Month: October 2011

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Google Bidding For Yahoo! – Is The Interest Real?

Google Bidding For Yahoo!: Is the Interest Real?

by Justin Dove, Investment U Research
Monday, October 24, 2011

Yahoo! (Nasdaq: YHOO) is a hot rumor in mergers and acquisition activity lately. First, there was news that the Chinese e-commerce company Alibaba (OTC: ALBIY.PK) was interested in a takeover.

Then Microsoft (Nasdaq: MSFT) was announced as a potential suitor three years after an unsuccessful attempt to take over the company.

Now the latest rumors tab search-engine giant Google (Nasdaq: GOOG) as a potential buyer. According to the reports, Google has talked to at least two private equity firms about potentially financing a deal.

While there are certainly some valuable parts of Yahoo!’s franchise that may interest Google, it doesn’t seem probable that the interest is genuine.

It sounds like Google is posing as a potential buyer in the hope of driving up the cost of the acquisition for its major rival, Microsoft.

“Fake” Interest As a Tactic

Although it may sound a bit like a conspiracy theory, it’s a tactic used in business all the time.

Baseball fans may remember that this past offseason the New York Yankees used “fake” interest in Carl Crawford to help drive up the bidding price and ultimately force the Boston Red Sox to pay an inflated $142 million for a seven-year contract. New York General Manager Brian Cashman later admitted that the team had no real interest, but wanted to drive up the price tag.

The rivalry between Google and Microsoft is somewhat comparable to that of the Yankees and Red Sox. The two companies battle for talent and have increasingly overlapped each other’s markets.

Just to name a few battlefields for the two companies:

  • Google introduced Google Docs to battle Microsoft Office.
  • Microsoft introduced Bing to challenge Google’s search engine supremacy.
  • Microsoft recently joined forces with its former enemy, Apple (Nasdaq: AAPL), and other companies to launch a patent war against Google’s Android mobile operating platform.
  • Now it appears Microsoft is gaining some steam to compete with Android in the tablet platform space with its Windows 8 product after failing to have much success with its previous endeavor into a mobile operating system.

The Bottom Line

Yahoo! stock is already benefiting from the Google rumors as it’s up close to three percent midday Monday. It’s unlikely Google would take on the antitrust attention and all of the problems Yahoo! is facing.

But Microsoft could see value in Yahoo! as a means to advance Bing in its competition with Google for search engine supremacy. Google may see this as a competitive move against them and be looking to drive up the price to make it harder on Microsoft.

Even though Google probably doesn’t have genuine interest, its potentially “fake” interest could still bring a higher premium in a possible takeover.

Good investing,

Justin Dove

Article by Investment U

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Bank of Israel Keeps Interest Rate at 3.00%

The Bank of Israel held its benchmark interest unchanged at 3.00%.  The Bank said: “The decision to leave the interest rate for November unchanged after reducing it for October is in line with monetary policy aimed at stabilizing the rate of inflation within the price stability target range of 1–3 percent over the coming 12 months, and is intended to support growth while preserving financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel, the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.”

Previously the Bank cut its monetary policy interest rate, after leaving it unchanged at its June, July, and August meetings, and increasing the interest rate by 25 basis points to 3.25% at its May meeting this year.  Israel recorded annual inflation of 2.9% in September, 3.4% in August and July, 4.2% in June, 4.1% in May, and 4.0% in April and just inside the Bank’s inflation target range of 1-3%.

Israel reported GDP growth of 4.8% (annualised) in the March quarter, and 3.3% in the June quarter.  The Bank said: “GDP growth for 2011 is forecast to be 4.7 percent, and 3.2 percent in 2012”  The Israeli Shekel (ILS) has weakened about 2.5% against the US dollar this year, while the USDILS exchange rate last traded around 3.65

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Euro/Dollar Daily Update 24/10/11

EUR/USD Analysis 

The Euro/Dollar currency pair gave a 6 week high earlier today prior to retracing under the 1.3900 level resistance.  The psycho level 1.4000 level is however seen as key in the near term with added confluence as follows:

  • 61.8% Fib ret of 1.4548 > 1.3144 is at 1.4009.
  • 150 EMA (Exponential Moving Average) is aligned with 1.4000.
  • Price structure support lows from the 2011-03 > 2011-09 period are likewise aligned.

