(Bloomberg) -- Japan’s Nikkei 225 Stock Average may have ended its 19-year bear market in October, according to Mitsubishi UFJ Securities analysts who use so-called Fibonacci patterns to make forecasts.
The Nikkei retreated to 7,162.90 on Oct. 27, an 82 percent plunge from a record high reached in December 1989. This marked a “major turning point in Fibonacci terms,” Naohiko Miyata, Mitsubishi’s chief technical analyst, said in a report. The index might approach 10,000 by June, or 40 percent above the 26- year low reached on March 10, Tokyo-based Miyata wrote in a note distributed to clients yesterday.
Fibonacci analysts use a system pioneered by 13th century mathematician Leonardo Pisano, who discerned ratios from proportions found in nature. The analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. Passage through one level is a sign an index will keep moving to the next.
The Nikkei 225 declined 237.84 points, or 2.7 percent, to 8,595.01 yesterday, the biggest drop since March 30.
Saturday, April 11, 2009
Earnings Preview: Intel Corporation, Crown Holdings, CSX Corporation and Mattel Inc.
By Charles Rotblut on April 11, 2009
This will be the first busy week for earnings season. Though the total number of reports is limited, just 68, nearly half will be from large-cap and mega-cap companies.
Financials will be in particular focus. Citigroup (C: 3.04 +0.34 +12.59%), Goldman Sachs (GS: 124.33 +9.58 +8.35%), and JPMorgan Chase (JPM: 32.75 +5.32 +19.39%) will release results. General Electric (GE: 11.33 +0.69 +6.48%) is also on the docket and all eyes will be on its finance division.
Outside the financial sector, reports from Intel (INTC: 15.98 +0.71 +4.65%), Johnson & Johnson (JNJ: 51.41 -0.04 -0.08%) and Google (GOOG: 372.50 +10.50 +2.90%) could impact market direction.
The Fed will add to the potential volatility with Wednesday afternoon’s release of the Beige Book. Inflation and housing data are also on the economic calendar.
Tuesday: March Producer Price Index (PPI), March auto sales, February business inventories
Wednesday: March Consumer Price Index (CPI), April Empire State manufacturing index, March industrial production and capacity utilization, weekly crude inventories, Fed Beige Book
Thursday: March housing starts and building permits, April Philadelphia Fed survey, weekly initial jobless claims
Friday: Preliminary April University of Michigan consumer confidence survey
The Federal Reserve’s web site is not listing any upcoming speeches from Fed officials. The next Fed meeting will occur on Apr 28 and 29.
April stock options will expire on Friday.
How results from the financial companies are perceived could have the biggest impact on market direction. Financial stocks have been trading off of sentiment (as opposed to fundamentals or technicals), so sentiment about the quarterly reports will matter much more than the actual numbers themselves.
Companies That Could Issue Positive Earnings Surprises
Six brokerage analysts have raised their first-quarter earnings estimates on Intel Corporation (INTC: 15.98 +0.71 +4.65%) within the past 30 days. Though the consensus estimate remains unchanged at 3 cents per share despite the revisions, the most accurate estimate calls for profits of 4 cents per share. Guidance could be better-than-feared given recent increases in full-year forecasts. The chipmaker has topped expectations during 3 out of the last 4 quarters. Intel is scheduled to report on Tuesday, Apr 14, after the close of trading.
Crown Holdings (CCK: 22.20 -0.01 -0.05%) has topped expectations during 6 out of the last 7 quarters. Though one analyst did recently lower his first-quarter profit projection, the consensus earnings estimate remains unchanged at 21 cents per share. There is risk, but the historic trend bodes well for another positive surprise. CCK is scheduled to report on Thursday, Apr 16, before the start of trading.
Companies That Could Issue Negative Earnings Surprises
More than half of the covering brokerage analysts have cut their first-quarter profit projections on CSX Corporation (CSX: 29.75 +1.16 +4.06%) during the past few weeks. The negative revisions have caused the consensus earnings estimate to fall 8 cents to 54 cents per share. The most accurate estimate is even more bearish at 50 cents per share. The railroad company has missed expectations once over the past 3 quarters. CSX is scheduled to report on Wednesday, Apr 15, before the start of trading.
Mattel, Inc. (MAT: 13.35 +0.59 +4.62%) has missed expectations during 3 out of the last 4 quarters, and analysts are bracing for another disappointment. Negative revisions by 3 of the 15 covering brokerage analysts over the past few weeks have sent the first-quarter consensus estimate a penny lower to a loss of 13 cents per share. The most accurate estimate is more bearish and calls for a loss of 17 cents per share. Mattel is scheduled to report on Friday, Apr 17, before the start of trading.
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This will be the first busy week for earnings season. Though the total number of reports is limited, just 68, nearly half will be from large-cap and mega-cap companies.
Financials will be in particular focus. Citigroup (C: 3.04 +0.34 +12.59%), Goldman Sachs (GS: 124.33 +9.58 +8.35%), and JPMorgan Chase (JPM: 32.75 +5.32 +19.39%) will release results. General Electric (GE: 11.33 +0.69 +6.48%) is also on the docket and all eyes will be on its finance division.
Outside the financial sector, reports from Intel (INTC: 15.98 +0.71 +4.65%), Johnson & Johnson (JNJ: 51.41 -0.04 -0.08%) and Google (GOOG: 372.50 +10.50 +2.90%) could impact market direction.
The Fed will add to the potential volatility with Wednesday afternoon’s release of the Beige Book. Inflation and housing data are also on the economic calendar.
Tuesday: March Producer Price Index (PPI), March auto sales, February business inventories
Wednesday: March Consumer Price Index (CPI), April Empire State manufacturing index, March industrial production and capacity utilization, weekly crude inventories, Fed Beige Book
Thursday: March housing starts and building permits, April Philadelphia Fed survey, weekly initial jobless claims
Friday: Preliminary April University of Michigan consumer confidence survey
The Federal Reserve’s web site is not listing any upcoming speeches from Fed officials. The next Fed meeting will occur on Apr 28 and 29.
April stock options will expire on Friday.
How results from the financial companies are perceived could have the biggest impact on market direction. Financial stocks have been trading off of sentiment (as opposed to fundamentals or technicals), so sentiment about the quarterly reports will matter much more than the actual numbers themselves.
Companies That Could Issue Positive Earnings Surprises
Six brokerage analysts have raised their first-quarter earnings estimates on Intel Corporation (INTC: 15.98 +0.71 +4.65%) within the past 30 days. Though the consensus estimate remains unchanged at 3 cents per share despite the revisions, the most accurate estimate calls for profits of 4 cents per share. Guidance could be better-than-feared given recent increases in full-year forecasts. The chipmaker has topped expectations during 3 out of the last 4 quarters. Intel is scheduled to report on Tuesday, Apr 14, after the close of trading.
Crown Holdings (CCK: 22.20 -0.01 -0.05%) has topped expectations during 6 out of the last 7 quarters. Though one analyst did recently lower his first-quarter profit projection, the consensus earnings estimate remains unchanged at 21 cents per share. There is risk, but the historic trend bodes well for another positive surprise. CCK is scheduled to report on Thursday, Apr 16, before the start of trading.
Companies That Could Issue Negative Earnings Surprises
More than half of the covering brokerage analysts have cut their first-quarter profit projections on CSX Corporation (CSX: 29.75 +1.16 +4.06%) during the past few weeks. The negative revisions have caused the consensus earnings estimate to fall 8 cents to 54 cents per share. The most accurate estimate is even more bearish at 50 cents per share. The railroad company has missed expectations once over the past 3 quarters. CSX is scheduled to report on Wednesday, Apr 15, before the start of trading.
Mattel, Inc. (MAT: 13.35 +0.59 +4.62%) has missed expectations during 3 out of the last 4 quarters, and analysts are bracing for another disappointment. Negative revisions by 3 of the 15 covering brokerage analysts over the past few weeks have sent the first-quarter consensus estimate a penny lower to a loss of 13 cents per share. The most accurate estimate is more bearish and calls for a loss of 17 cents per share. Mattel is scheduled to report on Friday, Apr 17, before the start of trading.
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Oil Chart Signals a Bounce Needed for Rally: Technical Analysis
Bloomberg) -- Crude oil futures for May delivery are testing key support levels and an “immediate bounce” is needed for the contract to return to recent highs, according to technical analysis by Newedge Group. If prices break through support at the $47.50 to $48, a barrel level, the contract may fall toward $46 a barrel and as low as $43.74, Veronique Lashinski, a senior research analyst for Newedge USA LLC in Chicago, wrote in a note to clients yesterday. Failure breach the support level may indicate a “bounce” to $54, she said.
“We can’t go any lower than $43.74 without causing severe technical damage,” Lashinski said in a telephone interview yesterday. This chart will be the daily technical focus until the May contract expires on April 21, she said.
Crude oil for May delivery reached $54.66 a barrel on the New York Mercantile Exchange on March 26, the highest since Nov. 28. The contract rose 23 cents, or 0.5 percent, to settle at $49.38 a barrel yesterday. A longer-term study features resistance around $55 and $60 and support around $38.50 and $40, according to the report. “It will take a lot to get above $60 unless there is a big change in the market fundamentals,” Lashinski said. “It looks like we have found market equilibrium here.”
Technical traders watch for patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
“We can’t go any lower than $43.74 without causing severe technical damage,” Lashinski said in a telephone interview yesterday. This chart will be the daily technical focus until the May contract expires on April 21, she said.
Crude oil for May delivery reached $54.66 a barrel on the New York Mercantile Exchange on March 26, the highest since Nov. 28. The contract rose 23 cents, or 0.5 percent, to settle at $49.38 a barrel yesterday. A longer-term study features resistance around $55 and $60 and support around $38.50 and $40, according to the report. “It will take a lot to get above $60 unless there is a big change in the market fundamentals,” Lashinski said. “It looks like we have found market equilibrium here.”
Technical traders watch for patterns on daily charts for clues to price direction, and may sell or buy based on those signals.
Return of Stock Bulls Signals Time to Sell: Technical Analysis
(Bloomberg) -- Investors turned optimistic for the third time since the credit crisis started last year, gauges of sentiment among individual investors in the U.S. show, a pattern that Helmsman Global Trading says is a signal to sell.The difference between the American Association of Individual Investors Bull Index and Bear Index surged to 5.6 as of April 2. When the reading rose to 11.5 in November and 13.6 in January it coincided with the end of “bear-market rallies” of at least 21 percent by the MSCI World Index.
“What that’s going to show is that people always want to look at the glass as if it is half full,” said Martin Marnick, head of trading at Helmsman Global Trading Ltd. in Hong Kong. “Using common sense you know what that general trend is. We’re in a recession and this is not the start of a bull market.”
The spread, which has fluctuated between 63 and minus 54 in the past two decades, has climbed above 5 in only three periods since the collapse of Lehman Brothers Holdings Inc. in September. It retreated to minus 8.6 according to data released yesterday. The AAII gauges are compiled from weekly polls and track whether U.S. individual investors believe the market will rise, fall, or remain unchanged in the next six months. A negative number in the bull-bear spread indicates pessimists outnumber optimists. The reading fell to as low as negative 51 on March 5, a level not seen since October 1990, when the MSCI World was at the end of a 10-month bear market that erased 26 percent of its value. The MSCI benchmark dropped 59 percent from its October 2007 high to a 13-year low on March 9. It has since rallied 22 percent.
The Organization for Economic Cooperation and Development said on March 27 its 30 members are likely to see their economies contract by 4.2 percent this year.
“What that’s going to show is that people always want to look at the glass as if it is half full,” said Martin Marnick, head of trading at Helmsman Global Trading Ltd. in Hong Kong. “Using common sense you know what that general trend is. We’re in a recession and this is not the start of a bull market.”
The spread, which has fluctuated between 63 and minus 54 in the past two decades, has climbed above 5 in only three periods since the collapse of Lehman Brothers Holdings Inc. in September. It retreated to minus 8.6 according to data released yesterday. The AAII gauges are compiled from weekly polls and track whether U.S. individual investors believe the market will rise, fall, or remain unchanged in the next six months. A negative number in the bull-bear spread indicates pessimists outnumber optimists. The reading fell to as low as negative 51 on March 5, a level not seen since October 1990, when the MSCI World was at the end of a 10-month bear market that erased 26 percent of its value. The MSCI benchmark dropped 59 percent from its October 2007 high to a 13-year low on March 9. It has since rallied 22 percent.
The Organization for Economic Cooperation and Development said on March 27 its 30 members are likely to see their economies contract by 4.2 percent this year.
Euro May Extend Losses to as Low as $1.25: Technical Analysis
(Bloomberg) -- The euro may extend its decline to $1.25 after dropping below the March 30 low of $1.3114, said Sumitomo Trust & Banking Co., Japan’s fifth-largest bank.The $1.3114 level is so-called support on a horizontal trend line of a descending triangle, said Akifumi Uchida, deputy general manager of the marketing unit in Tokyo at Sumitomo Trust & Banking. The trend line connects the March 30 low and the April 9 low, based on data compiled by Bloomberg. A descending triangle consists of horizontal and descending trend lines.
“The euro is weakening and is likely to go below $1.30,” Uchida said. “The currency has broken out of the triangle to the downside.”
Europe’s single currency declined to $1.3137 at 1:35 p.m. in Tokyo from $1.3169 in New York yesterday. It touched $1.3090, the weakest level since March 18. The euro fell 2.7 percent this week, the most since the first week of the year. The $1.25 level was last seen on March 5.
Daily momentum indicators such as the moving average convergence/divergence also showed sell signals for the euro against the dollar, Bloomberg data shows. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, and resistance is where there may be sell orders.
“The euro is weakening and is likely to go below $1.30,” Uchida said. “The currency has broken out of the triangle to the downside.”
Europe’s single currency declined to $1.3137 at 1:35 p.m. in Tokyo from $1.3169 in New York yesterday. It touched $1.3090, the weakest level since March 18. The euro fell 2.7 percent this week, the most since the first week of the year. The $1.25 level was last seen on March 5.
Daily momentum indicators such as the moving average convergence/divergence also showed sell signals for the euro against the dollar, Bloomberg data shows. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, and resistance is where there may be sell orders.
Thursday, April 9, 2009
Buy ‘Cyclical’ Stocks as Worst Is Past, Goldman Says
(Bloomberg) -- Investors in European stocks should increasingly favor manufacturing, technology and other industries that rely on economic growth as the global recession eases, Goldman Sachs Group Inc. said.“Recent data makes us more confident the worst in the economic cycle is past, and we further move towards cyclicals from defensives,” a team of London-based strategists led by Peter Oppenheimer wrote in a report dated yesterday. “Our strategy is to trade the cycles as they emerge, but be nimble as we may need to make more frequent sector changes than typically following a trough.”
