Gold Market Shines As Dow, S&P And Nasdaq Fall


 

27, August 2010

Global markets are in the doldrums and with decreased trading volumes and a lack of positive data there has been little to prevent a downward path this week. The Dow is down 2.23% on the week and just over 6% on the month, slipping below the critical 10,000 level (closing yesterday at 9,985). S&P 500 and Nasdaq have followed suit heading into the end of the month 6.7% and 6% down on the month.

In the UK the FTSE clawed back from the 6 week low of 5070 seen on Wednesday but is still 3.50% down on the month. In Asia, the Nikkei and Hang Seng haven’t bucked the global trend also down 5.5% and 2% on the month.

Yesterday the Labor Department in the States reported a reduction in new U.S claims for unemployment benefits. Initial claims for state unemployment benefits fell 31,000 to a seasonally adjusted 473,000, below market expectations for a drop to 490,000.

However this figure did little to support the dollar as firstly the claimant’s number still remains high and there is still a real concern about the recovery of the States after the horrendous week it has had. Many economists also look at the four week average price of initial claims which is viewed as a better gauge of employment trends; this figure was up slightly by 3,250 from 486,750.

Despite the onslaught of poor data Germany continues to shine as German consumer morale increased for the third month running, hitting its highest level since last October. German CPI data is also due out this morning and if it follows the positive trend we may seen the reading come out ahead of expectations however seasonal trends suggest August CPI readings are usually low.

In Euro trading news, money supply growth held steady in July as loans to the private sector steepened. The Conference Board’s leading economic index for the Eurozone (which is used to identify turning points in the business cycle of the Euro Zone) rose by 1% to 112.5 in July. The European Central bank reported loans to the private sector grew at a annual rate of 0.9% up from 0.5% rise in June.

Today should be an interesting day with GDP readings from the UK and US coupled with Bernanke speaking this afternoon. UK GDP Q2 2nd release is expected to be unchanged at 1.1% and US GDP Q2 2nd release is expected to be revised down slightly to 1.3%. This afternoon all eyes will turn to Bernanke who is speaking at a conference at 3pm (GMT) at the Economic Symposium in Jackson Hole, Kansas.

It is anticipated that Bernanke will revise down the US 2nd quarter economic growth figure at this annual conference. The recent flow of disappointing data from the States has fuelled fears of a double dip recession. Finally, the gold market news: Gold has edged higher this week to current levels of 1236 per ounce (Gold has surged this month as investors seek safe havens and is up 4.80% on the month).

Report by Philip Ryan

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Hindenburg Omen: The Feared Technical Indicator


 

The Hindenburg Omen — Omen-ous or Not?

Elliott Wave International Chief Market Analyst Steve Hochberg Sheds Light on a Feared Technical Indicator
By Elliott Wave International

Last week’s volatile market action coincided with a technical signal called the Hindenburg Omen whereby a relatively high number of new highs and lows in individual stocks occur at the same time. This indicator instantly gained an enormous amount of media attention. In this interview, Steve Hochberg, EWI’s Chief Market Analyst shares his perspective on this indicator and the “re-emergence” of technical analysis. Read more.


 

Euro Trading News: Euro Falling Against The Dollar


 

23, August 2010

Reports today suggest the forex market analysts are the most pessimistic on the Pound since May 2009, predicting the Chancellor’s cuts will eat into economic growth, the already soft economic recovery is forecast to slow causing Sterling to fall back against both the Dollar and Euro. Median estimates suggest the Pound will drop 8 per cent against the Euro by year end as the recent bullish UK data starts to deteriorate.

The US Dollar rose sharply on Friday against the Euro, Sterling, Aussie and Candian dollar on the back of risk aversion, while safe haven currencies such as CHF and the YEN strengthened against the dollar.

The Fed is perceived by the markets to be in a holding pattern until further directional economic data is released. Weakness in global equities carried through to European markets sending major indices lower while US stocks are lower as the sell off continued. The current lack of Tier 1 economic data out of the US is putting the focus on the equity markets.

The Euro fell against a basket of currencies on Friday and remains on the defensive this morning as comments by a senior ECB official fuelled expectations for liquidity to remain a concern for the single currency. ECB Governing Council member Axel Weber told Bloomberg in an interview published on Friday it would be “wise” to extend unlimited liquidity to banks past the end of 2010.

