Month: March 2012

AUDJPY continued it’s strong upward move and went as high as 88.00 before closing for the week at 87.80. The high and the closing both were in the resistance zone mentioned by us last to last weekend (please check aud/jpy forecast)

While what we mentioned about the resistance zone for AUDJPY is true but the strong closing without much of immediate consolidation from this resistance zone indicate that we can expect further upward gains towards 89.20 during the coming days. Above 89.20 the resistance should be around 89.60. Near 89.20 the psychological resistance of approaching 90.00 should start coming into the picture and 89.20 to 89.60 ranges should come as a resistance zone from where some downward consolidation may take place.

The above should stand good as long as no immediate break below the recent support near 85.60 take place. Any break of 85.60 should bring some support just blow it near 85.40 or the Kijun line of daily Ichimoku cloud but a break below that will make the short-term outlook neutral. This will represent a decisive break of 22-day EMA as well as the above mentioned Kijun line and will turn the focus for a correction towards 84.20 supports.

Please also check daily AUD/JPY Analysis.

By TraderVox.com

The EU is facing its first biggest test on the attempts to move past the two-year debt crisis when the private creditors in Greece decide whether to sign the biggest sovereign debt restructuring in the history of the union. Many investors are keeping a close eye on the events towards this deadline as creditors prepare for this signing.

The 106 billion debt-swap deal is hanging on the shoulders of the investors as Greece hopes for the 74% participation which is required for the deal to succeed. If creditors refuse voluntary participation, Greece may need to revert to legal action to force them to sign. This would be seen as a negative sign for the European Union. The debt swap deal was confirmed last week on the eve of the European Union summit. The deadline for the investors to sign the deal is March 8^th. A day later, on March 9^th, the euro-zone Finance Ministers will hold a teleconference to review the outcome of the deal.

According to Erik Nielsen, a Chief Global Economist at UniCredit SpA in London, the European debt-crisis is far from over. He added that there might be enough creditors who will participate in the write down to avert triggering collective action clauses that can be used by Greece to compel investors to participate in the debt swap. But this will not indicate that the crisis has been completely solved and how Greece progresses from there will be of critical importance.

The government of Greece has set a participation of 75 percent as the threshold for going on with the transaction. The investors are expected to forgive Greece 53.5 percent of their principal. They will also be expected to exchange their remaining holdings for Greek government notes and bonds from the European Financial Stability Facility. EFSF was authorized to release the bonds last week by the finance ministers in the region. Euro-zone leaders indicated that they will be moving their focus away from budget-cutting efforts to growth measures after completing the details of the second bailout for Greece.

Article provided TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
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By TraderVox.com

Euro is hovering around the 1.3200 levels for most part of the day. It printed a fresh low of 1.3158 during the early European session. It is currently quoting at around 1.3184, marginally down for the day. The support may be seen at 1.3160 and below at 1.3100 levels.

The resistance may be seen at 1.3210 and above at 1.3280. The sentiment is clearly bearish with doubts over the Greek default and China's growth rate is reported as lowest in 8 years.Services PMI data from EMU came below expectation. It fell to 48.8 against the expected value of 49.4. The corresponding figure for Germany came better than expected at 52.8 against the expectation of 52.6.

Article provided TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By The Sizemore Letter

Late last year, I asked openly if Sears (Nasdaq: $SHLD) could be the next Berkshire Hathaway (NYSE: $BRK-A) (see “Is Sears the Next Berkshire Hathaway?“).

The article was admittedly a bit of a tease.  When I suggested that Sears might be the next Berkshire, I didn’t intend it as a compliment.  As I wrote in December, everyone assumes that Warren Buffett’s decision to buy Berkshire Hathaway was one of his typical strokes of genius. Nothing could be further from the truth. In fact, Buffett revealed in a video interview that Berkshire Hathaway was the worst trade of his career, as a “$200 billion mistake.”