A failure to hold the current highs now brings 1.3600 into play as a potential downside target.  This market has bought the eur since earlie in October and there’s no obvious sign of a reversal at present.  The 76.00 dollar index level has also held intra-day and can be monitored if trading the dollar versus any other currency.

Daily Chart

eurusdanalysisoctober24th thumb EURUSD Analysis October 24th

  • RSI 14 is neutral at 55.57
  • Stoch(9,6) neutral at 51.21

Article by forex-fx-4x.com

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A Major New Threat to Your Stock Portfolio

A Major New Threat to Your Stock Portfolio

by Alexander Green, Investment U’s Chief Investment Strategist
Monday, October 24, 2011: Issue #1627

A number of readers have asked me to weigh in on the Occupy Wall Street movement and what it means for the financial markets.

Let me begin by saying I sympathize with the anger and frustration of these protesters.

It’s maddening when you can’t find a job, pay your bills, or plan for your retirement. It’s aggravating when your savings pay nothing. And I have no sympathy for the big wire houses. As I wrote in The Gone Fishin’ Portfolio, most Wall Street firms service their retail clients the way Bonnie and Clyde serviced banks.

Yet these demonstrators’ heads are leading them astray. If you want to examine who bears responsibility for the state of the economy, take a look at the facts, starting with the financial crisis of 2007 to 2009. Consider:

  • The Federal Reserve took interest rates too low for too long, making mortgage loans dirt-cheap and priming the real estate bubble.
  • Congress exempted the first $500,000 in capital gains on primary residences held for two years, creating a huge incentive for Americans to flip their homes.
  • In a misguided effort to promote home ownership for everyone, both Republican and Democrat legislators passed laws effectively criminalizing banks that failed to lend to subprime borrowers (and particularly minority subprime borrowers).
  • The federal government sponsored Fannie and Freddie – or (as I prefer) Phony and Fraudie – to warehouse these crummy loans and then put taxpayers on the hook to clean up the mess.
  • The $615-trillion market for credit default swaps accelerated the financial collapse. These should have been traded through central clearinghouses, on exchanges that provide transparency. Who decided against this? Congress in December of 2000 by passing the Commodity Futures Modernization Act and preventing any real oversight of the over-the-counter derivatives markets.
  • And who’s responsible for the regulation of banks, savings and loans, mortgage companies and rating agencies to make sure the mortgage market is fair and transparent? Why the federal government, of course.

The problem wasn’t corporate greed. It was government incompetence.

Sure, there’s plenty of blame to go around. For example, CEOs Jimmy Cayne of Bear Stearns, Dick Fuld of Lehman Brothers and Hank Greenberg of AIG all failed to understand the huge risk their own institutions were taking. Shareholders and employees of these firms suffered mightily as a result. There was plenty of collateral damage, too.

And let’s not forget the enemy in the mirror. After all, mortgage brokers don’t generally hogtie clients and force them to take out home loans at gunpoint. Plenty of Americans got caught up in the hoopla during the housing bubble and figured they could get rich in a hurry by flipping a house. That didn’t work out too well.

If there’s intense demand for home loans, however, the free market will provide them.

Understand that businesses compete for profits the way NFL teams compete for championships. If you attended a game where the referees let the players step out of bounds, spear, face mask, or commit personal fouls without blowing the whistle, all hell would break loose.

That’s what happened in the recent financial crisis. Politicians and bank regulators knew that financial institutions weren’t requiring down payments from borrowers. They knew they weren’t verifying income or assets or borrowers’ ability to repay the loans.

They were supposed to officiate the game. But they didn’t.

As Berkshire Hathaway Vice-Chairman Charlie Munger pointed out, when a lion escapes from the zoo and injures someone, you don’t blame the lion. You blame the lion keeper. Federal regulators had all the tools they needed to protect us – and failed to use them. Now they’re blaming it on investment banks and “millionaires and billionaires.” And the Occupy Wall Street crowd is buying it.