The Euro was further hit after the US Federal Reserve said the US and global economic recovery was losing steam, striking a nerve with investors. The euro zone is seeing an increasing split not only in banking but in the economy in general. While the euro zone economy improved in the second quarter with Germany setting the tone, southern Europe recorded much more muted growth. Market analysts believe the ECB may have little option but to keep flooding the money market with cash to help banks and governments in the EU.

The Euro zone economy will remain under the spotlight today with the release of the flash August euro zone PMI’s which are expected to fall back from 56.7 in July to 55.5. In the US the focus will be on the release of housing and labour market figures. On Friday of this week the focus will be on the UK with the release of Q2 GDP growth figures.

Report by Alistair Cotton

The contents of this report are for information purposes only.

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Market Analysis Video: Inside MarketClub


 

How To Use The SmartScan Tool Profitably

20 August 2010

Today you can take a look inside MarketClub and see the SmartScan tool in action. Watch and see how to spot stocks that are trading in-line with the trend in the three major indices.

We will be looking at several different stocks and picking one, which according to our “Trade Triangle” technology, could have a significant move.

If you would like to make a comment about this video on the MarketClub Trading Blog Click Here

Adam Hewison
President of INO.com
Co-founder of MarketClub

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The contents of this report are for information purposes only.

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Market Analysis Videos: S&P500 And Gold


 

Watching the S&P500 and Gold Markets

20 August 2010

On Monday, August 16th, early trading triggered a key weekly “Trade Triangle” to the downside. The weekly “Trade Triangle” turned red, indicating that all trends are negative and now pointing lower.

This new 90 second market analysis video shows you some of the scenarios we can see playing out for the S&P 500.

The second video explains about upside targets in the gold market. The MarketClub “Trade Triangle” technology flashed a buy signal on gold at $1,210.52 on August 12. Since that time the gold market has rallied some $15 and closed yesterday up at $1235.40. (see this post)

If you would like to make a comment about this video on the MarketClub Trading Blog Click Here

Adam Hewison
President of INO.com
Co-founder of MarketClub

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The contents of this report are for information purposes only.

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Currency Market Updates: Dollar Falls Again


 

20, August 2010

Gilts opened lower and Sterling remained on the back foot on Thursday morning ahead of UK Public finances and UK retail sales. The market continues to be concerned about public sector debt so any poor data was expected to see the market react abruptly as investor’s fear the UK government will struggle to meet its target for narrowing the deficit this year.

However, unexpectedly, retail sales actually rose three times faster then had been predicted in July. The Office for National Statistics said retail sales rose 1.1% on the month, the strongest growth since February 2010 and well above analyst forecasts for a 0.4 % rise. On the year, retail sales rose 1.3 %, again above forecasts of 0.6 %.

There was also a sharp improvement in Public Finances mainly driven by strong growth in tax receipts. The Treasury were quick to react after seeming concerned that this figure would be interpreted as more positive for future budget forecasts and they announced that their figures were still in line with the Office for Budget Responsibility full forecast. Sterling strengthened off the back of these figures and moved 1% higher against the Dollar and 0.5% against the Euro.

The UK managed to start the day off on a positive note but unfortunately the States were unable to continue this trend. U.S unemployment claims spiked to a nine month high. The Labour Department reported initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000, the highest since mid-November.

The dollar came under further pressure after factory activity in the US Mid-Atlantic region fell in August to -7.7 from 5.1 in July reported by the Federal Bank of Philadelphia on Thursday. This reading was the lowest reading since 2009.

The Dollar fell further against the Yen and nearly touched the 15 year low we saw earlier on this week as investors continue to remain apprehensive about the pace of the US economic recovery. Obama spoke out yesterday urging the Congress to push legislation to force tax cuts and ease credit for smaller businesses.

Gold benefited yesterday as investors flocked to safety. Gold looks set to climb higher and closed yesterday up at $1235.40. Conversely, Brent Crude Oil slumped by 1% to close at $74.40 as uncertainty in the US may signal lower demand.

Other news in the headlines includes a slew of takeover activity as companies eye up targets. There will be ongoing coverage of BHP’s now hostile takeover bid for Potash. BHP will begin the hard sell of the $40bn hostile bid to their own shareholders next week at road shows across the globe. It wouldn’t come as a surprise if BHP increase their bid after Potash rejected it and due to the likely scenario of a rival bidder entering the market. BHP could probably hike their offer to as much as $165/$170.