Goldman Sachs raised its recommendation on European industrial goods and services companies to “overweight,” matching its stance on oil and gas producers, carmakers and telecommunications providers. The brokerage also upgraded technology and travel shares to “neutral.”The MSCI World Index has risen 22 percent since March 9 on speculation governments’ actions to support banks and stimulate growth will help pull the global economy out of its first recession since World War II. U.S. durable-goods orders and home sales and Chinese manufacturing data have fueled optimism over the past month that the economic slump may be abating.
Strategists at Odds
Strategists are at odds over whether the low in March marked the bottom of Europe’s 21-month stocks rout. Morgan Stanley’s Teun Draaisma on April 6 advised investors to sell European equities, saying “the bear market is not over.” A day later, Mislav Matejka, JPMorgan Chase & Co.’s head of European equity strategy, said the rally will go on as investors buy before an expected rebound in earnings growth this year.
The Goldman Sachs team downgraded its recommendations on some industries that are less geared to economic growth. Drugmakers were cut to “neutral” and food and beverage producers were reduced to “underweight.”Since Europe’s Dow Jones Stoxx 600 Index reached a near seven-year high on June 1, 2007, a measure of food producers has dropped 35 percent. That compares with a 56 percent slump for the Stoxx Industrial Goods and Services Index.
Goldman Sachs raised its recommendation on European industrial goods and services companies to “overweight,” matching its stance on oil and gas producers, carmakers and telecommunications providers. The brokerage also upgraded technology and travel shares to “neutral.”The MSCI World Index has risen 22 percent since March 9 on speculation governments’ actions to support banks and stimulate growth will help pull the global economy out of its first recession since World War II. U.S. durable-goods orders and home sales and Chinese manufacturing data have fueled optimism over the past month that the economic slump may be abating.
Strategists at Odds
Strategists are at odds over whether the low in March marked the bottom of Europe’s 21-month stocks rout. Morgan Stanley’s Teun Draaisma on April 6 advised investors to sell European equities, saying “the bear market is not over.” A day later, Mislav Matejka, JPMorgan Chase & Co.’s head of European equity strategy, said the rally will go on as investors buy before an expected rebound in earnings growth this year.
The Goldman Sachs team downgraded its recommendations on some industries that are less geared to economic growth. Drugmakers were cut to “neutral” and food and beverage producers were reduced to “underweight.”Since Europe’s Dow Jones Stoxx 600 Index reached a near seven-year high on June 1, 2007, a measure of food producers has dropped 35 percent. That compares with a 56 percent slump for the Stoxx Industrial Goods and Services Index.
Wednesday, April 8, 2009
Bear Market Will Continue: Roubini
By: Reuters | 08 Apr 2009 | 03:22 AM ET
There's still bad news ahead for the US economy — and by extension for Canada — and the bear market for stocks is not over yet, according to a prominent economist who foretold much of the current turmoil.
Nouriel Roubini, a professor at New York University's Stern School of Business and chairman of economic research firm RGE Monitor, said on Tuesday that he expected more dour macroeconomic data and problems in the banking and housing sectors, as well as pressures on consumers.Big stimulus packages will eventually slow the rate at which economies contract, but that will take time, he added.Roubini, who made a name for himself by sounding early warning signs about housing bubbles and credit crises, earlier told Canada's BNN television that he still believed the recent market upturn represented a bear market rally, and not a change in sentiment.
"Macro news, earnings news and financial shocks are going to be worse than expected and that's why I believe this is still a bear market rally," he told BNN.
Markets logged four straight weeks of gains until this week on optimism that unprecedented interest rate cuts and billions of dollars of stimulus will eventually fight off the worst global downturn since World War Two, and on upbeat comments from U.S. banks on their performance so far in 2009.The fact that some indicators did not match pessimistic expectations was also a positive factor, as were last week's pledges by world leaders to do more to fight the crisis.But Roubini played down the rally.
"I am more a realist than a pessimist. I'll be the first one to call for the bottom of this economic contraction, recovery of the market when I see a sustained economic and therefore financial recovery," he said.
Meredith Whitney, chief executive of Meredith Whitney Advisory Group, said stabilization in the banking sector would hold the key to a turnaround.Whitney, one of Wall Street's most bearish bank analysts, has forecast another rough year for banks as they shed assets to raise capital.
There's still bad news ahead for the US economy — and by extension for Canada — and the bear market for stocks is not over yet, according to a prominent economist who foretold much of the current turmoil.
Nouriel Roubini, a professor at New York University's Stern School of Business and chairman of economic research firm RGE Monitor, said on Tuesday that he expected more dour macroeconomic data and problems in the banking and housing sectors, as well as pressures on consumers.Big stimulus packages will eventually slow the rate at which economies contract, but that will take time, he added.Roubini, who made a name for himself by sounding early warning signs about housing bubbles and credit crises, earlier told Canada's BNN television that he still believed the recent market upturn represented a bear market rally, and not a change in sentiment.
"Macro news, earnings news and financial shocks are going to be worse than expected and that's why I believe this is still a bear market rally," he told BNN.
Markets logged four straight weeks of gains until this week on optimism that unprecedented interest rate cuts and billions of dollars of stimulus will eventually fight off the worst global downturn since World War Two, and on upbeat comments from U.S. banks on their performance so far in 2009.The fact that some indicators did not match pessimistic expectations was also a positive factor, as were last week's pledges by world leaders to do more to fight the crisis.But Roubini played down the rally.
"I am more a realist than a pessimist. I'll be the first one to call for the bottom of this economic contraction, recovery of the market when I see a sustained economic and therefore financial recovery," he said.
Meredith Whitney, chief executive of Meredith Whitney Advisory Group, said stabilization in the banking sector would hold the key to a turnaround.Whitney, one of Wall Street's most bearish bank analysts, has forecast another rough year for banks as they shed assets to raise capital.
Futures Outlook For Wednesday
LIGHT CRUDE OIL May Contract
Buyers turned their backs on oil yesterday after it failed to break through 51.80. The turnaround gave sellers a chance to strut their stuff and declines were posted to 48.40.This morning has seen another wave of selling to 47.55 which has currently held. There is a little further to go on the downside as sellers see 46.75/61 as a challenge and buyers stay to the sidelines awaiting direction. At 46.75/61 profit taking and fresh buying will be observed. This level is also the 38.2 Fib retrace target, so although Oil is lower it hasn’t as yet broken through any support levels that would suggest the recent bull move is complete. Back above 47.65 would help buyers make the choice to buy looking for a move back to the break point of 49.80/85
Support
46.75/61**/46.11/45.56/45.15/44.70/62/43.62/43.16/42.51
Resistance
47.65/47.94/48.03/48.40/49.40/49.80/50.25/51.20/51.80
Today’s Pivot Points
53.21/51.18/49.79/47.76/46.37/
SHORT TERM HOURLY FIB RETRACEMENT LEVELS
49.06/49.86/50.57/51.28/52.08
LONGER TERM DAILY FIB LEVELS
49.40/46.61/44.11/41.61/38.82
Buyers turned their backs on oil yesterday after it failed to break through 51.80. The turnaround gave sellers a chance to strut their stuff and declines were posted to 48.40.This morning has seen another wave of selling to 47.55 which has currently held. There is a little further to go on the downside as sellers see 46.75/61 as a challenge and buyers stay to the sidelines awaiting direction. At 46.75/61 profit taking and fresh buying will be observed. This level is also the 38.2 Fib retrace target, so although Oil is lower it hasn’t as yet broken through any support levels that would suggest the recent bull move is complete. Back above 47.65 would help buyers make the choice to buy looking for a move back to the break point of 49.80/85
Support
46.75/61**/46.11/45.56/45.15/44.70/62/43.62/43.16/42.51
Resistance
47.65/47.94/48.03/48.40/49.40/49.80/50.25/51.20/51.80
Today’s Pivot Points
53.21/51.18/49.79/47.76/46.37/
SHORT TERM HOURLY FIB RETRACEMENT LEVELS
49.06/49.86/50.57/51.28/52.08
LONGER TERM DAILY FIB LEVELS
49.40/46.61/44.11/41.61/38.82
Global Investment News Briefs: RBS, Rio, Wal-Mart, MGM Mirage
By Money Morning on April 8, 2009
RBS Will Eliminate up to 9,000 Jobs; Mortgage Delinquencies Rise 7%; Rio Rebuffs Asia Steelmakers Discount Demands; Retail Sales Dive Sans Wal-Mart; Moody’s: More Than Half of Latin American Companies At Risk; CEO Confidence Hits Record Low; MGM in Talks to Refinance Debt; Audi Sales Fall in March
* Royal Bank of Scotland plc (RBS: 7.72 0.00 0.00%) said it may eliminate as many as 9,000 additional jobs to curb costs and repay $3.7 billion in government bailout money over the next three years. The bank said the actual number of losses may be “significantly lower” because of efforts to shift employees to new positions, Bloomberg reported.
* The number of delinquent mortgages rose 7% in February, with 39.8% of subprime borrowers at least 30 days behind on their mortgage payments, Dann Adams, president of U.S. Information Systems for Equifax Inc, told Reuters. “I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said.
* After contract negotiations stalled, Rio Tinto Group PLC (RTP: 126.67 0.00 0.00%) offered Asian steelmakers a 20% discount on its iron ore, well below the 40% to 50% discount Chinese steelmakers demanded, four executives close to the deal told Bloomberg. Some Chinese mills already rejected the offer from Rio, the world’s second-largest iron ore producer.
* Retailers are expected to post a 0.3% drop in same-store sales in March. Excluding Wal-Mart Stores Inc. (WMT: 52.39 0.00 0.00%), that figure would be a 4.7% drop, according to Thomson Reuters data. “We don’t see any signs of significant improvement with the exception of a continued full-fledged flight to value retailers,” said Craig Johnson, president of Customer Growth Partners, a retail research firm.
* The number of Latin American companies whose ratings have negative outlooks or are under review for a downgrade has jumped to 23% from 10% in September and more than half have “high exposure to funding risk,” Moody’s Investors Service (MCO: 22.20 0.00 0.00%) reported yesterday (Tuesday). The region’s companies are struggling to refinance debt as the financial crisis reduces access to credit and slowing economic growth crimps earnings, according to Moody’s, Bloomberg reported.
* A survey of U.S. chief executives released yesterday (Tuesday) showed two-thirds plan additional layoffs and expect sales to decline in the next six months as their confidence in the economy continues to fall, Reuters reported. The Business Roundtable’s quarterly CEO Economic Outlook Index fell to negative 5 - the first negative reading in the survey’s six-year history - and down from a fourth-quarter reading of 16.5. A reading below 50 means CEOs expect contraction rather than growth.
* Private equity firm Colony Capital LLC is in talks with MGM Mirage (MGM: 4.45 0.00 0.00%) to help refinance the casino company’s debt, two people with knowledge of the discussions told Bloomberg. Colony may invest as much as $750 million in corporate debt secured by a lien on one or more of MGM Mirage’s casinos, the anonymous sources said. An investment in CityCenter, MGM Mirage’s unfinished Las Vegas Strip project with Dubai World, is unlikely.
* Worldwide sales at Audi fell 10.7% in March from a year ago, but the German carmaker managed to increase sales in China, Reuters reported Monday. Audi, a Volkswagen AG (VLKAY.PK: 62.40 0.00 0.00%) unit, sold 90,400 cars worldwide in March as sales fell 12.9% in Western Europe but rose 6.6% in China. “The trend is positive: Our monthly results have been continually improving since January,” said Peter Schwarzenbauer, the manager in charge of marketing and sales at Audi.
RBS Will Eliminate up to 9,000 Jobs; Mortgage Delinquencies Rise 7%; Rio Rebuffs Asia Steelmakers Discount Demands; Retail Sales Dive Sans Wal-Mart; Moody’s: More Than Half of Latin American Companies At Risk; CEO Confidence Hits Record Low; MGM in Talks to Refinance Debt; Audi Sales Fall in March
* Royal Bank of Scotland plc (RBS: 7.72 0.00 0.00%) said it may eliminate as many as 9,000 additional jobs to curb costs and repay $3.7 billion in government bailout money over the next three years. The bank said the actual number of losses may be “significantly lower” because of efforts to shift employees to new positions, Bloomberg reported.
* The number of delinquent mortgages rose 7% in February, with 39.8% of subprime borrowers at least 30 days behind on their mortgage payments, Dann Adams, president of U.S. Information Systems for Equifax Inc, told Reuters. “I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said.
* After contract negotiations stalled, Rio Tinto Group PLC (RTP: 126.67 0.00 0.00%) offered Asian steelmakers a 20% discount on its iron ore, well below the 40% to 50% discount Chinese steelmakers demanded, four executives close to the deal told Bloomberg. Some Chinese mills already rejected the offer from Rio, the world’s second-largest iron ore producer.
* Retailers are expected to post a 0.3% drop in same-store sales in March. Excluding Wal-Mart Stores Inc. (WMT: 52.39 0.00 0.00%), that figure would be a 4.7% drop, according to Thomson Reuters data. “We don’t see any signs of significant improvement with the exception of a continued full-fledged flight to value retailers,” said Craig Johnson, president of Customer Growth Partners, a retail research firm.
* The number of Latin American companies whose ratings have negative outlooks or are under review for a downgrade has jumped to 23% from 10% in September and more than half have “high exposure to funding risk,” Moody’s Investors Service (MCO: 22.20 0.00 0.00%) reported yesterday (Tuesday). The region’s companies are struggling to refinance debt as the financial crisis reduces access to credit and slowing economic growth crimps earnings, according to Moody’s, Bloomberg reported.
* A survey of U.S. chief executives released yesterday (Tuesday) showed two-thirds plan additional layoffs and expect sales to decline in the next six months as their confidence in the economy continues to fall, Reuters reported. The Business Roundtable’s quarterly CEO Economic Outlook Index fell to negative 5 - the first negative reading in the survey’s six-year history - and down from a fourth-quarter reading of 16.5. A reading below 50 means CEOs expect contraction rather than growth.
* Private equity firm Colony Capital LLC is in talks with MGM Mirage (MGM: 4.45 0.00 0.00%) to help refinance the casino company’s debt, two people with knowledge of the discussions told Bloomberg. Colony may invest as much as $750 million in corporate debt secured by a lien on one or more of MGM Mirage’s casinos, the anonymous sources said. An investment in CityCenter, MGM Mirage’s unfinished Las Vegas Strip project with Dubai World, is unlikely.
* Worldwide sales at Audi fell 10.7% in March from a year ago, but the German carmaker managed to increase sales in China, Reuters reported Monday. Audi, a Volkswagen AG (VLKAY.PK: 62.40 0.00 0.00%) unit, sold 90,400 cars worldwide in March as sales fell 12.9% in Western Europe but rose 6.6% in China. “The trend is positive: Our monthly results have been continually improving since January,” said Peter Schwarzenbauer, the manager in charge of marketing and sales at Audi.
Weekly And Daily View Of Copper
By Corey Rosenbloom on April 8, 2009
A couple of readers have asked me to take a look at Copper prices, which have been tracing out a similar pattern to Crude Oil. Let’s take a quick look at the Weekly and Daily charts of Copper, which includes as massive Rounded Reversal and recent Cradle Trade.