Aside from aiding and abetting the recent the financial crisis, Congressmen in both political parties have grossly mismanaged the nation’s finances, running up trillions in debt and tens of trillions more in unfunded liabilities. (The debt now amounts to more than $1 million per taxpayer.) For a better picture of this fiasco, click here to see the National Debt Clock.

In short, rich people and Wall Street firms aren’t responsible for this state of affairs. Free-spending Congressmen are. Someone should tell the Wall Street occupiers to pick up camp and move over to 1st St and East Capitol, the address of the Capitol Building.

Between protests they might also pick up a book by Adam Smith, Friedrich Hayek, or Milton Friedman. According to Douglas Shoen, a former pollster for Bill Clinton, surveys of the Occupy Wall Street protesters show they overwhelmingly favor “opposition to free market capitalism and support for radical redistribution of wealth, intense regulation of the private sector and protectionist policies to keep American jobs from going overseas.”

This didn’t work in the 1930s. And it won’t work today.

If voters, out of misguided populist anger, elect representatives who endorse these policies… well, at the very least it won’t be good for your stock portfolio.

Next year’s elections may well be the most important of your lifetime. Some Americans believe business is responsible for the country’s economic woes. Others believe it’s government.

I say, “Let’s vote.”

Good investing,

Alexander Green

Article by Investment U

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New Zealand Dollar Expecting Volatile Move Monday Night

Source: ForexYard

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With New Zealand banks on holiday Monday in observance of Labour Day, many are anticipating a volatile jump in the New Zealand dollar’s (NZD) value come reopening later this evening. The New Zealand economy is releasing a highly important data release on consumer inflation (CPI).

As this report comes on the coattails of a bank holiday, it is expected to generate a wider swing than usual as bank liquidity comes back online simultaneously with an impactful report. The Kiwi has been consolidating lately and this evening’s data release could be what’s needed to shake it loose and send it reeling. Traders interested in trying to capture this volatility for profit would do well to watch this evening’s report.

Read more forex trading news on our forex blog.

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.

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Decline in German Manufacturing Disconcerting

Source: ForexYard

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Flash reports on the euro zone regional economy have shown manufacturing to be in decline. France did report a positive bump in manufacturing, but Germany and the broader region are indicating a decline. The reports on Germany are perhaps the most disconcerting of the data considering its recent importance in stabilizing the region.

Germany reported a downtick in their flash manufacturing figure from last month’s 50.3 to this month’s 48.9. The indicator has begun to weigh somewhat on the value of the euro (EUR) as investors adjust their appetite for risk in a region which appears to be slowing on the manufacturing and industrial fronts.

Read more forex trading news on our forex blog.

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.

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Inflationary Growth Slowing in Australia

Source: ForexYard

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The quarterly report on the Australian producer price index (PPI) revealed a slow-down in growth from an expected 0.8% to a reading of 0.6%. The indicator suggests that price increases related to increased demand for produced goods has diminished somewhat as the Australian economy turns mildly sluggish.

This report has so far dragged the Australian dollar (AUD) down mildly this morning, but speculators are turning their attention to the risk appetite of European nations this afternoon following the manufacturing and service reports out of the euro zone.

Read more forex trading news on our forex blog.

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.

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The Eurozone Wags the Gold & Silver Dog

JW Jones – www.OptionsTradingSignals.com

If Greece defaults and the European situation begins to spin out of control where will money flow? It would not make sense for market participants to buy Euro’s during a default regardless of whether the default it structured or not. In fact, it is more likely that European central banks and businesses would be looking to either hedge their Euro exposure or convert their cash positions to another currency all together.

Some market pundits would argue that gold and silver would likely benefit and I would not necessarily argue with that logic. However, the physical gold and silver markets are not that large and depending on the breadth of the situation, vast sums of money would be looking for a home. The two most logical places for hot money to target in search of safety would be the U.S. Dollar and U.S. Treasury’s.

The U.S. Dollar and U.S. Treasury obligations are both large, liquid markets that could facilitate the kind of demand that would be fostered by an economic event taking place in the Eurozone. My contention is that the U.S. Dollar would rally sharply along with U.S. Treasury’s and risk assets would likely selloff as the flight to safety would be in full swing.