Analysts have tipped Brazil’s Vale and rival Chinese and Russian firms to be on the sidelines. Other M&A activity includes Intel’s announcement that it will buy McAfee for $8bn and the $2.9bn hostile bid launched by Korea National Oil Corp for UK explorer Dana Petroleum after it’s takeover offer was rejected. No doubt we will get more stories about this flurry of hostile M&A activity over the weekend.

Today is a quiet day with only Canada’s CPI date for July out at 12.00.

Report by Philip Ryan

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Currency Market News: Pound Gets A Boost


 

18, August 2010

The Euro regained ground against the Dollar and Sterling yesterday as Ireland’s 2014 and 2020 bond auctions largely passed without incident. Spreads were already tightening ahead of the auction, and final bid-to-cover ratios of 5.4 and 2.4 respectively showed that demand remains firm.

Spain also sold 5.5 billion euros of 12- and 18- month bills at lower yields than in previous auctions in July. We wait to see if ECB intervention was the main reason for the strong demand. The European data picture was less rosy, however, as the ZEW Economic Sentiment survey was much lower than expected at 14.0 (consensus. 20.0), though the current situation index was firm at 44.3 (cons. 24.0).

Sterling is trading up 50 pips after the release of the Bank of England minutes showed one member, Andrew Sentance, voted to start the withdrawal of the exceptional monetary stimulus. This is the third straight meeting that Sentance has been the lone dissenting voice calling for a 25 basis point increase in the banks base rate.

He argued that the economic recovery is gaining momentum and the Bank needed to act to make sure inflation expectations are not allowed to deviate from current levels due to the current inflation rate stuck stubbornly above target.

Traders have taken this as a positive sign for the UK economy and the Pound now has just broken through 1.56 against the Dollar and 1.21 against the Euro.

Overnight, currency markets exhibited all the symptoms of risk aversion in overnight trade, with the US Dollar and the Japanese Yen tracking higher against all of their major counterparts. The dollar was also supported by data released yesterday which showed that producer prices for finished goods rose slightly in July, the first such increase in three months.

The price rise of the core index was the largest gain since January and, taken with the Consumer Price Index last Friday which also showed an increase for July, the report should help ease concerns among some Fed officials about the possibility of a drop in prices and salary, or deflation.

Apart from the Bank of England minutes, today is very light on the data front with Eurozone construction and US crude oil figures the only highlights.

Report by Alistair Cotton

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Currency Market News: US Dollar Holds Gains


 

16, August 2010

Friday was a busy day on the economic data front. First up, we saw figures released showing that the Eurozone economy expanded in the second quarter at the fastest pace in nearly four-years. The Euro-Zone’s seasonally adjusted preliminary second quarter GDP showed an expansion of 1.0%, compared with the previous 0.2% and the expected 0.7%.

The biggest jump in the figures came from Germany’s GDP, with a preliminary reading of Q2 GDP showing extremely robust 2.2% q/q growth, well above expectations of 1.3%. This was the fastest pace of growth in nearly 20 years since German reunification. Global demand and a weaker Euro helped boost exports during the period, sustaining growth in the area.

Whilst the UK can take comfort from the fact that they can control their own currency, there are still issues. House prices in the UK have taken a bit of a knock for the month of July according to figures posted by Rightmove, the property website. The figures reflect that people wanting to sell their homes are having to cut prices faster than at any time this year following a flood of properties hitting the market.

On a national basis house prices have come in by 1.7% from July to August. Following the Bank of England cutting its growth forecast on Wednesday and raising its estimate of inflation this housing data has not helped the continued fear around the risk of a double dip recession.

Friday’s US data was broadly in line with expectations. July retail sales rose by 0.4% (versus market consensus +0.5%) and the June reading was revised up to -0.3% from -0.5%. Crucially, core CPI inflation for July was steady at +0.9% as expected, suggesting there has been no increase in deflationary pressures in the past month. This may help calm fears that the Fed will be forced to launch another round of QE later this year.

The University of Michigan consumer sentiment index rose to 69.6, fractionally ahead of consensus of 69.0. The weakening risk environment allowed the US Dollar to hold onto much of last week’s gains. On the week, the euro shed 4.13% against the dollar with sterling only loosing 1.9%.