Just like many other commodities, Copper reached a high mid-summer 2008 and then suffered a massive, unforgiving decline down into new lows into the beginning of 2009. We’re seeing a similar arcing pattern to the upside, though it seems stronger in Copper than in Crude Oil which is coming off its own “Rounded Reversal.” Crude Oil is currently challenging (and apparently failing) at its 20-week EMA while Copper made little work of breaking above it into the “Open Air” space between the 20 and 50 EMAs.
We see a positive momentum divergence coming off the October price lows that continued until the actual lows in December (notice the doji candle that marked the exact low so far). Price is now in “Open Air,” meaning there’s not many reference points between $220 and $180. Notice the confluence with the 38.2% Fibonacci retracement and the 50 EMA at the $220/$230 level. Bulls will find that level difficult to overcome if price can even rally that far.
Dropping down to the Daily Chart, we see a closer view inside that lengthy positive momentum divergence that began in October and continued until December (again, notice the dojis on the daily chart at the lows). Price found key resistance (which also was good areas to place short-sell trades) at the 20 day EMA (a good place to trail a stop) through the decline.
Finally, as 2009 began, Copper broke that 20 EMA which set-up a “Magnet Trade” to test the 50 EMA. Notice the New Momentum High that set-up on this break. It did so and became ‘wedged’ or trapped between these key averages in a consolidation (Value Area, rectangle) until price surged out forming a new high at $170 and officially confirming the daily trend to Up, and also setting up the “Cradle Trade” which is the EMA crossover (”Golden Cross”).
The cradle held (notice the quick doji that formed into the Cradle - anxtraordinarily high probability buy signal - which held.
If you look closely, we see a slight negative momentum divergence setting up into the higher prices as bulls challenge the $200 level. This level could hold as ’round-number’ resistance, particularly if we get a down-move off this level. It would set-up an “Exhaustion Gap” which is very bearish for price, particularly as it gaps into possible resistance on a negative divergence.Continue to watch Copper Prices closely - if we’re going to have any sort of economic or stock market recovery, it would be perhaps foreshadowed and accompanied by continued strength in Copper.
A couple of readers have asked me to take a look at Copper prices, which have been tracing out a similar pattern to Crude Oil. Let’s take a quick look at the Weekly and Daily charts of Copper, which includes as massive Rounded Reversal and recent Cradle Trade.
Just like many other commodities, Copper reached a high mid-summer 2008 and then suffered a massive, unforgiving decline down into new lows into the beginning of 2009. We’re seeing a similar arcing pattern to the upside, though it seems stronger in Copper than in Crude Oil which is coming off its own “Rounded Reversal.” Crude Oil is currently challenging (and apparently failing) at its 20-week EMA while Copper made little work of breaking above it into the “Open Air” space between the 20 and 50 EMAs.
We see a positive momentum divergence coming off the October price lows that continued until the actual lows in December (notice the doji candle that marked the exact low so far). Price is now in “Open Air,” meaning there’s not many reference points between $220 and $180. Notice the confluence with the 38.2% Fibonacci retracement and the 50 EMA at the $220/$230 level. Bulls will find that level difficult to overcome if price can even rally that far.
Dropping down to the Daily Chart, we see a closer view inside that lengthy positive momentum divergence that began in October and continued until December (again, notice the dojis on the daily chart at the lows). Price found key resistance (which also was good areas to place short-sell trades) at the 20 day EMA (a good place to trail a stop) through the decline.
Finally, as 2009 began, Copper broke that 20 EMA which set-up a “Magnet Trade” to test the 50 EMA. Notice the New Momentum High that set-up on this break. It did so and became ‘wedged’ or trapped between these key averages in a consolidation (Value Area, rectangle) until price surged out forming a new high at $170 and officially confirming the daily trend to Up, and also setting up the “Cradle Trade” which is the EMA crossover (”Golden Cross”).
The cradle held (notice the quick doji that formed into the Cradle - anxtraordinarily high probability buy signal - which held.
If you look closely, we see a slight negative momentum divergence setting up into the higher prices as bulls challenge the $200 level. This level could hold as ’round-number’ resistance, particularly if we get a down-move off this level. It would set-up an “Exhaustion Gap” which is very bearish for price, particularly as it gaps into possible resistance on a negative divergence.Continue to watch Copper Prices closely - if we’re going to have any sort of economic or stock market recovery, it would be perhaps foreshadowed and accompanied by continued strength in Copper.
5 Common Mistakes That Most Investors Make
By StockNod on April 8, 2009
A key factor responsible for people achieving mediocre results or losing money in the stock market is lack of proper knowledge . The fundamental and technical variables that are responsible for the fluctuations in the prices of the stocks serves as a basis for investing wisely.
THE RULES OF THE GAME:
1.Speculations do not translate into money
The most challenging problem for today’s investors is that there is lot of free information, personal opinions and advice about the stock market. Only a specialist in stocks, who is engaged in studying the market in detail or is a professional consultant will have the necessary knowledge to help you make money. Thus it is important to shield yourself from rumors, information from dubious or unknown sources , or be influenced by friends and associates, especially those who has little knowledge about the stock market. Restrict yourself to very few sources of relevant data, facts and time tested principles that has proven to be accurate and profitable over time. It is unbelievable how much erroneous information is out there about the stock market, how it works and how to succeed at it.
2. Follow established set of guidelines
The age old question for most investors in stocks is whether they should buy, sell or hold on to the stocks. This indecisiveness depicts a lack of proper knowledge and that they do not follow established guidelines. Follow a set of strict principles or buy and sell rules is imperative to help in the decision making process.
3. Make actual profits
It is important to withdraw a part of your profits at regular intervals. Most investors often forget the prime reason for investing in the stock market - it is to make actual profits and not just make profits on paper. For example, let’s assume you have bought stocks @ $1per share and now the price has gone up to $2 per share. Based on your market analysis, there is a good probability that the stock prices will move up. However there is no harm if selling a percentage of your stock and realizing the profits from them.
4. Good dividends should not be the primary reason for buying stocks
There are dubious companies, who often use the bait of good dividends to lure investors. You might find later period that the dividends have dried up and the stock prices have gone down so badly that you have lost your invested capital. As a rule of thumb the more a company pays in dividends, the weaker it may be. It may have to pay high interest rates to replenish the funds paid out in form of dividends. Always remember, the major reason for buying a share is to increase the amount of money invested.
5. Don’t buy stocks based on emotions
A major hindrance as to why most investors fail to make money in stocks is that their decision making process of buying stocks is guided by hope or personal opinions. Successful investors pay attention to the market and are guided by sound principles and time tested methods that yields results. It takes time and disciplined effort to make the right decision but in the end its worth every minute of your time and effort.
A key factor responsible for people achieving mediocre results or losing money in the stock market is lack of proper knowledge . The fundamental and technical variables that are responsible for the fluctuations in the prices of the stocks serves as a basis for investing wisely.
THE RULES OF THE GAME:
1.Speculations do not translate into money
The most challenging problem for today’s investors is that there is lot of free information, personal opinions and advice about the stock market. Only a specialist in stocks, who is engaged in studying the market in detail or is a professional consultant will have the necessary knowledge to help you make money. Thus it is important to shield yourself from rumors, information from dubious or unknown sources , or be influenced by friends and associates, especially those who has little knowledge about the stock market. Restrict yourself to very few sources of relevant data, facts and time tested principles that has proven to be accurate and profitable over time. It is unbelievable how much erroneous information is out there about the stock market, how it works and how to succeed at it.
2. Follow established set of guidelines
The age old question for most investors in stocks is whether they should buy, sell or hold on to the stocks. This indecisiveness depicts a lack of proper knowledge and that they do not follow established guidelines. Follow a set of strict principles or buy and sell rules is imperative to help in the decision making process.
3. Make actual profits
It is important to withdraw a part of your profits at regular intervals. Most investors often forget the prime reason for investing in the stock market - it is to make actual profits and not just make profits on paper. For example, let’s assume you have bought stocks @ $1per share and now the price has gone up to $2 per share. Based on your market analysis, there is a good probability that the stock prices will move up. However there is no harm if selling a percentage of your stock and realizing the profits from them.
4. Good dividends should not be the primary reason for buying stocks
There are dubious companies, who often use the bait of good dividends to lure investors. You might find later period that the dividends have dried up and the stock prices have gone down so badly that you have lost your invested capital. As a rule of thumb the more a company pays in dividends, the weaker it may be. It may have to pay high interest rates to replenish the funds paid out in form of dividends. Always remember, the major reason for buying a share is to increase the amount of money invested.
5. Don’t buy stocks based on emotions
A major hindrance as to why most investors fail to make money in stocks is that their decision making process of buying stocks is guided by hope or personal opinions. Successful investors pay attention to the market and are guided by sound principles and time tested methods that yields results. It takes time and disciplined effort to make the right decision but in the end its worth every minute of your time and effort.
Daily Technical Analysis Forex/Gold/DJIA
Daily Forex Technicals | Written by iFOREX.bg |
EUR/USD 1.3186
EUR/USD Open 1.3278 High 1.3389 Low 1.3169 Close 1.3272
Yesterday Euro/Dollar dropped sharply with around 400 pips since Monday. Yesterday the currency couple rose to the top 1.3389, then sharply dropped, reaching a bottom at 1.3235, and closing the day at 1.3272. On the 4 hour chart it is shown that this was a case of a false break of the trend line, which, of course is not unusual. Immediate support is provided by the above trend line and the Fibonacci level in the region of 1.3150. Break under this zone may cause significant decreasing scenario towards 1.3030. At the moment there is no clear trading range and we expect signs for further movement direction. Signals are neutral for now. The CCI indicator is about to cross down the 100 line on the daily chart, signaling for potential descending pressure.
Technical resistance levels: 1.3590 1.3700 1.3830
Technical support levels: 1.3150 1.3030 1.2900
Trading range: 1.3200 - 1.3135
Trend: Downward
Sell at 1.3186 SL 1.3216 TP 1.3146
Daily Forex Technicals | Written by India Forex |
Euro: Euro has taken resistance from the long term bearish trendline around 1.3560 and also broken the triangle formation and just holding near the 1.3150 to 1.3249 (55 day and 100 day EMA ) The 4 hrly charts has gone flat. Ideally to remain bearish it has to hold below 1.3249. Stay neutral till the range breaks clearly. (Eur/Usd:1.3200). Neutral to slightly bearish.
Pound: Cable retraced 300 pips as expected and should ideally not break the medium term channel support at 1.45. Look for initiating longs around the 1.4489 to 1.4589 levels for a move of 200 pips. (Gbp/Usd: 1.4681). Bullish.
Yen: The Usd/Jpy pair reached towards 101.70 near the long term weekly trendline as expected . Correction could happen till 98.60 levels (100 day EMA). Initiate longs there with tight stops or else on the break of 102 (trendline level) provided it stays for 2-3 days. Neutral to Bullish (Usd/Jpy: 100.08).
Australian Dollar: Aussie is in its correction mode . Look for entering long only at around 0.6852 to 0.6907 levels for a target of 100 pips. Neutral to bullish. (Aud/Usd: 0.7058).
Gold: Gold is holding below the daily and weekly trend lines and likely to be still bearish. Sell at retracements.. Bearish (Gold: $883.77.00)
Dollar index :Dollar index is slightly weak and taking resistance at 85.54 at the holding below the falling trendline near 85.50 levels. The next cluster support at 82.20. It is likely to hold that support but incase it holds below 82 for 2 sessions it may head towards a dollar reversal and target 77.69 levels. (85.50) Bearish.
Daily Forex Technicals | Written by Easy Forex |
Euro 1.3280
Initial support at 1.3113 (Mar 30 low) followed by 1.3072 (Former resistance). Initial resistance is now located at 1.3592 (Mar 27 high) at followed by 1.3678 (Mar 24 high)
Yen 100.70
Initial support is located at 99.35 (Apr 3 low) followed by 98.23 (Apr 1 low). Initial resistance is now at 101.44 (Apr 6 high) followed by 102.41 (Oct 20 high).
Pound 1.4740
Initial support at 1.4450 (Apr 2 low) followed by 1.4241 (Mar 31 low). Initial resistance is now at 1.4986 (Feb 9 high) followed by 1.5154 (Jan 12 high).
Australian Dollar 0.7115
Initial support at 0.7044 (Apr 7 low) followed by the 0.6976 (Apr 2 low). Initial resistance is now at 0.7229 (Apr 3 high) followed by 0.7268 (Jan 7 high).
Gold 883
Initial support at 852 (Jan 23 low) followed by 843 (Jan 23 low). Initial resistance is now at 909 (Apr 1 high) followed by 945 (Mar 26 high).
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3072 1.3113 1.3280 1.3592 1.3678
USD/JPY 98.23 99.35 100.70 101.44 102.41
GBP/USD 1.4241 1.4450 1.4740 1.4986 1.5154
AUD/USD 0.6976 0.7044 0.7115 0.7229 0.7268
XAU/USD 843.00 852.00 883.00 909.00 933.00
DOW JONES INDEX
Today's support: - 7738.20, 7710.12 and 7680.73(main), where a delay and correction may happen. Break of the latter will give 7652.32 where correction also can be. Then follows 7918.26. Be there a strong impulse, we would see 7593.74. Continuation will bring 7558.30 and 7543.06.
Today's resistance: - 7798.23 and 7830.12(main), where a delay and correction may happen. Break would bring 7853.50, where a correction may happen. Then follows 7876.05, where a delay and correction could also be. Be there a strong impulse, we'd see 7897.44. Continuation would bring 7920.14.
FXtechtrade
EUR/USD 1.3186
EUR/USD Open 1.3278 High 1.3389 Low 1.3169 Close 1.3272
Yesterday Euro/Dollar dropped sharply with around 400 pips since Monday. Yesterday the currency couple rose to the top 1.3389, then sharply dropped, reaching a bottom at 1.3235, and closing the day at 1.3272. On the 4 hour chart it is shown that this was a case of a false break of the trend line, which, of course is not unusual. Immediate support is provided by the above trend line and the Fibonacci level in the region of 1.3150. Break under this zone may cause significant decreasing scenario towards 1.3030. At the moment there is no clear trading range and we expect signs for further movement direction. Signals are neutral for now. The CCI indicator is about to cross down the 100 line on the daily chart, signaling for potential descending pressure.
Technical resistance levels: 1.3590 1.3700 1.3830
Technical support levels: 1.3150 1.3030 1.2900
Trading range: 1.3200 - 1.3135
Trend: Downward
Sell at 1.3186 SL 1.3216 TP 1.3146
Daily Forex Technicals | Written by India Forex |
Euro: Euro has taken resistance from the long term bearish trendline around 1.3560 and also broken the triangle formation and just holding near the 1.3150 to 1.3249 (55 day and 100 day EMA ) The 4 hrly charts has gone flat. Ideally to remain bearish it has to hold below 1.3249. Stay neutral till the range breaks clearly. (Eur/Usd:1.3200). Neutral to slightly bearish.