Like Sears under chairman Eddie Lampert, Berkshire Hathaway was a company in terminal decline when Buffett bought it.  Buffett spent the first few decades as owner slowly shuttering the company’s factories, selling off assets, and redeploying the cash to more profitable ends.

Whether it was his intention or not, it appears that Lampert is following the same path.  Late last month, the New York Times reported that “In a Gamble for Cash, Sears Plans to Sell Stores.”

Sears intends to raise nearly $800 million in cash by selling off some of its stores.  The move should placate investors who feared that the company  was running out of cash, but it also makes it very clear that the company has no long-term future.  Sales have been in decline for five consecutive years, and you certainly don’t reverse that trend by selling off stores.  Like Berkshire Hathaway, there will likely come a day when Sears exists as a holding company and nothing more—and that day may be coming soon.

In any event, Lampert continues to increase his stake in the company.  His hedge funds now own a full 61 percent of Sears stock.

Investors who shunned Berkshire Hathaway in the early days of Buffett’s leadership because they viewed it as a business in terminal decline missed out on one of the greatest investment success stories in history.  Could it be that investors currently shunning Sears for the same reasons are making the same mistake?

Maybe.  Lampert’s apparent strategy of selling off Sears for spare parts and redeploying the cash to more profitable ventures may yet prove to be worthwhile.   And at just 0.18 times sales, Sears certainly trades at a discount to most major retailers.

Still, no matter what your opinion of Lampert as a “superinvestor,” it’s hard to justify buying a money-losing retailer in terminal decline that is also laden with debt.  Sears’ debt/equity ratio is 80%.  For a healthy business, this wouldn’t be a problem.  But no one in their right mind would call a wounded beast like Sears healthy.

Bottom line: If you like Lampert, follow his portfolio moves and invest accordingly.  There are plenty of sites that supply that information, including the popular GuruFocus (see Lampert’s portfolio).  But Sears is one that might be best avoided.

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.

By MoneyMorning.com.au

‘By far the best way to eliminate tailpipe emissions is to eliminate tailpipes’

US oil billionaires, Robert Hefner III and T. Boone Pickens have championed natural gas as oil’s successor for around 15 years. They’ve done this mainly by pushing the ‘green’ attributes of natural gas. Calling it ‘the bridge’ to a cleaner future… Which it may be in some ways…

Pickens even has a plan – The Pickens Plan – to replace petrol and diesel fuel with compressed natural gas (CNG).
(The Pickens Plan used to include wind energy. But in December 2010 he revamped it to focus exclusively on natural gas. As reported on MSNBC, ‘Pickens said low natural gas prices have made utility companies view wind power as too expensive. “You’re going to get natural gas prices up, or wind — it just isn’t gonna happen.”‘ )

The thing is, even if natural gas is not the bridge to cleaner energy, enough people believe it is to make it worth thinking about as an investment.

Even the US Environmental Protection Agency (EPA) is throwing its weight behind the move towards gas.

From wealthwire.com…

‘Last week, Lisa Jackson spoke on behalf of the EPA at an energy conference in New Jersey regarding the fracking debate.

‘According to Jackson, there’s “only an upside to hydraulic fracturing.” It will greatly benefit the economy through job creation; but that doesn’t necessarily mean the environment has to suffer like many critics claim…

‘Instead, Jackson explains that fracking can be clean, it just requires technology that will ensure the process is handled properly.’

On top of that, EPA research reports a Honda Civic powered by CNG travels the same distance as a petrol-powered Civic per kilowatt hour. And it emits 11% less carbon dioxide.

Of course, CNG-powered cars still ‘burn’ fuel and pump carbon dioxide through their exhaust pipes.

But with natural gas replacing coal at the power plant, electric cars become even cleaner. Bloomberg reports, ‘Encouraged by the availability of inexpensive and cleaner domestic gas, some electric utilities are replacing their coal-burning capacity with gas-fired units.’

That is the power of the market.