In other news, China is officially the second largest economy in the world, after the US. The Japanese GDP data out overnight reflected that China has moved into the lead and a number of economists are forecasting that China will take over as Number One by 2027.

This week’s economic calendar starts with today’s Eurozone’s CPI inflation data for July with a market expectation for 1.7% year on year. This is a heavy week for UK data starting with July’s CPI, due on Tuesday, expected to moderate again to +3.1% year on year versus previous month’s +3.2%. On Wednesday, the minutes from the August 5th MPC meeting are due, with weekend press speculation suggesting the possibility of a three-way-split in how the votes were cast.

We expect MPC Member Sentance to remain a lone voice in calling for a rate hike. After the recent weakness in house price and consumer confidence, retail sales due on Thursday will be a useful barometer of whether consumer spending has been affected by headlines warning of imminent and severe fiscal consolidation.

Out from the US this week, starts with tomorrow’s July’s housing starts and industrial production. This is then followed on Thursday by weekly initial jobless claims and two indices of manufacturing activity.

Report by Tim Lewis

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7 Ways To Become An Unsuccessful Trader


 

7 Ways to Become an Unsuccessful Trader
Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.
 August 12, 2010

By Elliott Wave International

To be a successful trader demands knowledge.

If you’d prefer to become an unsuccessful trader, you can start by making the following common trading mistakes, detailed by a professional who spent 25 years in portfolio management, trading and forecasting in the financial capital of the world, New York City.

In 2002, Wayne Gorman, long-time Elliott wave trader and current head of trader education at Elliott Wave International, left his 35th floor Manhattan apartment and moved to the quiet of North Georgia. He’s been sharing his knowledge and skills with aspiring traders ever since — in both online seminars and before live audiences around the world.

Wayne graciously agreed to a Q&A about trading mistakes. In his interview, Wayne reveals seven common mistakes traders make.

——–

EWI: Could you name two mistakes frequently made by stock traders?

Wayne Gorman: (mistake 1) The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an “event” comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.

(mistake 2) The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.

EWI: What are two common mistakes among options traders?

WG: (mistake 3) One common mistake is to buy puts or calls that are way “out of the money,” with no other transactions to compliment them. Unless your timing is absolutely perfect — and who has perfect timing? — your chance of success is low. It’s like buying a lottery ticket.

(mistake 4) Another common mistake is to buy options with too little time left to expiration. With less than one month to expiration, the time decay begins to accelerate and the chances of success diminish.

EWI: Please name a frequent mistake among traders who aim to catch the beginning of a particular Elliott wave.

WG: (mistake 5) In the middle of a corrective pattern, it’s common to run out of patience while waiting for confirmation of a trend change. You have to give corrective patterns time to unfold before you jump in. This requires discipline, and a solid understanding of the many ways corrective patterns can unfold.

EWI: What’s the biggest misconception among traders about using Elliott waves?

WG: (mistake 6) Too many traders think Elliott wave is a trading system that tells you exactly where to enter and exit a particular market. That’s the biggest misconception. The reality is that it’s an analytical and forecasting tool, which helps you develop and use your own trading system, based on your own personal risk tolerance.

EWI: What technical indicators do you believe traders over-rely on, and why?

WG: (mistake 7) Traders tend to over-rely on momentum indicators such as RSI, Stochastics and MACD to precisely spot turning points. But to paraphrase Mark Twain, markets can stay overbought or oversold a lot longer than either you or I can remain solvent.

EWI: How would you characterize today’s market action, and do you teach courses that address this environment?

WG: This is a difficult stock market in the near term. Prices haven’t strayed far from where they began in January. The action has yet to break out significantly to the downside or upside. This situation may not last much longer. I can suggest these online courses to deal with the current situation, and to prepare for the next big move:


 

Market Analysis Video: Keep A Close Eye the NASDAQ


 

Has The NASDAQ Lost Momentum?

The NASDAQ appears to be acting the same as it was two years ago. The pattern is clearly shown on the charts in the video below. Should it continue and repeat itself there could be danger ahead for many investors.

Watch as Adam Hewison walks and talks you through the points and the formations.You will also see how the Trade Triangle indicators work and why it will be important to keep an eye on these signals over the coming days.

If you would like to make a comment about this video on the MarketClub Trading Blog Click Here

In recent days we have looked at two other huge markets. If you missed these market anasysis videos here are the links:

Video 1: S&P500 Looks Poor

Video2: Doom For The DOW?