Pound: Cable retraced 300 pips as expected and should ideally not break the medium term channel support at 1.45. Look for initiating longs around the 1.4489 to 1.4589 levels for a move of 200 pips. (Gbp/Usd: 1.4681). Bullish.
Yen: The Usd/Jpy pair reached towards 101.70 near the long term weekly trendline as expected . Correction could happen till 98.60 levels (100 day EMA). Initiate longs there with tight stops or else on the break of 102 (trendline level) provided it stays for 2-3 days. Neutral to Bullish (Usd/Jpy: 100.08).
Australian Dollar: Aussie is in its correction mode . Look for entering long only at around 0.6852 to 0.6907 levels for a target of 100 pips. Neutral to bullish. (Aud/Usd: 0.7058).
Gold: Gold is holding below the daily and weekly trend lines and likely to be still bearish. Sell at retracements.. Bearish (Gold: $883.77.00)
Dollar index :Dollar index is slightly weak and taking resistance at 85.54 at the holding below the falling trendline near 85.50 levels. The next cluster support at 82.20. It is likely to hold that support but incase it holds below 82 for 2 sessions it may head towards a dollar reversal and target 77.69 levels. (85.50) Bearish.
Daily Forex Technicals | Written by Easy Forex |
Euro 1.3280
Initial support at 1.3113 (Mar 30 low) followed by 1.3072 (Former resistance). Initial resistance is now located at 1.3592 (Mar 27 high) at followed by 1.3678 (Mar 24 high)
Yen 100.70
Initial support is located at 99.35 (Apr 3 low) followed by 98.23 (Apr 1 low). Initial resistance is now at 101.44 (Apr 6 high) followed by 102.41 (Oct 20 high).
Pound 1.4740
Initial support at 1.4450 (Apr 2 low) followed by 1.4241 (Mar 31 low). Initial resistance is now at 1.4986 (Feb 9 high) followed by 1.5154 (Jan 12 high).
Australian Dollar 0.7115
Initial support at 0.7044 (Apr 7 low) followed by the 0.6976 (Apr 2 low). Initial resistance is now at 0.7229 (Apr 3 high) followed by 0.7268 (Jan 7 high).
Gold 883
Initial support at 852 (Jan 23 low) followed by 843 (Jan 23 low). Initial resistance is now at 909 (Apr 1 high) followed by 945 (Mar 26 high).
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3072 1.3113 1.3280 1.3592 1.3678
USD/JPY 98.23 99.35 100.70 101.44 102.41
GBP/USD 1.4241 1.4450 1.4740 1.4986 1.5154
AUD/USD 0.6976 0.7044 0.7115 0.7229 0.7268
XAU/USD 843.00 852.00 883.00 909.00 933.00
DOW JONES INDEX
Today's support: - 7738.20, 7710.12 and 7680.73(main), where a delay and correction may happen. Break of the latter will give 7652.32 where correction also can be. Then follows 7918.26. Be there a strong impulse, we would see 7593.74. Continuation will bring 7558.30 and 7543.06.
Today's resistance: - 7798.23 and 7830.12(main), where a delay and correction may happen. Break would bring 7853.50, where a correction may happen. Then follows 7876.05, where a delay and correction could also be. Be there a strong impulse, we'd see 7897.44. Continuation would bring 7920.14.
FXtechtrade
Dollar Index, Aud/Usd Elliott Wave Analysis
The $ Index moved higher in the last few sessions and hit the black line that was mentioned on Monday. Prices were strong on the upside moves, and so the wave count has been changed recently into an extended black wave I, followed by a current wave ii retrace. If the wave count is correct then a turning point should follow once wave ii completes, somewhere below the wave IV) highs. The current wave count will have to be changed into a more complex correction if the critical resistance area around the 86.13 top does not hold.
Dollar Index
Aud/Usd Elliott
Aussie traded lower and made a new low of a complex wave IV), just below the current wave w). On a smaller time frame it is clear that the correction in wave IV) was made by double zig-zag pattern with the lows at 0.7040. After that move the market started to trade higher again, approaching the upper blue resistance line which needs to be broken for wave V) targets to follow through. The first one is shown at the same wave I) distance, followed by second and third target around the 161.8% Fibonacci extension levels of red and black corrective waves.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved.
Dollar Index
Aud/Usd Elliott
Aussie traded lower and made a new low of a complex wave IV), just below the current wave w). On a smaller time frame it is clear that the correction in wave IV) was made by double zig-zag pattern with the lows at 0.7040. After that move the market started to trade higher again, approaching the upper blue resistance line which needs to be broken for wave V) targets to follow through. The first one is shown at the same wave I) distance, followed by second and third target around the 161.8% Fibonacci extension levels of red and black corrective waves.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved.
Komentar "Bear Market Rally" Berpeluang Picu Koreksi IHSG Jangka Pendek
IHSG akhirnya ditutup melemah pada hari Selasa, berkat kondisi teknikal yang overbought dan signal reversal, diikuti munculnya kembali serangkaian sentimen negatif untuk pasar saham AS, dimana pada hari Selasa Bilionaire George Soros, CEO Pimco El-Erian (a very underweight stocks)”, CEO Goldman Sachs (Financial Crisis 'Deeply Humbling'), Investor Marc Faber memperingatkan pasar masih berada dalam "BEAR MARKET RALLY" (sesuai dengan prediksi penulis) dan menunjukkan krisis finansial belum berakhir (toxic debt bank akan mencapai $4 triliun di tahun ini) dan krisis perumahan (mortgage foreclosures meningkat) kian memburuk terutama menjelang dimulainya musim Earnings Q1 di AS. Kondisi tersbut diperburuk oleh ancaman kebangkrutan GM Motor Corp AS dan penurunan harga komoditi yang dipimpin oleh minyak ($49.82 /barel), telah memicu aksi profit-taking di sejumlah saham komoditas dan perbankan lokal.
Aksi profit-taking diperkirakan berlanjut pada hari Rabu (IHSG) dan indeks saham regional (DJIA, Nikkei 225, Hang Seng yang terlebih dahulu menunjukkan teknikal bearish divergence & signal reversal) di akhir pekan ini. Dimana investor akan kembali memburu dolar AS, di tengah ketidakpastian komitmen Grup G20 minggu lalu dan perkiraan musim Earnings di AS dan Eropa, dengan kondisi resesi ekonomi diperburuk oleh krisis tenaga kerja (Unemployment AS diperkirakan melejit ke 9.9% di akhir tahun 2009). Meski potensi penurunan saham di IHSG lebih didominasi oleh penurunan saham yang bervaluasi mahal & telah menguat tajam baru-baru ini (ASII, BBRI, PGAS, BUMI, UNVR, AALI, ISAT, TLKM (baru saja diupgrade DB ke Rp 10,000, sebelumnya KZ upgrade ke Rp 9,000), INCO ). Penguatan rupiah ke penutupan Rp 11,335 per dolar yang juga pemicu inflow ke saham lokal, gagal dimanfaatkan investor menjelang liburan pemilu 9 April dan hari Paskah. Perkiraan GDP Q1 Indonesia (3-4% Y/Y) yang dirilis bebrapa pekan mendatang akan membebani IHSG di Q2. Harga minyak $49.84, emas $ 882, nikel $ 10850, timah 10900, DJ Coal -5.09 159.0 CPO MYR 2,205.
Secara teknikal IHSG menunjukkan pola candle breakaway (moderate bearish reversal)dimana hari sebelumnya menunjukkan pola shooting star, diikuti rejection high (1527-pivot target) dan ascending triangle resistance line masih aman pada pekan ini, stochastic menunjukkan bearish divergence, MFI toppish, mendukung koreksi turun ke target 1,456/1,350/1,244 (koreksi wave IV) setelah wave 5 selesai di 1,527, selama level 1,530 tidak ditembus dalam 1-2 pekan mendatang. Profit Taking saham unggulan BUMI, ASII, ITMG, AALI, BMRI, BBRI, BBCA, UNVR, UNTR, MEDC, INCO, ANTM, ISAT, SMCB untuk collect kembali di pekan depan. Perkiraan range hari Rabu: 1,430-1,500.
R4 1579.18/ R3 1546.33/ R2 1520.14 R1 1503.72/ PP 1497.05 midpoint 1487.29/ S1 1470.87/ S2 1447.78 S3 1414.93/ S4 1398.50.
Hold sell DJIA 7,700-8,000 area target 7,300-7,000, Sell Nikkei Futures Juni & Hang Seng Futures April (liat di Asian Stock).
Aksi profit-taking diperkirakan berlanjut pada hari Rabu (IHSG) dan indeks saham regional (DJIA, Nikkei 225, Hang Seng yang terlebih dahulu menunjukkan teknikal bearish divergence & signal reversal) di akhir pekan ini. Dimana investor akan kembali memburu dolar AS, di tengah ketidakpastian komitmen Grup G20 minggu lalu dan perkiraan musim Earnings di AS dan Eropa, dengan kondisi resesi ekonomi diperburuk oleh krisis tenaga kerja (Unemployment AS diperkirakan melejit ke 9.9% di akhir tahun 2009). Meski potensi penurunan saham di IHSG lebih didominasi oleh penurunan saham yang bervaluasi mahal & telah menguat tajam baru-baru ini (ASII, BBRI, PGAS, BUMI, UNVR, AALI, ISAT, TLKM (baru saja diupgrade DB ke Rp 10,000, sebelumnya KZ upgrade ke Rp 9,000), INCO ). Penguatan rupiah ke penutupan Rp 11,335 per dolar yang juga pemicu inflow ke saham lokal, gagal dimanfaatkan investor menjelang liburan pemilu 9 April dan hari Paskah. Perkiraan GDP Q1 Indonesia (3-4% Y/Y) yang dirilis bebrapa pekan mendatang akan membebani IHSG di Q2. Harga minyak $49.84, emas $ 882, nikel $ 10850, timah 10900, DJ Coal -5.09 159.0 CPO MYR 2,205.
Secara teknikal IHSG menunjukkan pola candle breakaway (moderate bearish reversal)dimana hari sebelumnya menunjukkan pola shooting star, diikuti rejection high (1527-pivot target) dan ascending triangle resistance line masih aman pada pekan ini, stochastic menunjukkan bearish divergence, MFI toppish, mendukung koreksi turun ke target 1,456/1,350/1,244 (koreksi wave IV) setelah wave 5 selesai di 1,527, selama level 1,530 tidak ditembus dalam 1-2 pekan mendatang. Profit Taking saham unggulan BUMI, ASII, ITMG, AALI, BMRI, BBRI, BBCA, UNVR, UNTR, MEDC, INCO, ANTM, ISAT, SMCB untuk collect kembali di pekan depan. Perkiraan range hari Rabu: 1,430-1,500.
R4 1579.18/ R3 1546.33/ R2 1520.14 R1 1503.72/ PP 1497.05 midpoint 1487.29/ S1 1470.87/ S2 1447.78 S3 1414.93/ S4 1398.50.
Hold sell DJIA 7,700-8,000 area target 7,300-7,000, Sell Nikkei Futures Juni & Hang Seng Futures April (liat di Asian Stock).
Most Japan Shares Gain on Spending Optimism; HK Shares End Slightly Lower On Profit-Taking After 11% Jump
(Bloomberg) -- Most Japanese stocks rose on speculation increased government spending will boost company earnings, overshadowing declines by resource companies on lower commodities prices.Penta-Ocean Construction Co., which helped developed Kansai International Airport, leapt 5.1 percent after Japanese Prime Minister Taro Aso said the nation’s spending plan should exceed 10 trillion yen ($99 billion). Honda Motor Co. and rival Mazda Motor Corp. climbed at least 2.2 percent amid optimism global demand is rebounding. Inpex Corp., Japan’s largest oil explorer, retreated 2.4 percent after crude dropped yesterday.The broad Topix index added 1.63, or 0.2 percent, to close at 832.60 in Tokyo, with almost the same number of stocks rising and falling. The Nikkei 225 Stock Average swayed between gains and losses at least 20 times, closing down 25.08, or 0.3 percent, at 8,832.85, breaking a four-day winning streak. Nikkei futures expiring in June dipped 0.3 percent to 8,860 in Osaka and slipped 0.2 percent to 8,865 in Singapore. Hold sell 8190,8535 target 8K, stop diatas 9150
Resistance 9070.00/ 8950.00/ 8850.00/ 8790.00
PP 8770.00
Support 8690.00/ 8650.00 (sell break)/ 8530.00/8410.00 (Sell break)
(Dow Jones)--Investors took profit Tuesday after Hong Kong's benchmark index surged 11% over the last three sessions, but the market's losses narrowed late in the day on gains in China-related financial firms. Analysts said they expect the blue-chip index to resume its rise to test 15,800 points in the coming sessions, tracking the recent strength in Chinese stocks, which ended at a seven month-high Tuesday. The Hang Seng Index fell 69.07 points, or 0.5%, to 14,928.97, but was off a low of 14,743.71 hit in the morning session. The index has risen 3.8% from the start of this year. Turnover totaled HK$50.93 billion, down sharply from HK$62.19 billion Monday, an indication that selling pressure wasn't strong, said analysts. Louis Tse, investment strategist at Value Convergence CEF, said Tuesday's consolidation was well expected because the benchmark index appeared overbought after the recent rally. But he said the index could regain strength and reach the year-to-date high of 15,763 points by the end of May, underpinned by the recent robust performance of global equities. The Shanghai Composite Index ended up 0.8% at 2439.18, the highest level since Aug. 20. Though analysts expect further near-term gains in the Hang Seng Index, they said the sustainability of the rebound will depend on Wall Street's near-term performance amid the many uncertainties facing the U.S. economy. 'The recent rise in the U.S. equities market has been very strong. Whether the (Dow Jones Industrial Index) can rise above 8,200 points will be an important cue for the local market,' said Castor Pang, a strategist at SHK Financial. He said local stocks are expensive at current levels, and recommends that investors consider buying when the benchmark index retreats to around 13,800 points. Hold sell 14,831/14035/13,490 target 13,500 stop above 15,000.