People who buy electricity want something cleaner… and something cheaper.

So here you have two converging ideas…

1. We Need to Replace Expensive Oil
2. We Need Clean Energy

And now they’ve collided to make natural gas an attractive investment opportunity.

Is natural gas going to replace oil as the dominant energy source?

To answer that, let’s take a look at an excerpt from a recent update of Kris Sayce’s investment newsletter, Australian Small-Cap Investigator…

Gas Demand to Quadruple

‘There was a chart and comment [from the recent Coal Seam Gas Risks and Returns Conference] I found interesting…

Click here to enlarge

“In BP’s recent World Energy Outlook, they stated the world will consume 30% more energy in 2030 than it does today.

“Once source of power has always dominated the energy mix. Wood in the pre-industrial age, coal in the industrial revolution and then oil in the 20th century.

“The proven world oil reserves in 1990 were, 1.0 trillion barrels, in 2000 1.3 trillion barrels and in 2010 1.5 trillion barrels, so oil reserves are growing. If new technologies and operations are implemented oil reserves can grow significantly.

“By 2030 trends in the energy mix will see fuel shares converge for the first time as gas gains in importance.”

‘If oil reserves are growing, they aren’t growing at a rate fast enough to either, a) maintain oil’s share of energy consumption, and b) to cause a major fall in the oil price.

‘That’s not to say it won’t happen. But now, with natural gas so cheap and new technology and processes resulting in big discoveries now, a shift is definitely taking place – away from oil, and into natural gas…

‘[B]illions of dollars are going into developing Australia’s natural gas and liquefied natural gas infrastructure. And that’s not surprising considering the expected quadrupling of demand:

Click here to enlarge

‘Natural gas stocks have gotten off to a good start in 2012.

‘And if I’m right about natural gas replacing oil as the dominant energy source over the next few years, you can expect to see an even better future for natural gas stocks.’

Aaron Tyrrell
Editor, Money Morning

Publisher’s Note: To see more from Kris, please go here to learn more about Australian Small-Cap Investigator.

From the Archives…

The Stock Market Financial Winter is Coming
2012-03-02 – Dan Denning

Why You’ll Want to Watch This ‘Bad’ Retail Stock Very Closely
2012-03-01 – Kris Sayce

Higher Oil Prices – Government Guaranteed
2012-02-29 – Dr. Alex Cowie

Asymmetric and Economic Warfare with Iran
2012-02-28 – Dan Denning

Why the Greek Debt Crisis Has Nothing to Do With the Euro
2012-02-27 – Nick Hubble

Natural Gas Demand To Quadruple

By MoneyMorning.com.au

While the banking system of the Western world is slowly collapsing from the weight of debt on top of it, the BRIC nations – Brazil, China, India, and Russia are putting gold, silver, iron, and real assets at the heart of their balance sheets. They are reducing the amount of Western debt they own and building a solid metal core.

Bloomberg reports that India has floated the idea of a “BRICS bank“. According to the report:

India has proposed setting up a multilateral bank that would be exclusively funded by developing nations and finance projects in those countries, two government officials with knowledge of the matter said.

The plan has been circulated to the countries in the so- called BRIC group — Brazil, Russia, India and China — as well as to South Africa, an Indian government official said. A Brazilian government official confirmed the proposal.

The plan will be discussed among developing nations alongside the meeting of Group of 20 finance ministers in Mexico City this weekend, the Indian official said, asking not to be identified by name as the proposal isn’t public and is in the early, exploratory phases.

Maybe the Indians are tired of dealing with the International Monetary Fund (IMF) and the World Bank. America and Europe control them. You see what they’ve done to Greece: selling the Greeks into years of lower living standards and poverty in order to prevent bankers from losing money. If that isn’t a sign to set up your own system, I don’t know what is.