Adam Hewison
President of INO.com
Co-founder of MarketClub

The contents of this report are for information purposes only.

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Currency Market Updates: $1.7trillion Lost Stock Value


 

13, August 2010

Global stock arkets look set to end the week well in the red. Across the globe indicies are about 4% down on the week wiping a whopping USD $1.7trillion off global stock values in the past 4 days.

An unexpected rise in US jobless claims yesterday ironically caused the dollar to make further gains as the world’s most liquid currency benefitted off the back of risk aversion. Disappointingly US new claims for jobless benefits rose to a six month high as the labour market in the States continues to struggle.

The labour department figures showed the initial jobless claims rose by 2,000 to 484,000 when a significant reduction was expected. Freddie Mac also reported further disappointing figures as home loans in the States hit new lows off the back of a soft US economy.

European Industrial Production figures out yesterday did little to boost confidence in the market. Output in the Euro area dropped 0.6% from May versus expectations of a 0.3% gain suggesting the Euro Zone economy is still far away from making a recovery. Coupled with extremely poor growth figures from Greece, EUR came under pressure reversing early gains.

The Greek economy shrank by 1.5% in the second quarter, this figure was significantly lower then economists had expected. The Greek economy is expected to contract by 4% this year according to the EU and IMF.

However, this morning’s data shows more positive signs for the Eurozone with Germany and France reporting better then expected GDP. Starting with Germany their GDP grew 2.2% (compared to the 1.3% expected) in the second quarter driven mainly from strong investment and exports.

Impressively this figure was the biggest gain in 23 years and economist are expecting at least a 3% growth this year. France’s GDP figures, although not nearly as superior as Germany’s, were still marginally better (by 0.1%) than the market had predicted coming out at 0.6%. French consumer prices fell less than expected in July at -0.3% month on month (up 1.9% on an annual basis).

In Asia, all eyes have been upon the Yen which reached a 15 year high on Wednesday of 84.73. Yen has since sold off slightly to current levels of 85.90. It is being very closely watched by, no doubt, anxious officials. in an unscheduled press conference yesterday, the Finance Minister, Yoshihiko Noda pledged that “appropriate action” would be taken against the strength of the yen. Exactly what the action will be however is unknown but one would expect this to signal possible intervention.

With very little data out elsewhere this Friday, focus today will be on the Eurozone GDP out at 10am followed by US data later this afternoon.

Report by Alistair Cotton

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Market Analysis Video: Doom For The DOW?


 

Currency Market Updates, keeping
an Eye the DOW:

Adam Hewison
President of INO.com
Co-founder of MarketClub.com

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currency market updates,
currency market news,
market trading news,


 

Two Crucial Keys for Trading


 

Today’s guest is Chuck Hughes of Wealth Insider Alliance. Chuck is going to discuss a simple way to kill two birds with one stone in this post on risk management. Be sure to comment on this post and let us know what tricks you use.


——————————————————————————————————————————


Does this phrase sound familiar? “Watch the downside, and the upside will take care of itself.” That’s what John Paulson’s mentor and former boss, Marty Gruss, constantly drilled into his head. Or, to put it in the words of Warren Buffett, “Rule 1: Never lose money.  Rule 2: Never forget rule No. 1.”


What is the best way for you to minimize your downside and launch your success rate – and your profits – through the roof? Actually, there are several ways… and two of them are absolutely crucial.  They defy human nature, but are absolute MUSTS for trading success. In order to achieve success you MUST practice sound risk management by doing at least two things in particular:

Closing out your losing trades before they develop into large losses.Not limiting your profits by selling winning trades with a small profit. Sounds pretty simple and obvious, right? Yet most traders end up doing just the opposite. Seduced by the euphoria of taking a quick 10% profit, they sell winning trades early, even though they’re giving up potentially greater profits later.

Or worse, they’ll sell a stock when they have a small profit but continue to hold losing stocks, eventually winding up with a portfolio of losers. In other words, they shoot themselves in the foot – limiting their upside and letting their downside run wild. There’s a simple way to avoid falling into either of these two pitfalls, though… Striving for a 3-to-1 profit-to-loss ratio will help to ensure your winners keep on growing, and the losers get the boot before they can take a significant bite out of your bottom line.