Resistance 15413.83/15174.83/14982.00/14862.50
PP 14816.33
Support 14623.50 (Sell break)/ 14457.83/ 14218.83 (Sell break)/14099.33
Resistance 9070.00/ 8950.00/ 8850.00/ 8790.00
PP 8770.00
Support 8690.00/ 8650.00 (sell break)/ 8530.00/8410.00 (Sell break)
(Dow Jones)--Investors took profit Tuesday after Hong Kong's benchmark index surged 11% over the last three sessions, but the market's losses narrowed late in the day on gains in China-related financial firms. Analysts said they expect the blue-chip index to resume its rise to test 15,800 points in the coming sessions, tracking the recent strength in Chinese stocks, which ended at a seven month-high Tuesday. The Hang Seng Index fell 69.07 points, or 0.5%, to 14,928.97, but was off a low of 14,743.71 hit in the morning session. The index has risen 3.8% from the start of this year. Turnover totaled HK$50.93 billion, down sharply from HK$62.19 billion Monday, an indication that selling pressure wasn't strong, said analysts. Louis Tse, investment strategist at Value Convergence CEF, said Tuesday's consolidation was well expected because the benchmark index appeared overbought after the recent rally. But he said the index could regain strength and reach the year-to-date high of 15,763 points by the end of May, underpinned by the recent robust performance of global equities. The Shanghai Composite Index ended up 0.8% at 2439.18, the highest level since Aug. 20. Though analysts expect further near-term gains in the Hang Seng Index, they said the sustainability of the rebound will depend on Wall Street's near-term performance amid the many uncertainties facing the U.S. economy. 'The recent rise in the U.S. equities market has been very strong. Whether the (Dow Jones Industrial Index) can rise above 8,200 points will be an important cue for the local market,' said Castor Pang, a strategist at SHK Financial. He said local stocks are expensive at current levels, and recommends that investors consider buying when the benchmark index retreats to around 13,800 points. Hold sell 14,831/14035/13,490 target 13,500 stop above 15,000.
Resistance 15413.83/15174.83/14982.00/14862.50
PP 14816.33
Support 14623.50 (Sell break)/ 14457.83/ 14218.83 (Sell break)/14099.33
Stock Market Counter Trend Rally Could Extend for Several Months
By Andre Gratian
MarketTurningPoints.com
Chart Pattern and Momentum
Enough time has now passed to define the major trends of the stock market. In this weekly chart, we show two main channels, one outlined in brown -- the current main bear market trend and, contained within that one, another outlined in green which represents a secondary market trend which could be a primary decline all by itself! In order for this bear market to be over, prices will have to move out of the brown channel completely! This will take some time, and will probably not happen until next year. Unfortunately, this will probably not be the end of the entire decline. This is likely to only represent an "A" leg of the total bear market, with "B" and "C" legs to come and to conclude sometime in 2012-2014. This is when the very long 120-year cycle is expected to make its low. By then, the SPX should have declined to about 350-400. So much for the "hold stocks for the long term" theory, and the economy showing signs of recovery!
On the chart, I have also labeled what I believe is the correct EW structure. Time will tell and it does not really matter at this point. Cycles and a quiver full of other methodologies will help to determine the future market course. For the time being, the oscillators are still in a strong uptrend with no bearish indications.
MarketTurningPoints.com
Chart Pattern and Momentum
Enough time has now passed to define the major trends of the stock market. In this weekly chart, we show two main channels, one outlined in brown -- the current main bear market trend and, contained within that one, another outlined in green which represents a secondary market trend which could be a primary decline all by itself! In order for this bear market to be over, prices will have to move out of the brown channel completely! This will take some time, and will probably not happen until next year. Unfortunately, this will probably not be the end of the entire decline. This is likely to only represent an "A" leg of the total bear market, with "B" and "C" legs to come and to conclude sometime in 2012-2014. This is when the very long 120-year cycle is expected to make its low. By then, the SPX should have declined to about 350-400. So much for the "hold stocks for the long term" theory, and the economy showing signs of recovery!
On the chart, I have also labeled what I believe is the correct EW structure. Time will tell and it does not really matter at this point. Cycles and a quiver full of other methodologies will help to determine the future market course. For the time being, the oscillators are still in a strong uptrend with no bearish indications.
Tuesday, April 7, 2009
(Bloomberg) -- The yen strengthened for the first time in four days against the dollar and the euro, Treasuries gained and stocks declined on speculat
(Bloomberg) -- The yen strengthened for the first time in four days against the dollar and the euro, Treasuries gained and stocks declined on speculation losses at U.S. banks will bring the rally in global equities to a halt.The Japanese currency climbed 0.8 percent versus the dollar and 2 percent against the euro. The euro dropped 1.2 percent compared with the dollar and Europe’s Dow Jones Stoxx 600 Index slid 1.3 percent after a report showed the region’s economy shrank more than estimated in the fourth quarter.Asian stocks declined, with the MSCI Asia Pacific Index falling for the first time in five days after rising 23 percent since March 9. Standard & Poor’s 500 Index futures slid. Stocks in emerging markets fell, snapping a 30 percent gain in the past five weeks and the 10-year U.S. note advanced for the first time in four days.
“It’s a bear-market rally because we have not yet turned the economy around,” billionaire investor George Soros, 78, said in a Bloomberg Television interview yesterday. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”
European Contraction
The International Monetary Fund will raise its forecast for U.S. bad debt to $3.1 trillion from a January prediction of $2.2 trillion, with estimates of another $900 billion of toxic assets from Europe and Asia, the Times said today in London without saying where it got the information.
The Dow Jones Stoxx 600 Index fell for a third day after the European Union’s statistics office in Luxembourg said gross domestic product in the euro region declined 1.6 percent from the previous three months, the most in at least 13 years. The EU’s March 5 estimate was for a 1.5 percent contraction.Futures on the S&P 500 Index fell 1.7 percent on speculation that Alcoa Inc., the largest U.S. aluminum producer, will start earnings season after the close of trading today by announcing a first-quarter loss of $400 million. Profits for companies in the S&P 500, which advanced 23 percent since reaching a 12-year low on March 9, dropped for the seventh straight quarter, according to analyst estimates compiled by Bloomberg, the longest streak since the Great Depression.
Waning Profit
Treasuries rose as the Federal Reserve prepared to buy government debt as part of a quantitative easing policy designed to revive the economy by lowering borrowing costs. The yield on the February 2019 note fell two basis points to 2.90 percent.For S&P 500 companies, profits probably fell 37 percent in the first quarter, according to estimates from more than 1,700 securities analysts compiled by Bloomberg.
Michael Mayo, the New York-based analyst who left Deutsche Bank AG to join Calyon Securities, recommended selling U.S. bank stocks yesterday and said loan losses will exceed levels from the Great Depression. The MSCI Emerging Markets Index of 23 developing countries dropped 1.2 percent today. The global benchmark climbed 32 percent in the previous 25 days, the biggest gain for the gauge since it started in 1987. Russia’s Micex Index slipped 1.3 percent even after Credit Suisse Group AG upgraded the nation’s equities to “overweight” from “underweight.”
“It’s a bear-market rally because we have not yet turned the economy around,” billionaire investor George Soros, 78, said in a Bloomberg Television interview yesterday. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”
European Contraction
The International Monetary Fund will raise its forecast for U.S. bad debt to $3.1 trillion from a January prediction of $2.2 trillion, with estimates of another $900 billion of toxic assets from Europe and Asia, the Times said today in London without saying where it got the information.
The Dow Jones Stoxx 600 Index fell for a third day after the European Union’s statistics office in Luxembourg said gross domestic product in the euro region declined 1.6 percent from the previous three months, the most in at least 13 years. The EU’s March 5 estimate was for a 1.5 percent contraction.Futures on the S&P 500 Index fell 1.7 percent on speculation that Alcoa Inc., the largest U.S. aluminum producer, will start earnings season after the close of trading today by announcing a first-quarter loss of $400 million. Profits for companies in the S&P 500, which advanced 23 percent since reaching a 12-year low on March 9, dropped for the seventh straight quarter, according to analyst estimates compiled by Bloomberg, the longest streak since the Great Depression.
Waning Profit
Treasuries rose as the Federal Reserve prepared to buy government debt as part of a quantitative easing policy designed to revive the economy by lowering borrowing costs. The yield on the February 2019 note fell two basis points to 2.90 percent.For S&P 500 companies, profits probably fell 37 percent in the first quarter, according to estimates from more than 1,700 securities analysts compiled by Bloomberg.
Michael Mayo, the New York-based analyst who left Deutsche Bank AG to join Calyon Securities, recommended selling U.S. bank stocks yesterday and said loan losses will exceed levels from the Great Depression. The MSCI Emerging Markets Index of 23 developing countries dropped 1.2 percent today. The global benchmark climbed 32 percent in the previous 25 days, the biggest gain for the gauge since it started in 1987. Russia’s Micex Index slipped 1.3 percent even after Credit Suisse Group AG upgraded the nation’s equities to “overweight” from “underweight.”
Bearish On Oil, Bullish On Gold
Today, SFOT would like to venture into the macro world and share some of his views(some of which he does have a position in).
Stocks: Bearish
From a very simple standpoint, if earnings outlook is negative, dividends are getting cut and hence yield is less attractive, global trade slowing, GDP globally being slashed down and the end of recession not in sight (economists are even pushing their forecast further out), SFOT cannot bring himself to believe in any sort of sustained rally.
Gold: Bullish
One of the most technical and flow driven asset class to trade. SFOT still believes in the store of value use of Gold, and its traditional use as a form of inflation hedge. The opportunity cost of holding Gold is next to nothing with rates at zero and other asset classes not providing any better returns( unless you have managed to capture that 50% bounce from financials every other month).
Oil: Bearish
Spread bearish, own puts, more in the short end, and will sell spreads into strength for reasons discussed in the past few weeks from inventories, demand, and financial flows. The baltic dirty tanker index below shows
freight rates for crude has collapsed to multiyear lows. That said, tankers are very cheap to hire for storage space and it seems that the floating storage is beginning to build again in crude oil. Refined products are the ugliest in terms of inventories on water and the low freight rates will probably help give some ‘fake’ demand when physical guys take advantage of the contango to buy materials for storage.
By: Chris_Vermeulen
By SFOT on April 7, 2009
Stocks: Bearish
From a very simple standpoint, if earnings outlook is negative, dividends are getting cut and hence yield is less attractive, global trade slowing, GDP globally being slashed down and the end of recession not in sight (economists are even pushing their forecast further out), SFOT cannot bring himself to believe in any sort of sustained rally.
Gold: Bullish
One of the most technical and flow driven asset class to trade. SFOT still believes in the store of value use of Gold, and its traditional use as a form of inflation hedge. The opportunity cost of holding Gold is next to nothing with rates at zero and other asset classes not providing any better returns( unless you have managed to capture that 50% bounce from financials every other month).
Oil: Bearish
Spread bearish, own puts, more in the short end, and will sell spreads into strength for reasons discussed in the past few weeks from inventories, demand, and financial flows. The baltic dirty tanker index below shows
freight rates for crude has collapsed to multiyear lows. That said, tankers are very cheap to hire for storage space and it seems that the floating storage is beginning to build again in crude oil. Refined products are the ugliest in terms of inventories on water and the low freight rates will probably help give some ‘fake’ demand when physical guys take advantage of the contango to buy materials for storage.
By: Chris_Vermeulen
By SFOT on April 7, 2009
Global Investment News Briefs: Sun, HSBC, Ford, Time Warner, Oil Prices
By Money Morning on April 7, 2009 | More Posts By Money Morning
Sun Backs Away from IBM; HSBC Raises $19.1 Billion; Ford Reduces Debt by 38%; Emerging Market Stocks Regaining Strength; Stanford Investors Sue for Funds; Bank Stocks Sink on Mayo’s “Underperform” Rating; Time Warner Prepping for AOL Spinoff; Oil Drops Near $50
* Sun Mircosystems Inc. (JAVA: 6.56 0.00 0.00%) has broken talks with International Business Machines Corp. (IBM: 101.56 0.00 0.00%), a source close to the situation told Bloomberg. According to the source, Sun backed out because IBM’s offer of around $9.40 a share was too low.
* Shareholders bought 97% of HSBC Holdings Plc’s (HBC: 33.49 0.00 0.00%) $19.1 billion (12.85 billion-pound) share sale, the bank said. “This staves off by a very long way the day when they would have to go cap in hand to the government,” Alan Beaney, who helps manage about $2 billion at Principal Investment Management, told Bloomberg. “The real question is have they raised enough?”
* Ford Motor Co. (F: 3.77 0.00 0.00%) said yesterday (Monday) that it has reduced its automotive debt by $9.9 billion, or 38%. The debt reduction will trim more than $500 million from the carmaker’s annual cash interest expense, Reuters reported.
* Emerging-market stocks, as measured by the MSCI Emerging Markets Index, climbed to nearly a six-month high yesterday (Monday) on speculation that stimulus packages around the world are loosing credit markets, Bloomberg reported. Last year, the index lost 54% of its value, but has gained about 11% so far this year.
* Investors in Stanford Group Co. asked a federal appeals court to order a Dallas judge to unlock brokerage accounts frozen when U.S. regulators sued Allen Stanford over an alleged Ponzi scheme and seized his assets, Bloomberg reported. Lawyers for the investors argued that the judge lacked authority to place into receivership Stanford’s Antigua-based bank, which is at the center of the alleged $8 billion fraud.
* Financial shares and major U.S. stock indexes dropped yesterday (Monday) after influential analyst Mike Mayo assigned an “underweight” rating to U.S. banks, Reuters reported. Saying loan losses may exceed Great Depression levels and the government may be forced to take over large lenders, Mayo advised clients to sell shares of banks. Mayo gained recognition in 1999 at Credit Suisse AG (CS: 31.44 0.00 0.00%), for correctly taking a bearish stance on bank stocks when other analysts remained bullish.
* Time Warner Inc. (TWX: 21.56 0.00 0.00%), tried to pave the way for a spin-off of its beleaguered AOL Internet unit by asking bondholders to change credit terms, Reuters reported. The media conglomerate said the change in credit terms would allow for a possible change in ownership at AOL. AOL has long been one of the weakest units at Time Warner.
* Oil prices fell to near $50 a barrel yesterday (Monday) as U.S. stock markets dropped on worries over the banking sector and the dollar gained against the euro. Oil prices have been tracking equities markets closely in recent weeks as energy dealers use stock index performance as a gauge of sentiment around the economy, Reuters reported. U.S. light crude for May delivery fell $2.26 to $50.25 a barrel while London Brent crude fell $1.81 to $51.65 a barrel.
Sun Backs Away from IBM; HSBC Raises $19.1 Billion; Ford Reduces Debt by 38%; Emerging Market Stocks Regaining Strength; Stanford Investors Sue for Funds; Bank Stocks Sink on Mayo’s “Underperform” Rating; Time Warner Prepping for AOL Spinoff; Oil Drops Near $50
* Sun Mircosystems Inc. (JAVA: 6.56 0.00 0.00%) has broken talks with International Business Machines Corp. (IBM: 101.56 0.00 0.00%), a source close to the situation told Bloomberg. According to the source, Sun backed out because IBM’s offer of around $9.40 a share was too low.
* Shareholders bought 97% of HSBC Holdings Plc’s (HBC: 33.49 0.00 0.00%) $19.1 billion (12.85 billion-pound) share sale, the bank said. “This staves off by a very long way the day when they would have to go cap in hand to the government,” Alan Beaney, who helps manage about $2 billion at Principal Investment Management, told Bloomberg. “The real question is have they raised enough?”