You can be sure silver and gold will be part of the BRICS bank, if there ever is one. According to Mineweb, an official at the Bombay Bullion Association said India could drive the silver price up to US$60 by importing close to 5,000 tonnes of the metal this year. Given the cheap silver price and the almost certainty that Europe’s debt crisis is going to get a lot worse, this move makes total sense.

Eric Sprott puts it in perspective:

It shouldn’t surprise anyone to see those lenders [non-G6 members) piling into alternative assets that have a better chance at protecting their wealth, long-term. This is likely why China reduced its US Treasury exposure by $32 billion in the month of December. This is also why China, which produced 360 tonnes of gold internally last year, also imported an additional 428 tonnes in 2011, up from 119 tonnes in 2010.8

This may also be why China’s copper imports hit a record high of 508,942 tonnes in December 2011, up 47.7 percent from the previous year, despite the fact that their GDP declined at year-end. Same goes for their crude oil imports, which hit a record high of 23.41 million metric tons this past January, up 7.4 percent year-over-year. The so-called experts have a habit of downplaying these numbers, but it seems pretty clear to us: China isn’t waiting around for next QE program. They are accelerating their move away from paper currencies and into hard assets.

I’m not sure I agree that all hard assets are going to preserve the value of money as well as gold and silver. In fact, I’m not sure hard assets will be immune from the forces of debt deflation. They certainly won’t be. You will face losses on them too.

But at the end of the day when you own something real and have possession of it, it’s a lot more useful than a piece of paper that represents somebody else’s promise to pay. More investors are looking to own real things, or at least the shares of companies that extract and sell real things. That’s an investment trend worth noting, and worth trying to take advantage of in the coming years.

The Western world has turned its financial system into a corrupt cesspool that rewards deceit without work. The financial system – along with the rule of law, sound money, low taxes, and free trade – was one of the attributes that gave the West a huge competitive advantage over the last 300 years.

If that advantage is gone, and if the global financial system will change radically in the coming years, it’s going to mean a huge amount of disruption at the very least. The old debt-based system could stick around for years, eroding the value of your savings and chewing away your time. Or it could blow up.

In the meantime, about the only thing you can do is keep thinking about protecting yourself as best you can. The shift in economic and financial power is also an opportunity. And Australia is uniquely positioned to take advantage of that transition.

Dan Denning

Editor, Australian Wealth Gameplan

From the Archives…

The Stock Market Financial Winter is Coming
2012-03-02 – Dan Denning

Why You’ll Want to Watch This ‘Bad’ Retail Stock Very Closely
2012-03-01 – Kris Sayce

Higher Oil Prices – Government Guaranteed
2012-02-29 – Dr. Alex Cowie

Asymmetric and Economic Warfare with Iran
2012-02-28 – Dan Denning

Why the Greek Debt Crisis Has Nothing to Do With the Euro
2012-02-27 – Nick Hubble

Banking on the BRICs

By MoneyMorning.com.au

The second half of last year was slow torture for most stock market investors.

For investors in higher-risk stocks, like small-cap mining stocks, it was even worse.

The ASX200 may have lost 14% last year. But the ASX Emerging Companies Index (which mostly comprises small-cap miners) fell by 23%.

Then very quietly, with no announcement, the market turned up in December.

No bell was rung. The market didn’t send out a memo warning you. And the mood at the time was so bad that few even considered a turnaround could even be on the cards.

But turn it did.

Since it bottomed, the ASX200 has clawed a modest 5% gain, while the ASX Emerging Companies Index has exploded by 18% in just a few months.

This is important because this index is a good bellwether for the Aussie mining stocks I cover in Diggers and Drillers. And this big bounce has been good for D&D readers.

In December, we sent out a free report on a shortlist of stocks I liked for 2012. Readers that subscribed at the time and invested in all of them are now sitting on an average gain of 28% in two months. The best performer is up 66%. The other gainers are up 62%, 44%, 7%, with the losers down just 4% and 6%.