If you’re willing to risk 7% on a trade, then you should expect a 21% profit on your winning trades in order to achieve a 3-to-1 profit-to-loss ratio. If you are willing to risk 10% on a trade, then you should expect a 30% profit on your winning trades, which can be difficult to achieve. I always think in terms of taking measured risks with every trade.


Also, if you have enough trading funds, don’t risk more than 10% of your capital on any one trade. This is important, as it spreads your risk between 10 trades and helps prevent a large portfolio loss if one of your trades experiences a big loss. Practicing sound money management is important for your trading success, and is often overlooked in the search for finding profitable trading strategies. In my experience, risk management is just as important as trade selection.


Or, as the saying goes, ‘Watch your downside, and the upside will take care of itself.”


Chuck Hughes
Wealth Insider Alliance


Read more at the Traders Blog

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U.S. CDS Spike While Treasury Yields Hit New Low?


 

It’s always interesting to keep an eye on the CDS markets. There are few markets where panic is better on display than in the credit markets – they can be illiquid, irrational and incredibly complex. The moves can be violent, gut wrenching and often times, totally wrong. A quick glance at the recent moves in this market is a prime example of this violent action.


In my opinion, there are few things more irrational than the existence of CDS on the USA (see Figure 1). Okay, perhaps that is going a bit too far, but the volatility in USA CDS can often be gut wrenching and dramatic – as if the world’s largest and most dynamic economy is a mere penny stock.


click to enlarge images


CMA2USA CDS SPIKE WHILE TREASURY YIELDS HIT NEW LOW?CMA1USA CDS SPIKE WHILE TREASURY YIELDS HIT NEW LOW?


(Figure 1)


It is my opinion that the odds of a true debt default in the USA are astronomically low. Of course, the majority of investors probably disagree with me – for instance, former heads of the Fed, famous bond investors, and even Treasury Secretaries disagree with me. Not to mention, most Americans (and most investors for that matter) believe we are on the precipice of becoming the next Greece. Regular readers are probably familiar with my diatribe about the debt situation in the USA and why I believe there is no threat of true debt default in the USA without a serious lapse of judgment by the US Congress. Even Mr. Bernanke (despite his faults) absolutely nailed his response to this very question by Barney Frank late last year:



Barney Frank:


“Do you think there is any realistic prospect of America defaulting on its debt in the foreseeable future?”


Bernanke:


“Not unless Congress decides not to pay which I don’t anticipate….”


But what really makes this all so interesting to me is that the USA could technically default through a hyperinflationary episode in which the USA is essentially deemed a lousy economy and an even worse overseer of its currency. I don’t discount that there is some possibility of high inflation at some point, however, I also put the odds of this as being relatively low (my position on a grossly indebted private sector that results in deflation is well documented).


But who is right? If the risk of inflation appears low and the USA cannot technically default on its debt then why are bond yields near record lows while CDS spike higher? In my opinion there is a great inefficiency occurring in the markets. Clearly, both CDS and government bonds cannot be right. This is obviously a hotly debated topic and I would never bet against the ignorance of the US Congress therefore I understand that, like all market participants, I know less than I think I know. It is virtually impossible to understand a system as complex as a stock market in order to make a truly risk free bet. But the beauty, in understanding a potential inefficiency such as this and the fact that I know less than I think I know, is that there is always a hedge, always a way to protect against the risk of being wrong. Finding the inefficiency is usually the hardest part….


The macro debate is, in my opinion, the most interesting of our time. Can the USA default? Will we suffer hyperinflation and effectively default? No one really knows for sure, but the inefficient market provides us with opportunities to not only hedge against potential outcomes, but to potentially profit from them. The markets will hash this all out in due time. Hedge accordingly.


Source: CMA

The Pragmatic Capitalist picture The proprietor of The Pragmatic Capitalist is the founder and CEO of an investment partnership.

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Small Businesses: Confidence Is Lost


 

The latest Small Business survey from the NFIB contains more signs of the continuing struggles on Main Street. The latest outlook remains near its lows. With this sort of uncertainty it is no surprise that the labor markets remain a complete mess. The commentary from the NFIB nicely summarizes the situation (see below):



NFIB1CONFIDENCE IS LOST


“Seventy-three (73) percent of the owners report that the current period is not a good time to expand. Of those, 66 percent cite the weak economy as the main reason, but 18 percent cite the “political climate” as the source of uncertainty. This elevated level of concern has prevailed since January 2008 when Congress began debating the “stimulus” and other possible actions to deal with the economy and the government changed hands. The expiration of the Bush tax program and the implementation of the health care bill represent the two largest tax increases in modern history. Add to that serious talk of a VAT and passing cap and trade. Nothing here tocreate optimism about the future for business owners or consumers. Top that off with government borrowing of $1.8 trillion last year and $1.5 trillion this year and on into the future, it is no surprise that owners are fearful and pessimistic.