* Ford Motor Co. (F: 3.77 0.00 0.00%) said yesterday (Monday) that it has reduced its automotive debt by $9.9 billion, or 38%. The debt reduction will trim more than $500 million from the carmaker’s annual cash interest expense, Reuters reported.
* Emerging-market stocks, as measured by the MSCI Emerging Markets Index, climbed to nearly a six-month high yesterday (Monday) on speculation that stimulus packages around the world are loosing credit markets, Bloomberg reported. Last year, the index lost 54% of its value, but has gained about 11% so far this year.
* Investors in Stanford Group Co. asked a federal appeals court to order a Dallas judge to unlock brokerage accounts frozen when U.S. regulators sued Allen Stanford over an alleged Ponzi scheme and seized his assets, Bloomberg reported. Lawyers for the investors argued that the judge lacked authority to place into receivership Stanford’s Antigua-based bank, which is at the center of the alleged $8 billion fraud.
* Financial shares and major U.S. stock indexes dropped yesterday (Monday) after influential analyst Mike Mayo assigned an “underweight” rating to U.S. banks, Reuters reported. Saying loan losses may exceed Great Depression levels and the government may be forced to take over large lenders, Mayo advised clients to sell shares of banks. Mayo gained recognition in 1999 at Credit Suisse AG (CS: 31.44 0.00 0.00%), for correctly taking a bearish stance on bank stocks when other analysts remained bullish.
* Time Warner Inc. (TWX: 21.56 0.00 0.00%), tried to pave the way for a spin-off of its beleaguered AOL Internet unit by asking bondholders to change credit terms, Reuters reported. The media conglomerate said the change in credit terms would allow for a possible change in ownership at AOL. AOL has long been one of the weakest units at Time Warner.
* Oil prices fell to near $50 a barrel yesterday (Monday) as U.S. stock markets dropped on worries over the banking sector and the dollar gained against the euro. Oil prices have been tracking equities markets closely in recent weeks as energy dealers use stock index performance as a gauge of sentiment around the economy, Reuters reported. U.S. light crude for May delivery fell $2.26 to $50.25 a barrel while London Brent crude fell $1.81 to $51.65 a barrel.
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Banks' Toxic Debts Could Hit $4 Trillion: Report
By: Reuters and CNBC.com | 07 Apr 2009 | 03:58 AM ET
Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources.The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.But it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21, the newspaper reported.In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia, the Times said.
Financial Woes
Bank stocks came under pressure on Monday after Michael Mayo, a former Deutsche Bank analyst who now works for CLSA's Calyon Securities, highlighted the risks in the sector in a research note.Mayo, who is widely respected for his timely calls in the sector, remains negative on the sector and is starting coverage at Calyon with "sell" or "underperform" ratings on 11 traditional U.S. bank stocks. His earnings forecasts for the sector also are below the average estimates of other Wall Street analysts.Mayo expects the recession to persist and to put further pressure on commercial real estate loans.
Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund are set to suggest, British daily The Times reported on its website without citing sources.The IMF said in January that it expected the deterioration in U.S.-originated assets to reach $2.2 trillion by the end of next year.But it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21, the newspaper reported.In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia, the Times said.
Financial Woes
Bank stocks came under pressure on Monday after Michael Mayo, a former Deutsche Bank analyst who now works for CLSA's Calyon Securities, highlighted the risks in the sector in a research note.Mayo, who is widely respected for his timely calls in the sector, remains negative on the sector and is starting coverage at Calyon with "sell" or "underperform" ratings on 11 traditional U.S. bank stocks. His earnings forecasts for the sector also are below the average estimates of other Wall Street analysts.Mayo expects the recession to persist and to put further pressure on commercial real estate loans.
Elliott Wave Analysis : GBP-USD & Gold
Gbp/Usd Elliott Wave Analysis
Cable broke through one of the major resistance zones that were described on Friday, with prices currently trading 120 pips above the 1.4780 level. This was the first broken resistance point seen that may lead into impulse wave count. The market is still below the 1.5000 area which also needs to be broken for a bullish wave count confirmation. Traders need to be patient as the market may initially make three waves of pull-back, near to the black support line, before prices will be able to continue higher again. So, for now, both, triangle and zig-zag wave counts from a daily chart are valid.
Gold Elliott Wave Analysis
Gold has broken through the major 885 support area discussed on Friday, which means that the bearish waves now may be forming a huge red wave C leg, with wave 3 in process. Prices have broken the lows of wave 1 which is confirming lower wave 3 moves. The first target on the way down looks to be around the 857 area with the same length of distance as in wave 1 which is just above the lower parallel line of the bear channel. The next and more likely target is at the 830 area at the 161.8% extension of wave 2 with the possible lows on the lower support line of the channel. This wave count will now be valid so long as prices remain below critical wave 2 resistance point shown.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved.
Cable broke through one of the major resistance zones that were described on Friday, with prices currently trading 120 pips above the 1.4780 level. This was the first broken resistance point seen that may lead into impulse wave count. The market is still below the 1.5000 area which also needs to be broken for a bullish wave count confirmation. Traders need to be patient as the market may initially make three waves of pull-back, near to the black support line, before prices will be able to continue higher again. So, for now, both, triangle and zig-zag wave counts from a daily chart are valid.
Gold Elliott Wave Analysis
Gold has broken through the major 885 support area discussed on Friday, which means that the bearish waves now may be forming a huge red wave C leg, with wave 3 in process. Prices have broken the lows of wave 1 which is confirming lower wave 3 moves. The first target on the way down looks to be around the 857 area with the same length of distance as in wave 1 which is just above the lower parallel line of the bear channel. The next and more likely target is at the 830 area at the 161.8% extension of wave 2 with the possible lows on the lower support line of the channel. This wave count will now be valid so long as prices remain below critical wave 2 resistance point shown.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved.
Daily Technical Analysis Forex / Gold
Daily Forex Technicals | Written by ecPulse.com |
EURO
The Euro versus the dollar declined sharply yesterday opposing expectations, to breach the key support for the ascending channel at 1.3375 before facing the 38.2% correction and a minor support at 1.3310. This decline can be seen as a correction for the last incline where the uptrend prevails as far as 1.3285 remains intact to help target the 1.3410 level. Momentum indicators show the pair being oversold which may support the upside movements. However, a clear break of the 1.3285 level will change the short term trend to the downside to target 1.3110
The trading range for today is among the key support at 1.3050 and the key resistance at 1.4180.The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120.
Support: 1.3310, 1.3285, 1.3255, 1.3175, 1.3135
Resistance: 1.3410, 1.3490, 1.3555, 1.3580, 1.3625
Recommendation: According to our analysis, we believe its best to buy the pair above 1.3410 with targets at 1.3555 and stop loss with a four hour close below 1.3310
GBP
After trading was stable above the key resistance at 1.4790, the GBP/USD pair declined significantly to the 38.2% correction at 1.4645 opposing our expectations to continue inclining as far as 1.4835 remains intact. The decline seen was a correction to the upside wave and the pair is now targeting the 61.8% correction at 1.4450 after nearing the key resistance where it is important to monitor the current support at 1.4645 which may determine the intraday trend. A rebound from the previously mentioned level will result in a retest of the 1.4875 level, yet breaching it to the downside will take the pair to the key support at 1.4450
The trading range for today is among the key support at 1.4450 and the key resistance at 1.5180. The general trend is to the downside as far as 1.5270 remains intact with targets at 1.3440
Support: 1.4645, 1.4600, 1.4545, 1.4520, 1.4450
Resistance: 1.4740, 1.465, 1.4850, 1.4930, 1.4985
Recommendation: According to our analysis, we believe its best to sell the pair below 1.4645 with targets at 1.4545 and stop loss with a four hour close above 1.4765
JPY
The Dollar versus Japanese yen was gradually declining in correctional movements within a minor ascending channel that took the pair to the 38.2% correction at 100.25 before rebounding back to the upside. It is expected for the pair to target the key support for the ascending channel at 98.85 where the intraday trend for today is to the downside and will prevail as far as 100.95 remains intact
The trading range for today is among the key support at 93.35 and the key resistance at 102.60.The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60.
Support: 100.25, 99.90, 99.15, 98.85, 98.55
Resistance: 100.95, 101.45, 101.95, 102.60, 103.00
Recommendation: According to our analysis, we believe its best to sell the pair below 100.95 with targets at 99.90 and stop loss with a four hour close above 101.45
CHF
The USD/CHF pair continued to trade within a minor descending channel yesterday where we currently see trading near the key resistance of the channel. A bullish technical pattern (flag) has been constructed with targets breaching the 1.1370 resistance level to incline and change the intraday trend to the upside targeting 1.1440 and 1.1530 (previously breached support turned resistance. The next four hour close regarding the 1.1370 level will determine the intraday trend
The trading range for today is among the key support at 1.0975 and the key resistance at 1.1750. The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245
Support: 1.1330, 1.1290, 1.1230, 1.1205, 1.1165
Resistance: 1.1440, 1.1485, 1.1530, 1.1570, 1.1615
Recommendation: According to our analysis, we believe its best to sell the pair with the next hourly close below 1.1370 with targets at 1.1205 and stop loss with a four hour close above 1.1440
Gold 871
Initial support at 852 (Jan 23 low) followed by 843 (Jan 23 low). Initial resistance is now at 909 (Apr 1 high) followed by 945 (Mar 26 high).
Gold Sup 2 Sup 1 Spot Res 1 Res 2
XAU/USD 843.00 852.00 871.00 909.00 933.00
Easy Forex
Daily Forex Technicals | Written by Mizuho Corporate Bank
EURUSD
Comment: Hugging the top of the Ichimoku 'cloud', hovering around the 9-day moving average. The Euro is not overbought and one-month at-the-money implied volatility is lower than it has been since October. Time to start picking up again? A sustained break above last month's high at 1.3739 should see another round of short-covering send it back up towards 1.4400.Strategy: Attempt longs at 1.3355, adding to 1.3400; stop below 1.3250. Add to longs on a sustained break above 1.3800 for 1.4000 and then more.Direction of Trade: ↗
Support Resistance
1.3357 "1.3421
1.3321 1.3518
1.325 1.3582*
1.3166 1.365
1.3113* 1.3739*
GBPUSD
Comment: Holding above immediate retracement support and the Ichimoku 'cloud' though below yesterday's high at 1.4960. A sustained break above 1.5000 should set off another round of serious short-covering.Strategy: Buy at 1.4675; stop below 1.4400. Short term target 1.4960, then 1.5375. Direction of Trade: →↗
Support Resistance
1.4638 " 1.4750/1.4780
1.4535 1.485
1.4450/1.4435* 1.4960/1.5000**
1.44 1.5155/1.5185
1.424 1.5375*
USDJPY
Comment: Consolidating neatly under yesterday's high at 101.45 and we continue to favour another brief squeeze higher still, to 102.00 and possibly even as high as 106.50 some time this month.Strategy: Attempt small longs at 100.50, adding to 99.50; stop below 99.00. Cover ahead of 102.20.Direction of Trade: ↗
Support Resistance
100.40 " 101.11
100.22 101.45/101.65*
99.9 101.85
99.35 102.20*
98.50* 102.45
EURO
The Euro versus the dollar declined sharply yesterday opposing expectations, to breach the key support for the ascending channel at 1.3375 before facing the 38.2% correction and a minor support at 1.3310. This decline can be seen as a correction for the last incline where the uptrend prevails as far as 1.3285 remains intact to help target the 1.3410 level. Momentum indicators show the pair being oversold which may support the upside movements. However, a clear break of the 1.3285 level will change the short term trend to the downside to target 1.3110
The trading range for today is among the key support at 1.3050 and the key resistance at 1.4180.The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120.
Support: 1.3310, 1.3285, 1.3255, 1.3175, 1.3135
Resistance: 1.3410, 1.3490, 1.3555, 1.3580, 1.3625
Recommendation: According to our analysis, we believe its best to buy the pair above 1.3410 with targets at 1.3555 and stop loss with a four hour close below 1.3310
GBP
After trading was stable above the key resistance at 1.4790, the GBP/USD pair declined significantly to the 38.2% correction at 1.4645 opposing our expectations to continue inclining as far as 1.4835 remains intact. The decline seen was a correction to the upside wave and the pair is now targeting the 61.8% correction at 1.4450 after nearing the key resistance where it is important to monitor the current support at 1.4645 which may determine the intraday trend. A rebound from the previously mentioned level will result in a retest of the 1.4875 level, yet breaching it to the downside will take the pair to the key support at 1.4450
The trading range for today is among the key support at 1.4450 and the key resistance at 1.5180. The general trend is to the downside as far as 1.5270 remains intact with targets at 1.3440
Support: 1.4645, 1.4600, 1.4545, 1.4520, 1.4450
Resistance: 1.4740, 1.465, 1.4850, 1.4930, 1.4985
Recommendation: According to our analysis, we believe its best to sell the pair below 1.4645 with targets at 1.4545 and stop loss with a four hour close above 1.4765
JPY
The Dollar versus Japanese yen was gradually declining in correctional movements within a minor ascending channel that took the pair to the 38.2% correction at 100.25 before rebounding back to the upside. It is expected for the pair to target the key support for the ascending channel at 98.85 where the intraday trend for today is to the downside and will prevail as far as 100.95 remains intact
The trading range for today is among the key support at 93.35 and the key resistance at 102.60.The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60.
Support: 100.25, 99.90, 99.15, 98.85, 98.55
Resistance: 100.95, 101.45, 101.95, 102.60, 103.00
Recommendation: According to our analysis, we believe its best to sell the pair below 100.95 with targets at 99.90 and stop loss with a four hour close above 101.45
CHF
The USD/CHF pair continued to trade within a minor descending channel yesterday where we currently see trading near the key resistance of the channel. A bullish technical pattern (flag) has been constructed with targets breaching the 1.1370 resistance level to incline and change the intraday trend to the upside targeting 1.1440 and 1.1530 (previously breached support turned resistance. The next four hour close regarding the 1.1370 level will determine the intraday trend
The trading range for today is among the key support at 1.0975 and the key resistance at 1.1750. The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245
Support: 1.1330, 1.1290, 1.1230, 1.1205, 1.1165
Resistance: 1.1440, 1.1485, 1.1530, 1.1570, 1.1615
Recommendation: According to our analysis, we believe its best to sell the pair with the next hourly close below 1.1370 with targets at 1.1205 and stop loss with a four hour close above 1.1440
Gold 871
Initial support at 852 (Jan 23 low) followed by 843 (Jan 23 low). Initial resistance is now at 909 (Apr 1 high) followed by 945 (Mar 26 high).