Risk and Reward Mining Stocks

The type of mining stocks I recommend are risky, and need a market with an appetite for risk to thrive. So after shunning risk in 2011, why is the market risky hungry now? I asked this question in my D&D weekly update on the 22^nd of December:

‘In most years the market has a run up leading into Christmas; the so-called “Santa rally”.

‘But this year Santa couldn’t afford to feed his reindeer because of food price inflation, and his sled was repossessed due to non-payment on his vehicle loan.

‘There’s not much Christmas cheer out there in the markets as the year limps to a close. 2011 has been one long grind.

‘Smaller companies fall faster than large companies. They are riskier investments as they often depend on capital to explore, develop their projects, or expand their operations. So while the ASX200 is down 15%, the XEC, which includes small mining stocks, is down 25% since the start of January.

‘So why take the risk?

‘Because the opposite is also true.

‘When the market turns around, smaller companies rise faster than large companies.

‘Small-cap miners did much better against the rest of the market from late 2008 to the start of this year. The small caps outperformed by more than four-fold: 85% for the ASX300 metals and mining index, compared to 20% for ASX200.

‘So the 500 billion Euro question is – Which one is it to be in 2012?

‘The market is truly in the hands of the politicians, so you’d have to ask them. There has never been more market intervention than there is today. No one knows which dial, lever, or button the central bankers, or nation’s leaders, will push next to try and save the day. Trying to guess their next move is what passes for trading these days. The political headlines from Europe have been driving the market for most of this year.

‘I’ve heard that if you put a chimpanzee in front of a typewriter and incentivised it to hit buttons at random, it may just take many years, but it is a matter of permutations and probability before it produces the complete works of Shakespeare.

‘With this in mind, I’m starting to think we elect a chimpanzee into the ECB, to accelerate the progress made against the European debt crisis so far.

‘I think we could all do with a break from hearing about Europe over the next few weeks. But I doubt that we will. And be prepared to hear about it right up to Christmas next year as well.

‘The latest move has been for the European Central Bank (ECB) to offer unlimited loans to banks, for 1%, at 3 years.

‘So where is that money coming from then?

‘The ECB is printing it (although these days it is just done electronically with a key stroke).

‘This is simply ‘Quantitative Easing’ by another name.

‘The ECB can legally print this money – as long as it has collateral from the borrower. So to allow unlimited loans, the ECB has loosened the terms of what it considers ‘collateral’ to include just about anything.

‘Government bonds, small business loans, antique hub caps, and Aunt Mildred’s glass unicorn collection. It’s all the same to the ECB. Just as long as they can find the price on eBay for your chosen collateral, they’ll fix you up with an easy billion euros of cheap credit for three years…’

Since then, the sugar rush of half a billion euros of LTRO money has calmed the European bond markets. The barometer-of-the-moment, the Italian 10-year bond yield, has now fallen dramatically to less than 5%.

Great, but what does this tell us? This tells us that the market thinks the chances of Italy going down the same road as Greece are less likely now. French and Spanish yields have also been falling fast.

The ECB have now decided to bet they can print their way out of the European debt crisis. Banks have just taken up another half a billion of LTRO loans. I think this is why the fall in Italian yields has accelerated in the last week.

Fighting debt with debt hasn’t worked so far, so I don’t think that it will work in the long run this time.

But, in the short term at least, I do think we will see more risk coming back into the market. The falling bond yields have made stock market investors more comfortable that a Euro crisis is on ice – for now anyway.

So I think the second LTRO will mean a continuation of the rally that is driving up small-cap mining stocks. The music will stop at some point. I think it could be at least a few months off, judging by the effect of the first LTRO. Until then…

Gold and silver small-cap stocks have had a huge turnaround. They are rallying on a 12% increase in the gold price and a 34% jump in the silver price – as well as the big jump in risk appetite.

The junior gold miners index (GDXJ) has bounced 20% since Christmas. This chart covers the smaller gold companies that are exploring for gold, or developing gold mines. The chart is looking much better, and I think the next leg up is brewing.