What’s missing from the “debate” is logic. Policies should not violate common sense and logic, if they do, they are misleading and disguising a hidden agenda. Arguing that more government spending and taxes are needed to re-establish optimism, confidence and growth doesn’t meet the common sense test. Saving bankrupt companies to preserve union jobs doesn’t make sense either. The list of these “policy inconsistencies” is long.


Bottom line, owners remain pessimistic and nothing is happening in Washington to provide encouragement. Confidence is lost. At least the “real variables” (hiring, capital spending and inventory investment) did not deteriorate substantially in July. The damage to the Optimism Index was done by expectations for business conditions for the second half – owners predict that the economy will not improve appreciably, at least on Main Street. Big banks and big manufacturers may be doing well, but the small
firms are not. If this doesn’t change soon, the success of the large firms will be imperiled as well.”


Source: NFIB

The Pragmatic Capitalist picture The proprietor of The Pragmatic Capitalist is the founder and CEO of an investment partnership.

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Market Analysis Video: S&P500 Looks Poor


 

Keeping an Eye The S&P:

This is an important to all traders and investors. The S&P500 looks to be in danger as the trend heads downward.  This market analysis video points out the danger quite clearly.

The video runs two minutes and 18 seconds and shows you one key element that I think can make or break the S&P 500 market.

Our Trade Triangle technology is neutral on the SP500 but it could turn any day now and this is what I want to share with you today.

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub.com

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Google and Verizon Power Grab?


 

Google (GOOG) and Verizon (VZ) have proposed that new regulations should allow some internet services delivered by cell phone transmission networks to be exempt from “net neutrality” and “openness” requirements of current regulation.  The concept of  net neutrality (New York Times article) involves assuring that networks are run in such a way that Joe Sixpack’s website recieves the same internet access and transmission service as Google and other giants. 


The entire current  situation is reviewed by Claire Cain Mill and Miguel Helft in the New York Times.To this observer, this proposal sounds insidious.  Let’s go back to the late 1990s.  Let’s suppose that someone at that time instituted a policy of exempting broadband internet service from the net neutrality requirements of the dominant technology of the time: 56kb dial-up. 


The internet today would be dominated by a few giants that could pay for control of the high speed transmission services.  What seemed to be peripheral at the time has become mainstream today.  There would be few new ventures that could afford to pay for the broadband transmission needed to attract users accustomed to the operational speed that broadband offers.


The Google-Verizon proposal is an attempt to put the camel’s nose under the tent.  If implemented the camel will soon occupy the entire tent and the locals will be banished to the desert.  


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Currency Market Updates

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Currency Market News: Fed Statement Boosts USD


 

11, August 2010

The Dollar strengthened overnight after the Fed took steps to try and bolster the fragile US economy, saying they will maintain their holdings of securities to stop money from draining out of the financial system. (see Tuesday’s post) In a bid to avoid a double dip recession, The US central bank said it would reinvest between $200-300m of proceeds from maturing mortgage bonds from the first $1.2 trillion QE cycle.

It left its policy rate unchanged and renewed its pledge to keep rates low for an extended period. Following the fed announcement, treasuries surged and stocks pared losses as markets anticipated a renewed round of asset purchases should the economy slow further. Figures since the last FOMC meeting in June indicates that the pace in recovery in output, manufacturing, retail, employment and housing has slowed significantly.

The pound fell against the Dollar to its lowest level in more than a week after data signalled Britain’s economic recovery may be slowing. A UK housing market gauge showed the first decline in prices in a year in July, while a separate survey reported stores showing slower sales growth in July.

UK consumer confidence dropped in July, a third month in a row to its lowest level in 15 months. The biggest budget cuts since World War II, faster inflation and resilient unemployment have undermined consumer confidence.