Gold Sup 2 Sup 1 Spot Res 1 Res 2
XAU/USD 843.00 852.00 871.00 909.00 933.00
Easy Forex
Daily Forex Technicals | Written by Mizuho Corporate Bank
EURUSD
Comment: Hugging the top of the Ichimoku 'cloud', hovering around the 9-day moving average. The Euro is not overbought and one-month at-the-money implied volatility is lower than it has been since October. Time to start picking up again? A sustained break above last month's high at 1.3739 should see another round of short-covering send it back up towards 1.4400.Strategy: Attempt longs at 1.3355, adding to 1.3400; stop below 1.3250. Add to longs on a sustained break above 1.3800 for 1.4000 and then more.Direction of Trade: ↗
Support Resistance
1.3357 "1.3421
1.3321 1.3518
1.325 1.3582*
1.3166 1.365
1.3113* 1.3739*
GBPUSD
Comment: Holding above immediate retracement support and the Ichimoku 'cloud' though below yesterday's high at 1.4960. A sustained break above 1.5000 should set off another round of serious short-covering.Strategy: Buy at 1.4675; stop below 1.4400. Short term target 1.4960, then 1.5375. Direction of Trade: →↗
Support Resistance
1.4638 " 1.4750/1.4780
1.4535 1.485
1.4450/1.4435* 1.4960/1.5000**
1.44 1.5155/1.5185
1.424 1.5375*
USDJPY
Comment: Consolidating neatly under yesterday's high at 101.45 and we continue to favour another brief squeeze higher still, to 102.00 and possibly even as high as 106.50 some time this month.Strategy: Attempt small longs at 100.50, adding to 99.50; stop below 99.00. Cover ahead of 102.20.Direction of Trade: ↗
Support Resistance
100.40 " 101.11
100.22 101.45/101.65*
99.9 101.85
99.35 102.20*
98.50* 102.45
Soros Calls Gain by U.S. Stocks Since March a Bear-Market Rally
(Bloomberg) -- George Soros, the billionaire hedge- fund manager who made money last year while most peers suffered losses, said the four-week rally by U.S. stocks isn’t the start of a bull market because the economy is still shrinking.“It’s a bear-market rally because we have not yet turned the economy around,” Soros, 78, said in an interview yesterday with Bloomberg Television, referring to a temporary rebound in stock prices. “This is not a financial crisis like all the other financial crises that we have experienced in our lifetime.”
The Standard & Poor’s 500 Index of the largest U.S. companies has gained 24 percent since March 9 on optimism that the worst of the 16-month U.S. recession is over. The economy continues to contract, and there’s a risk the U.S. falls into a depression, Soros said.“As long as we deal with this in a multilateral and more or less coordinated way, I think we’ll get through,” he said.
Soros gave a mostly positive review of the President Barack Obama’s administration.
“He’s done very well in every area, except in dealing with the recapitalization of the banks and the restructuring of the mortgage market,” said Soros, who has published an updated paperback version of his book “The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (Scribe Publications, 2009). “There, unfortunately, there’s just a little bit too much continuity with the previous administration.”
U.S. stocks fell for the first time in five days yesterday on concern that government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression. Soros said the banking system is “seriously under water” with banks on “life support.”
‘Zombie’ Banks
“They are weighed down by a lot of bad assets, which are still declining in value,” he said in the interview in his New York office. “The amount is difficult to estimate, but I think it’s in the region of maybe a trillion-and-a-half dollars.” Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a U.S. recovery.“This is part of the muddling-through scenario where we are going to keep zombie banks alive,” Soros said. “It’s going to sap the energies of the economy.”
The Financial Accounting Standards Board last week relaxed so-called mark-to-market rules, allowing banks to use “significant” judgment in gauging prices of some investments on their books. While analysts said the measure may reduce writedowns and boost net income, investor advocates and accounting-industry groups said it will help financial institutions hide their true health.
Nationalization Bugaboo
“This bugaboo of nationalizing the banks, which President Obama has determined not to do, the result is that we are nationalizing only one side of the balance sheet,” Soros said. “We gradually take over the deficits on the balance sheet. But we are not actually going to benefit from the banks recovering.”
Money being injected into banks under government rescue programs should be used to finance new leading, according to Soros. He said he participated in HSBC Holdings Plc’s rights offer, which raised about $17.7 billion last week.
Soros’s firm oversees $21 billion. Its Quantum Endowment Fund returned 8 percent in 2008. That compared with an average loss of 19 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago. The fund is up 5.2 percent this year through February, according to data compiled by Bloomberg.Soros was ranked as last year’s fourth-highest paid hedge fund manager with about $1.1 billion, according to Institutional Investor’s Alpha magazine.
Hedge-Fund Regulation
Soros said hedge funds should be regulated like other financial firms and that it would be appropriate for authorities to monitor positions to see whether some managers have “excessive exposure.”
The Group of 20 leaders said last week that they would extend oversight to all financial institutions deemed vital to global financial stability, including for the first time “systemically important” hedge funds. U.S. Treasury Secretary Timothy Geithner said last month he wants to bring hedge funds, private-equity firms and derivatives markets under federal supervision for the first time.
Soros said that the U.S. housing market hasn’t reached a trough, even as transactions in some areas such as California have increased.
China’s Stimulus
Soros said China’s economic growth will accelerate before the end of the year. China’s economy in the fourth quarter grew 6.8 percent from the same period a year earlier, lagging the 9 percent expansion in all of 2008 and 13 percent in 2007. Industrial output growth slowed, forcing thousands of factories to close and leaving about 20 million migrant workers jobless.
The Standard & Poor’s 500 Index of the largest U.S. companies has gained 24 percent since March 9 on optimism that the worst of the 16-month U.S. recession is over. The economy continues to contract, and there’s a risk the U.S. falls into a depression, Soros said.“As long as we deal with this in a multilateral and more or less coordinated way, I think we’ll get through,” he said.
Soros gave a mostly positive review of the President Barack Obama’s administration.
“He’s done very well in every area, except in dealing with the recapitalization of the banks and the restructuring of the mortgage market,” said Soros, who has published an updated paperback version of his book “The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (Scribe Publications, 2009). “There, unfortunately, there’s just a little bit too much continuity with the previous administration.”
U.S. stocks fell for the first time in five days yesterday on concern that government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression. Soros said the banking system is “seriously under water” with banks on “life support.”
‘Zombie’ Banks
“They are weighed down by a lot of bad assets, which are still declining in value,” he said in the interview in his New York office. “The amount is difficult to estimate, but I think it’s in the region of maybe a trillion-and-a-half dollars.” Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a U.S. recovery.“This is part of the muddling-through scenario where we are going to keep zombie banks alive,” Soros said. “It’s going to sap the energies of the economy.”
The Financial Accounting Standards Board last week relaxed so-called mark-to-market rules, allowing banks to use “significant” judgment in gauging prices of some investments on their books. While analysts said the measure may reduce writedowns and boost net income, investor advocates and accounting-industry groups said it will help financial institutions hide their true health.
Nationalization Bugaboo
“This bugaboo of nationalizing the banks, which President Obama has determined not to do, the result is that we are nationalizing only one side of the balance sheet,” Soros said. “We gradually take over the deficits on the balance sheet. But we are not actually going to benefit from the banks recovering.”
Money being injected into banks under government rescue programs should be used to finance new leading, according to Soros. He said he participated in HSBC Holdings Plc’s rights offer, which raised about $17.7 billion last week.
Soros’s firm oversees $21 billion. Its Quantum Endowment Fund returned 8 percent in 2008. That compared with an average loss of 19 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago. The fund is up 5.2 percent this year through February, according to data compiled by Bloomberg.Soros was ranked as last year’s fourth-highest paid hedge fund manager with about $1.1 billion, according to Institutional Investor’s Alpha magazine.
Hedge-Fund Regulation
Soros said hedge funds should be regulated like other financial firms and that it would be appropriate for authorities to monitor positions to see whether some managers have “excessive exposure.”
The Group of 20 leaders said last week that they would extend oversight to all financial institutions deemed vital to global financial stability, including for the first time “systemically important” hedge funds. U.S. Treasury Secretary Timothy Geithner said last month he wants to bring hedge funds, private-equity firms and derivatives markets under federal supervision for the first time.
Soros said that the U.S. housing market hasn’t reached a trough, even as transactions in some areas such as California have increased.
China’s Stimulus
Soros said China’s economic growth will accelerate before the end of the year. China’s economy in the fourth quarter grew 6.8 percent from the same period a year earlier, lagging the 9 percent expansion in all of 2008 and 13 percent in 2007. Industrial output growth slowed, forcing thousands of factories to close and leaving about 20 million migrant workers jobless.
US Government Data Fatally Flawed: Real Jobless Rate Hits 19.8%!
By Martin D. Weiss on April 7, 2009
Many years ago, when Dad and I used to look at official data and analysis, we knew they were flawed. So we developed our own. That’s how we figured out that the capital of savings and loans was grossly overstated and that thousands of S&Ls were headed for a massive bust.Our awareness of the flaws was also a key factor in helping us warn consumers prior to the failures of giant insurance companies during the 1990s. (See the review of our work by U.S. Government Accountability Office GAO.)
It was critical to helping us warn you of nearly every major financial failure in the debt crisis that began more than two years ago. (See my blog for our forecast track record.)Plus, it’s one of the main reasons I believe the government’s efforts to bail out Citigroup, AIG, and other financial institutions are doomed to failure: Their numbers are wrong, their theories are upside down, and they’re fighting the wrong war. (For the full exposé I presented at the National Press Club last month, see my white paper, “Dangerous Unintended Consequences: How Banking Bailouts, Buyouts and Nationalization Can Only Prolong America’s Second Great Depression and Weaken Any Subsequent Recovery.”)But we’re not the only ones finding fatal flaws in official numbers and conclusions. John Williams of ShadowStats.com has been persistently doing so with the government’s official data on inflation and unemployment, among other key measures.
His latest estimate of the true March unemployment rate in the United States: 19.8 percent!
Hard to believe? Then consider the facts:
Fact #1. Fatally Flawed Official Unemployment Number
The U.S. government’s Bureau of Labor Statistics (BLS) shocked the world Friday with the release of its official, headline unemployment number: A surge from 8.1 percent to 8.5 percent.But it’s really a lot worse. This number (called “U-3″), although invariably cited by the press in the headlines, is the narrowest, most sugarcoated measure of U.S. joblessness:
* It excludes workers seeking full-time jobs, failing to find them, and then accepting part-time work that almost invariably pays far less.
* It excludes discouraged workers who have given up looking for jobs because they can’t find any.
* And, as if that wasn’t enough to color the truth, the BLS has been consistently and grossly understating the current unemployment numbers, not revising them until months later when fewer people are paying attention.
Williams points out that:
“The pattern of impossible biases being built into the headline monthly payroll employment continued with March 2009 reporting. Instead of the headline jobs loss of 663,000, consistent application of seasonal-adjustment factors would have shown a more-severe monthly jobs loss of about 750,000. This upside reporting bias has been seen in 11 of the last 12 months, with a rolling 12-month total upside headline-number bias of 1,345,000.”
The proof: In every single one of its six most recent monthly payroll reports, the BLS has announced massive upward revisions in prior months’ job loss numbers - with five of those even exceeding its own guidelines for the acceptable margin of error (plus or minus 5 percent).
Fact #2. Government Admits Some of the Flaws
The government also publishes a broader measure of unemployment (”U-6″), which corrects some - but not all - of the above flaws.This measure includes many discouraged and part-time workers, as it should. And, lo and behold, those adjustments alone add more than seven full percentage points to the unemployment rate!Instead of 8.5 percent unemployment, suddenly we see that we have 15.6 percent unemployment, according the government’s own admission.Instead of a recession, suddenly we see that we are already in a depression.
Most importantly, rather than a government that recognizes the fundamental failure of its efforts over the years to pump-prime the economy - with abundant cheap money, huge federal deficits, and financial bailouts - we have a government that continues to pursue this same folly with ever greater zeal.It’s the epitome of self-deception, leading to misguided policy and, ultimately, causing extreme hardships for nearly everyone, including unemployed officials themselves.
Fact #3. Government Still Fails to Admit ALL of the Flaws
Not only has the government excluded discouraged workers from its headline number, manipulating the public’s perception … it also distorts the way it measures discouraged workers. It’s a manipulation within a manipulation, which Williams explains as follows:
“During the Clinton Administration, ‘discouraged workers’ - those who had given up looking for a job because there were no jobs to be had - were redefined so as to be counted only if they had been ‘discouraged’ for less than a year. This … defined away the bulk of the discouraged workers.”In other words, if you’ve been a discouraged worker for less than a year, you are among those counted in the broader 15.6 percent unemployment rate the government revealed on Friday.
But if you’ve been discouraged for more than a year, suddenly and magically, the government says you’re not “discouraged” any more. In BLS newspeak, you’re a non-discouraged, non-unemployed non-person. You don’t exist. Or maybe you just don’t get what the real definition of “is” is.
By Williams’ and any reasonable person’s definition, though, you’re still unemployed. You still need a place to live and food to eat. And for Washington to make reasoned decisions, you still need to be counted.
Result: Even the government’s broadest measure of unemployment - now at 15.6 percent - is grossly understated. The real figure, Williams estimates, is 19.8 percent.
Depression-Level Unemployment! And We’re Still Far From the Bottom!
The peak unemployment rate in America’s First Great Depression was 25 percent. Trouble is, it’s hard to pinpoint how the measurements back then correspond to the various measures today.
My view: Although the tools of official deception may have been less developed, the real unemployment rate in the 1930s was probably higher in those days as well - with many among the unemployed falling through the cracks and simply never counted.
No matter what, the inescapable conclusions for today should be evident:
* We are already in a depression. Based on the government’s own admission, we have high, double-digit unemployment. That clinches it.
* The economy’s decline still has a long way to go.Yes, on the eve of the BLS release last Friday, some people were starting to talk about a “possible bottom” in the economy - “maybe.” But that talk ended abruptly as soon as economists took one look at the release and realized the utter speed of the decline. As The New York Times explained on Saturday,“The severity and breadth of the job losses in March - which afflicted nearly every industry outside of health care - prompted economists to conclude that an agonizing plunge in employment prospects was still unfolding.”
* The Obama stimulus package is too little, too late for the economy.“When drafting plans in January to spend roughly $800 billion to stimulate the deteriorating economy,” continues The New York Times, “the Obama administration operated on the assumption that the unemployment rate would reach 8.9 percent by the end of the year - without the extra federal spending. Three months into the year, the unemployment rate has already soared to 8.5 percent, from 7.6 percent, the highest level in more than a quarter-century.”
* The Obama stimulus package is too much, too soon for the bond market. With the economy weaker than expected, you’d think bond investors, who traditionally see a falling economy as the best antidote to inflation, would rejoice. Instead, they’re doing precisely the opposite. They know that the stimulus package is driving the federal deficit to an unheard-of $2 trillion. They know the Fed cannot cut rates below zero. And so they’re using every opportunity to sell. Result: Even Friday, when the shocking jobless release hit the newswires, bond investors dumped bonds, driving prices lower and yields higher.