20% Bounce in Small Gold Stocks in Two Months

Some small-cap gold and silver stocks have done much better than this.

An Aussie silver explorer I tipped for D&D readers in December, in just 3 months, has gained 103%. A gold explorer I tipped 11 months ago is now up 213%; with plenty left in the tank I reckon.

Precious metal stocks make up over half of the 19 stocks in the D&D portfolio, but in January I saw a rally brewing in oil. Demand for oil was growing steadily, but the supply side was falling to pieces. The problems around Iran were the catalyst for the whole thing to take off. So it made sense for me to shift my attention to oil stocks.

It wasn’t just Iran though. Major oil exporters including Nigeria and Kazakhstan, who between them export more oil than Iran, were facing their own problems. Oil supply is also falling from other exporters.

Political chaos in Sudan and Yemen has caused a 500,000-barrel-a-day gap in the market. That may not sound like much when the world gets through 90 million barrels each day. But the market is so tight that it could be more than enough to move prices. Production from Syria is also falling on the back of sanctions from the European Union.

Brent crude oil is up 12% in a month, and the oil stock I tipped in January is now up 43%.

You just have to look around the market to see that we are back into a market where risk-tolerant investors can make good money on explosive moves.

It’s not just gold, silver and oil stocks.

One copper explorer has jumped 109% in eight trading days. This was after spectacular drilling results of 231 metres of 4.49% copper. Put another way, this intersection contains more copper than the result that put Sandfire Resources on the map.

Even unglamorous sectors are rallying. Take uranium stocks for example. The two D&D uranium stocks are up 30% and 38% from their December lows. Another uranium stock, Alliance Resources (ASX:AGS) has soared over 196% since early December.

Apart from the likely effects of the ECB’s money printing, one thing that told me the market could be turning in December was just how bearish everyone was. When everyone has truly had a gutful, that is often the time to go shopping.

As Lord Rothschild said, ‘Buy on the sound of war cannons, and sell on the sound of victory trumpets’.

There’s certainly no sound of victory trumpets just yet.

The mood in the market is still cautious and negative. Investors are disbelieving and untrusting of this rally.

With this mood prevalent, and the effects of the LTRO2 still to filter through in coming months, I think the small-cap rally has legs yet. Using sensible risk management, and picking the best small-cap stocks to ride the rally, it could be a very profitable couple of months ahead.

Dr. Alex Cowie
Editor, Diggers & Drillers

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This Could Be A Very Profitable Couple of Months for Small-Cap Mining Stocks

AUDUSD had formed a cycle top at 1.0855 on 4-hour chart. Further decline to test 1.0596 key support would likely be seen, a breakdown below this level will indicate that the longer term uptrend from 0.9861 had completed, then the following downward movement could bring price to 0.9500 area. Resistance is at 1.0855, only break above this level could trigger another rise towards 1.1080 previous high.

Daily Forex Forecast

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators decreased their overall US dollar long positions last week while Japanese yen positions fell sharply for a fourth consecutive week and declined to their lowest level since May 2011.

Non-commercial futures traders, including hedge funds and large speculators, increased their total US dollar long positions to $12.98 billion on February 28th from a total long position of $17.25 billion on February 21st, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators sharply decreased their Euro short positions as sentiment for the euro currency improved for a second consecutive week last week. Euro net short positions decreased to 109,674 contracts against the currency on February 28th from the previous week’s total of 142,159 net short contracts.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions improved for a second consecutive week to see their best position since September, according to the data as of February 28th. British pound positions saw a total of 23,235 net short positions on February 28th following a total of 31,350 net short positions registered on February 21st. British pound sterling positions are now their best level since September 6th when positions equaled 13,220 short contracts.

