thomas report on Bloomberg Television’s “Countdown.” (Source: Bloomberg)