This morning’s Bank of England inflation report accompanied by the usual speech from Governor Mervyn King will be closely watched along with UK jobless claims. Other data released today is this evenings US trade balance along with a monthly budget statement.

Report by Tim Lewis

The contents of this report are for information purposes only.

Currency Market Updates

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Currency Market Updates: The Fed Meeting


 

10, August 2010

Speculation over the announcement of QE2 at tonight’s Federal Reserve meeting is reverberating around the market at present. The consensus seems to be that that additional liquidity will be added to the system through reinvestment of maturing assets already on the Fed balance sheet, rather than return to fully blown quantitative easing.

The recent surge in commodity prices after Russia placed a halt on exports of grain is a worrying development for the Fed, it will need to consider that further down the road after it may find certain parts of the economy experiencing inflation at the same time as others are suffering from rampant deflation. This is why this Fed meeting is seen as so important– we wait to here which way the inflation/deflation needle is pushed (unless we end up waiting until next month!).

Sterling continued its climb against the Dollar yesterday as momentum from Fridays disappointing US jobs figures continued in early trading. But the Dollar has regained some ground this morning after the announcement from the Royal Institute of Chartered Surveyors that UK house prices have declined for the first time in a year.

The Bank of England has announced it is to overhaul its macroeconomic model (excitingly named the Bank of England Quarterly Model) after a glut of large revisions to GDP figures and because inflation has been above target for 42 of the 51 months, triggering seven letters from BOE Governor Mervyn King to the Chancellor over the same period.

A chat over three pints of warm lager and a packet of crisps are no longer deemed an acceptable method of assessing the health of the UK economy and the Bank plans to spend £3.5 million (or 350,000 magic eight balls) on overhauling and improving their forecasting model.

The announcement has led some commentators to suggest the markets may start to lose credibility in the Banks ability to forecast inflation – this could feed into Sterling weakness, but since the story broke Sterling has hardly budged and along with us, the market probably sees the announcement as good rather than bad news. UK trade balance figures were better than expected

The release of better than expected German June trade data helped the euro remain on a firmer footing for most of yesterday against the US Dollar . The strong 3.8% m/m increase in exports aided the idea of a Germany export led recovery. It is also worth noting that the rise in imports was better than expected; a factor which may support growth elsewhere in the Euro zone. On the data front later today we have the Nationwide & ABC consumer confidence surveys from the UK and US respectively.

Report by Alistair Cotton

The contents of this report are for information purposes only.

Currency Market Updates

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One of the biggest mistakes we see …


 

One of the biggest mistakes we see with traders and investors is this:

They have no game-plan. This is one of the most, if not the most important element in trading and you should not be trading without one. When you have a game plan, it allows you to get in and out of the market in a non-emotional way.

So often we see traders jump into markets based on emotion, investment show ideas, or rumors. This is the worst possible way to trade and the quickest way to lose money. There’s nothing more important to have than a game plan to enter and exit positions in the markets.

By creating a game plan, you are setting yourself up emotionally to handle anything that happens in the market. Having a successful game plan complete with an exit and money management strategy is enormously important.

With the kind of volatility that we are seeing in the markets today, not having a game plan is like financial suicide and that is something that you don’t want to do. This is one of the most, if not the most important element in trading, and you should not be trading without one.

When you have a game-plan it allows you to get in and out of the market in a non-emotional way. So often we see traders jump into markets based on emotion, investment show ideas, or rumors. This is the worst possible way to trade and the quickest way to lose money.

HERE’S HOW TO GET STARTED

Creating  a game plan is very easy and you can do in a matter of minutes. Here are the 5 KEY STEPS:

STEP 1: Write down your reasons for buying or selling a particular market.

STEP 2: Write down your entry points for the market you’re about to trade.

STEP 3: Write down when you are going to exit this market. This can be with a stop or when a market reaches a  pre-determined target zone.

STEP 4: Do not make market decisions during trading hours.

STEP 5: Review your game plan every day to see whether things are going according to what you expect. This allows you to adjust your money management stops and your target zones in a non-emotional way.
That’s it. It couldn’t be any easier and the only cost is a sheet of paper and some of your time.

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Here is my personal game plan, which I use on a daily basis.  You can download it here.
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So there you have it … 5 EASY STEPS that can protect and grow your money in the future.

Every success in trading and in life,

Adam Hewison
President, INO.com
Co-founder of MarketClub

Read more at the Traders Blog

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