JPY: The Japanese yen speculative contracts continued to decline last week to fall for a fourth consecutive week and dropped over to a total short positions for the first time since May 2011, according to the data on February 28th. Yen  positions dropped to a total of 1,203 net short contracts reported on February 28th following a total of 17,257 net long contracts on February 21st. Yen speculative positions, now in short territory, are at their lowest level since May 31st when positions totaled 1,648 short contracts.

CHF: Swiss franc speculator positions improved just slightly from the previous week. Speculator positions for the Swiss currency futures registered a total of 19,391 net short contracts on February 28th following a total of 19,846 net short contracts as of February 21st.

CAD: Canadian dollar positions rose higher for a fourth consecutive week and continue to be at their highest level since August. Canadian dollar positions rose to a total of 22,480 net long contracts as of February 28th following a total of 14,112 long contracts that were reported for February 21st. CAD positions are now at their highest position since August 7th 2011 when long contracts equaled 23,704.

AUD: The Australian dollar long positions rose slightly for the second consecutive week. Australian dollar positions increased to a total net amount of 78,201 long contracts on February 28th after totaling 74,700 net long contracts reported as of February 21st. The AUD speculative positions are now at their highest level since Australian dollar long positions totaled 81,438 on July 26th 2011.

NZD: New Zealand dollar futures speculator positions decreased after they had risen for nine consecutive weeks through February 21st. NZD contracts fell to a total of 22,114 net long contracts as of February 28th following a total of 24,211  net long contracts on February 21st. NZD contracts on February 21st had passed the previous 12-month high level recorded on August 2nd when net long contracts totaled 24,126.

MXN: Mexican peso speculative contracts improved for an eighth straight week and continued to be at the best position since August 2nd. Peso long positions numbered a total of 60,750 net long speculative positions as of February 28th following a total of 49,425 long contracts that were reported for February 21st.

COT Currency Data Summary as of February 28, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -109674
GBP -23235
JPY -1203
CHF -19391
CAD +22480
AUD +78201
NZD +22114
MXN +60750

Other COT Trading Resources:

Trading Forex Using the COT Report

This is your opportunity to learn the method that has stood the test of time

By Elliott Wave International

In the 1930s, Ralph N. Elliott discovered that stock market prices tend to move in recurring patterns. He defined these patterns (or “waves”) and explained how they combine to create larger versions of themselves. He called his discovery the Wave Principle.

After much research into R.N. Elliott’s work, A.J. Frost and Robert Prechter published the 1978 text Elliott Wave Principle. This lesson captures a flavor of Elliott’s fascinating approach to market analysis.

The first step in Elliott wave analysis is identifying patterns in market prices. At their core, wave patterns are simple; there are only two of them: “motive waves,” and “corrective waves.” Motive waves are composed of five sub-waves and move in the same direction as the trend of the next larger size. A corrective wave follows, composed of three sub-waves, and it moves against the trend of the next larger size. As the picture below shows, these two patterns form similar structures of larger sizes, or “degrees,” as R.N. Elliott, the discoverer of the Wave Principle, called them.

The above pattern begins with waves 1, 2, 3, 4 and 5 that together form wave (1) — a five-wave, motive structure that tells us that the trend at the next larger degree is also upward. If you were reading this in real-time, and the rest of the pattern was not visible, it would also warn you to watch for a three-wave correction.

Corrective wave (2) in the chart above is followed by waves (3), (4), and (5), to complete an impulsive sequence one degree larger � labeled 1 (circled). This is followed by a three-wave correction of the same degree: wave 2 (circled) with subwaves (A)-(B)-(C). One way to think about corrective waves is that, because they move against the next larger trend, they lack the strength to unfold into a full five-wave move.

Learn the Elliott Wave Principle — Free If you’re interested in learning Elliott wave analysis, but haven’t yet gotten a copy of the book Elliott Wave Principle: Key to Market Behavior, check out EWI’s online edition. Even if you already have the book, the online edition is a handy way to look something up when you don’t have your book nearby. Learn the method that successful investors have used for decades.