To illustrate the point that the U.S. Dollar will likely rally on a European crisis, the chart below illustrates the price performance of the Euro compared to the U.S. Dollar Index. The chart speaks for itself:

Euro Dollar Options

Clearly the chart above supports my thesis that if the Euro begins to falter, the U.S. Dollar Index will rally sharply. In the long run I am not bullish on the U.S. Dollar, however in the case of a major event coming out of the Eurozone the Dollar will be one of the prettiest assets, among the ugly fiat currencies.

The first leg of the rally in the U.S. Dollar occurred back in late August. I alerted members and we took a call ratio spread on UUP that produced an 81% return based on risk. I am starting to see a similar type of situation setting up that could be an early indication that the U.S. Dollar is setting up to rally sharply higher in the weeks ahead. The daily chart of the U.S. Dollar Index is shown below:

US Dollar Index Options

As can be seen from the chart above, the U.S. Dollar Index has tested the key support level where the rally that began in late August transpired. When an underlying asset has a huge breakout it is quite common to see price come back and test the key breakout level in following weeks or months. We are seeing that situation play out during intraday trade on Friday.

We are coming into one of the most important weeks of the year. Several cycle analysts are mentioning the importance of the October 26th – 28th time frame as a possible turning point. I am not a cycle expert, but what I do know is that we should know more about Europe’s situation during that time frame. It would not shock me to see the U.S. Dollar come under pressure and risk assets rally into the October 26th – 28th time frame. However, as long as the U.S. Dollar Index can hold above the key breakout area the bulls will not be in complete control.

If I am right about the U.S. Dollar rallying higher, the impact the rally would have on gold and silver could be extreme. While I think gold would show relative strength during that type of economic scenario, I think both metals would be under pressure if the U.S. Dollar started to surge. In fact, if the Dollar really took off to the upside I think both gold and silver could potentially selloff sharply.

As I am keenly aware, anytime I write something negative about gold and silver my inbox fills up with hate mail. However, if my expectations play out there will be some short term pain in the metals, but the selloff may offer the last buying opportunity before gold goes into its final parabolic stage of this bull market. The weekly chart of gold below illustrates the key support levels that may get tested should the Dollar rally.

Gold Options Trading

For quite some time silver has been showing relative weakness to gold. It is important to consider that should the U.S. Dollar rally, silver will likely underperform gold considerably. The weekly chart of silver is illustrated below with key support areas that may get tested should the Dollar rally:

Silver Options Trading

Clearly there is a significant amount of uncertainty surrounding the future of the Eurozone and the Euro currency. While I do not know for sure when the situation in Europe will come to a head, I think the U.S. Dollar will be a great proxy for traders and investors to monitor regarding the ongoing European debacle.

If the Dollar breaks down below the key support level discussed above, gold and silver will likely start the next leg of the precious metals bull market. However, as long as the U.S. Dollar can hold that key level it is quite possible for gold and silver to probe below recent lows.

Both gold and silver have been rallying for quite some time, but the recent pullback is the most severe drawdown so far. It should not be that difficult to surmise that gold and silver may have more downside ahead of them as a function of working off the long term overbought conditions which occurred during the recent precious metals bull market.

Make no mistake, if the Dollar does rally in coming months risk assets will be under significant selling pressure. While the price action will be painful, those prepared and flush with cash will have an amazing buying opportunity in gold, silver, and the mining complex. Right now, risk remains excruciatingly high as the European bureaucrats wag the market’s dog.

Subscribers of OTS have pocketed more than 150% return in the past two months. If you’d like to stay ahead of the market using My Low Risk Option Strategies and Trades check out OTS at OptionsTradingSignals.com and take advantage of our free occasional trade ideas or a 66% coupon to sign up for daily market analysis, videos and Option Trades each week.

JW Jones

This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.

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How to Trade Gold and Oil Prices This Coming Week

By Chris Vermeulen – thegoldandoilguy.com

How To Trade Gold & Oil – The past couple weeks have been tough for most investors. The recent light volume rallies which have taken place in gold, oil and stocks has been generating mixed signals for technical analysts like myself. In order avoid a large draw down on your trading capital you must focus on the long term intraday charts.

What is a long term intraday chart you ask? It is simply a 4 or 8 hour candlestick or bar chart. For example the charts below in this report are 4 hour charts. So each candlestick represents 4 hours.

Why should you use these long term intraday charts instead of say a daily chart? There are four main reasons for this:

  1. If you used a daily chart then this information would be condensed showing you the daily high, low, open and closing prices. While the 4 hour futures chart shows you large multi intraday chart patterns that most traders would never see…  Patterns not seen by the average investor have a higher probability of working in your favour. Also these patterns are much larger than just normal intraday patterns which you see on the 5, 10, or 60 minute charts. Remember the larger the pattern the more potential profit there will be.
  2. These longer time frames allow us to follow gold, silver, oil and stock indexes around the clock 24/7 using futures contracts. Think about it… regular trading hours from 9:30am – 4pm ET only allows you to see 1/3rd of the price action each day. That means you are only seeing parts of larger patterns while the 24/7 contracts show you ALL Price Action.
  3. The last reason you must use futures charts is for the volume readings. Futures show real volume levels which can be used for trading. So the volume you see on ETFs will not have the proper volume levels for that specific commodity or index. More times than not it almost the opposite…
  4. My last reason for trading long term intraday futures charts is because the price of the underlying commodity or index moves true while the ETFs which try to shadow these commodities generate false breakouts and breakdowns on a regular basis. Watch my video about this here: http://www.thetechnicaltraders.com/ETF-trading-videos/TTTOct19Oil/index.html

 

Let’s take a look at the charts…

Gold Futures Contract – 240 Minute (4 Hour) Chart

Gold finally broke down from the bearish rising wedge which it had been forming through late September until mid October. I know the majority of traders, investors, and financial newsletters have already positioned themselves either long or short the metal as they anticipate the next major move.

I will agree that a large move either up or down is just around the corner but what sets me apart from others is the fact that I don’t bet my hard earned money when the odds are 50/50. I don’t pick tops or bottoms; rather I wait for a clean break out or low risk entry point. Only then will I take action. Until the blue box on the chart has been broken with some type of retest I will continue to observe and analyze the chart of gold.

How To Trade Gold

 

Crude Oil Futures Contract – 240 Minute (4 Hour) Chart

The past month crude oil trading has been very profitable for subscribers and me. We shorted crude oil using an inverse etf in September which moved over 20% in our favour within a few trading sessions. And just last week we shorted it again for a 7.5% move in less than 24 hours.

Overall I am still bearish on oil but have moved to cash until I see another high probability setup unfolding. The recent price action in crude oil makes the odds about a 50/50 bet as to which way it will break next. This is why I have moved back to cash and pocketed the quick gain.

How To Trade Oil

 

SP500 Exchange Traded Fund – 240 Minute (4 Hour) Chart

This chart is not the SP500 futures contract. This is just the SPY ETF but what I wanted to show was how the market was showing mixed signals. The past couple weeks price has been broadening and this can be taken two different ways…

More times than not it is seen as a bearish pattern and price generally falls afterwards. But in rare situations which I think we could be experiencing now this broadening price action can be very bullish, meaning much higher prices ahead. So I continue to observe and prepare for a possible trade setup.

How To Trade Indexes

 

Weekend Gold, Oil and Stocks Trend Conclusion:

In short, I feel the market is on the verge of a strong move. The problem is that price action, market sentiment and economic news are all giving mixed signals…

The best position right now is in cash and if something unfolds this week to our favour, then we will get involved but I am not going to take a 50/50 guess on what the next move is until the odds are in favour to one side or the other.

August until now (October 24) the SP500 is down -3.7% and Gold is up 1.1%, Silver is down 20% and oil is down -7.2. Subscribers of my newsletter have pocketed over 38.5% in total gains using my simple low risk ETF trading alerts.

Get My FREE Bi-Weekly Trading Reports and Videos by joining my free newsletter here: thegoldandoilguy.com

Chris Vermeulen