* Government bonds are the next big shoe to fall in this giant debt crisis. I don’t mean the government will default on its debt. What I’m referring to is the market prices of medium- and long-term government bonds. They’re already falling sharply, driving long-term rates higher. As the Treasury rushes to finance its recent bailout frenzy, expect that trend to accelerate.
Many years ago, when Dad and I used to look at official data and analysis, we knew they were flawed. So we developed our own. That’s how we figured out that the capital of savings and loans was grossly overstated and that thousands of S&Ls were headed for a massive bust.Our awareness of the flaws was also a key factor in helping us warn consumers prior to the failures of giant insurance companies during the 1990s. (See the review of our work by U.S. Government Accountability Office GAO.)
It was critical to helping us warn you of nearly every major financial failure in the debt crisis that began more than two years ago. (See my blog for our forecast track record.)Plus, it’s one of the main reasons I believe the government’s efforts to bail out Citigroup, AIG, and other financial institutions are doomed to failure: Their numbers are wrong, their theories are upside down, and they’re fighting the wrong war. (For the full exposé I presented at the National Press Club last month, see my white paper, “Dangerous Unintended Consequences: How Banking Bailouts, Buyouts and Nationalization Can Only Prolong America’s Second Great Depression and Weaken Any Subsequent Recovery.”)But we’re not the only ones finding fatal flaws in official numbers and conclusions. John Williams of ShadowStats.com has been persistently doing so with the government’s official data on inflation and unemployment, among other key measures.
His latest estimate of the true March unemployment rate in the United States: 19.8 percent!
Hard to believe? Then consider the facts:
Fact #1. Fatally Flawed Official Unemployment Number
The U.S. government’s Bureau of Labor Statistics (BLS) shocked the world Friday with the release of its official, headline unemployment number: A surge from 8.1 percent to 8.5 percent.But it’s really a lot worse. This number (called “U-3″), although invariably cited by the press in the headlines, is the narrowest, most sugarcoated measure of U.S. joblessness:
* It excludes workers seeking full-time jobs, failing to find them, and then accepting part-time work that almost invariably pays far less.
* It excludes discouraged workers who have given up looking for jobs because they can’t find any.
* And, as if that wasn’t enough to color the truth, the BLS has been consistently and grossly understating the current unemployment numbers, not revising them until months later when fewer people are paying attention.
Williams points out that:
“The pattern of impossible biases being built into the headline monthly payroll employment continued with March 2009 reporting. Instead of the headline jobs loss of 663,000, consistent application of seasonal-adjustment factors would have shown a more-severe monthly jobs loss of about 750,000. This upside reporting bias has been seen in 11 of the last 12 months, with a rolling 12-month total upside headline-number bias of 1,345,000.”
The proof: In every single one of its six most recent monthly payroll reports, the BLS has announced massive upward revisions in prior months’ job loss numbers - with five of those even exceeding its own guidelines for the acceptable margin of error (plus or minus 5 percent).
Fact #2. Government Admits Some of the Flaws
The government also publishes a broader measure of unemployment (”U-6″), which corrects some - but not all - of the above flaws.This measure includes many discouraged and part-time workers, as it should. And, lo and behold, those adjustments alone add more than seven full percentage points to the unemployment rate!Instead of 8.5 percent unemployment, suddenly we see that we have 15.6 percent unemployment, according the government’s own admission.Instead of a recession, suddenly we see that we are already in a depression.
Most importantly, rather than a government that recognizes the fundamental failure of its efforts over the years to pump-prime the economy - with abundant cheap money, huge federal deficits, and financial bailouts - we have a government that continues to pursue this same folly with ever greater zeal.It’s the epitome of self-deception, leading to misguided policy and, ultimately, causing extreme hardships for nearly everyone, including unemployed officials themselves.
Fact #3. Government Still Fails to Admit ALL of the Flaws
Not only has the government excluded discouraged workers from its headline number, manipulating the public’s perception … it also distorts the way it measures discouraged workers. It’s a manipulation within a manipulation, which Williams explains as follows:
“During the Clinton Administration, ‘discouraged workers’ - those who had given up looking for a job because there were no jobs to be had - were redefined so as to be counted only if they had been ‘discouraged’ for less than a year. This … defined away the bulk of the discouraged workers.”In other words, if you’ve been a discouraged worker for less than a year, you are among those counted in the broader 15.6 percent unemployment rate the government revealed on Friday.
But if you’ve been discouraged for more than a year, suddenly and magically, the government says you’re not “discouraged” any more. In BLS newspeak, you’re a non-discouraged, non-unemployed non-person. You don’t exist. Or maybe you just don’t get what the real definition of “is” is.
By Williams’ and any reasonable person’s definition, though, you’re still unemployed. You still need a place to live and food to eat. And for Washington to make reasoned decisions, you still need to be counted.
Result: Even the government’s broadest measure of unemployment - now at 15.6 percent - is grossly understated. The real figure, Williams estimates, is 19.8 percent.
Depression-Level Unemployment! And We’re Still Far From the Bottom!
The peak unemployment rate in America’s First Great Depression was 25 percent. Trouble is, it’s hard to pinpoint how the measurements back then correspond to the various measures today.
My view: Although the tools of official deception may have been less developed, the real unemployment rate in the 1930s was probably higher in those days as well - with many among the unemployed falling through the cracks and simply never counted.
No matter what, the inescapable conclusions for today should be evident:
* We are already in a depression. Based on the government’s own admission, we have high, double-digit unemployment. That clinches it.
* The economy’s decline still has a long way to go.Yes, on the eve of the BLS release last Friday, some people were starting to talk about a “possible bottom” in the economy - “maybe.” But that talk ended abruptly as soon as economists took one look at the release and realized the utter speed of the decline. As The New York Times explained on Saturday,“The severity and breadth of the job losses in March - which afflicted nearly every industry outside of health care - prompted economists to conclude that an agonizing plunge in employment prospects was still unfolding.”
* The Obama stimulus package is too little, too late for the economy.“When drafting plans in January to spend roughly $800 billion to stimulate the deteriorating economy,” continues The New York Times, “the Obama administration operated on the assumption that the unemployment rate would reach 8.9 percent by the end of the year - without the extra federal spending. Three months into the year, the unemployment rate has already soared to 8.5 percent, from 7.6 percent, the highest level in more than a quarter-century.”
* The Obama stimulus package is too much, too soon for the bond market. With the economy weaker than expected, you’d think bond investors, who traditionally see a falling economy as the best antidote to inflation, would rejoice. Instead, they’re doing precisely the opposite. They know that the stimulus package is driving the federal deficit to an unheard-of $2 trillion. They know the Fed cannot cut rates below zero. And so they’re using every opportunity to sell. Result: Even Friday, when the shocking jobless release hit the newswires, bond investors dumped bonds, driving prices lower and yields higher.
* Government bonds are the next big shoe to fall in this giant debt crisis. I don’t mean the government will default on its debt. What I’m referring to is the market prices of medium- and long-term government bonds. They’re already falling sharply, driving long-term rates higher. As the Treasury rushes to finance its recent bailout frenzy, expect that trend to accelerate.
Gold falls on possible IMF gold sales, rising dollar
(MarketWatch) -- Gold futures fell Monday for a third straight session to end near $870 an ounce, wiping out their yearly gains as traders shaved positions on worries that the 403 tons of gold sales by the International Monetary Fund will increase supply and depress gold prices.Meanwhile, a stronger U.S. dollar also added downward pressures on gold prices.
Gold for April delivery fell $24.10, or 2.7%, to end at $871.50 an ounce in North American electronic trading. It dropped to as low as $865.10 earlier. The more active June contract also fell Monday, down 3.2% at $868.50.Gold has lost nearly 6% since April 1 and is now down 1.4% for the year, partly out of optimism that collective actions by leaders of the world's major nations may stem the global economic crisis.
IMF gold sales
Leaders from the Group of 20 nations said last Thursday they endorse 403 tons of gold sales by the IMF. The proceeds will be used to provide finance for the poorest countries over the next two to three years.The announcement came one day after the European Central Bank said it had completed the sale of 35.5 tons of gold.
The IMF's plan to sell the gold still needs to be approved by an 85% majority vote from its 185 members. The U.S., which has 17% voting power in the fund, essentially holds veto power.
Falling ETF investment
Investment in gold exchange-traded funds also stalled recently. Holdings in SPDR Gold Shares (GLD 85.30, -2.29, -2.6%) , the biggest gold exchange-traded fund, stood at 1,127.37 tons Friday, down slightly from a day ago, according to latest data from the fund.It's the first drop in SPDR holdings in one month. The SPDR lost 2.2% to $85.68 on Monday.
Gold for April delivery fell $24.10, or 2.7%, to end at $871.50 an ounce in North American electronic trading. It dropped to as low as $865.10 earlier. The more active June contract also fell Monday, down 3.2% at $868.50.Gold has lost nearly 6% since April 1 and is now down 1.4% for the year, partly out of optimism that collective actions by leaders of the world's major nations may stem the global economic crisis.
IMF gold sales
Leaders from the Group of 20 nations said last Thursday they endorse 403 tons of gold sales by the IMF. The proceeds will be used to provide finance for the poorest countries over the next two to three years.The announcement came one day after the European Central Bank said it had completed the sale of 35.5 tons of gold.
The IMF's plan to sell the gold still needs to be approved by an 85% majority vote from its 185 members. The U.S., which has 17% voting power in the fund, essentially holds veto power.
Falling ETF investment
Investment in gold exchange-traded funds also stalled recently. Holdings in SPDR Gold Shares (GLD 85.30, -2.29, -2.6%) , the biggest gold exchange-traded fund, stood at 1,127.37 tons Friday, down slightly from a day ago, according to latest data from the fund.It's the first drop in SPDR holdings in one month. The SPDR lost 2.2% to $85.68 on Monday.
Stocks May See ‘Correction’ of 10%, Marc Faber Says
(Bloomberg) -- Marc Faber, the investor who recommended buying U.S. stocks before the steepest rally in more than 70 years, said the Standard & Poor’s 500 Index may drop as much as 10 percent before resuming gains.The index may decline to about 750 and rebound after July, Faber, 63, said in a Bloomberg Television interview in Singapore. Global stock markets are unlikely to fall below their October and November lows, he said.
“We need some kind of correction, maybe around 5 to 10 percent, and after that we can maybe rally more into July,” said Faber, the publisher of the Gloom, Boom & Doom report. “The economic news, while it won’t be good, the rate of getting worse will slow down.”
The S&P has rallied 25 percent from a 12-year low since March 9, when Faber advised investors to buy U.S. stocks, saying government actions will boost shares. Asian equities are among the best bets for global investors because they are attractively valued and will benefit the most from a global economic rebound.Faber told investors to abandon U.S. stocks a week before 1987’s so-called Black Monday crash and said in August 2007 that U.S. shares were entering a bear market. The S&P 500 peaked two months later before retreating as much as 57 percent.
Commodities, Banks
Faber said he bought some commodity producers in November and is now less “interested” in these companies after some stocks more than doubled. He is also buying some bank stocks and predicted that Citigroup Inc. shares could “easily rebound” to around $5 from $2.72 currently.“The rebound potential for some of these banks and financial institutions is quite high,” Faber said.
In Asia, stocks offer “much better value” than U.S. shares, and investors should seize the opportunity to buy the region’s equities on “every setback,” the investor said. Japanese stocks also “look interesting,” he added.“If you buy Asian equities in the next three months, over the next five to 10 years, for sure you will make money,” Faber said. “Asian exporting countries will benefit the most from an expansion when it happens.”
Faber is less favorable on bonds, saying they are entering a “long-term bear market” that can last for the next 15 years to 20 years.
Investors should also diversify into the currencies of Canada, Australia and Singapore because in the U.S. dollar “may weaken somewhat,” he added. The dollar has strengthened against all of the so-called Group of 10 currencies except the yen in the last 12 months, according to data tracked by Bloomberg.Faber still advises investors to buy gold even though the precious metal is going to be “dead money” in the next three to six months. He plans to buy more gold if prices drop to between $750 and $800 an ounce, he added. Prices retreated yesterday to $872.8, the lowest in more than two months.
“We need some kind of correction, maybe around 5 to 10 percent, and after that we can maybe rally more into July,” said Faber, the publisher of the Gloom, Boom & Doom report. “The economic news, while it won’t be good, the rate of getting worse will slow down.”
The S&P has rallied 25 percent from a 12-year low since March 9, when Faber advised investors to buy U.S. stocks, saying government actions will boost shares. Asian equities are among the best bets for global investors because they are attractively valued and will benefit the most from a global economic rebound.Faber told investors to abandon U.S. stocks a week before 1987’s so-called Black Monday crash and said in August 2007 that U.S. shares were entering a bear market. The S&P 500 peaked two months later before retreating as much as 57 percent.
Commodities, Banks
Faber said he bought some commodity producers in November and is now less “interested” in these companies after some stocks more than doubled. He is also buying some bank stocks and predicted that Citigroup Inc. shares could “easily rebound” to around $5 from $2.72 currently.“The rebound potential for some of these banks and financial institutions is quite high,” Faber said.
In Asia, stocks offer “much better value” than U.S. shares, and investors should seize the opportunity to buy the region’s equities on “every setback,” the investor said. Japanese stocks also “look interesting,” he added.“If you buy Asian equities in the next three months, over the next five to 10 years, for sure you will make money,” Faber said. “Asian exporting countries will benefit the most from an expansion when it happens.”
Faber is less favorable on bonds, saying they are entering a “long-term bear market” that can last for the next 15 years to 20 years.
Investors should also diversify into the currencies of Canada, Australia and Singapore because in the U.S. dollar “may weaken somewhat,” he added. The dollar has strengthened against all of the so-called Group of 10 currencies except the yen in the last 12 months, according to data tracked by Bloomberg.Faber still advises investors to buy gold even though the precious metal is going to be “dead money” in the next three to six months. He plans to buy more gold if prices drop to between $750 and $800 an ounce, he added. Prices retreated yesterday to $872.8, the lowest in more than two months.
Morgan Stanley says the bear market is not over
Morgan Stanley has decided the bear market is not over and - coincidentally or not - leading shares have lost all their early gains and turned south.The bank's much followed strategy team led by Teun Draaisma has moved its recommendation on equities from neutral to underweight, following the recent rises in global markets. They said in a 12 page note today:
"We continue to prefer cash over equities as we have done throughout most of this bear market, and we continue to prefer earnings stability, strong balance sheets and low valuations. After the recent strength in equities, with European equities up 17% and the S&P 500 up 25% from their troughs, we now move 5% out of equities into bonds. Thus, our new asset allocation is +5% overweight cash, neutral bonds, -5% UW equities."
As for the bear market - correctly called by Draaisma - the team said:
"We have to decide whether this is towards the end of another bear market rally that we should sell into now that hope has grown, or the start of a much larger advance, maybe even a new bull market. Our decision is to sell into strength now.
"Our three signposts to identify the end of the bear market do not flash green. We wish to wait for fundamentals to be close to trough before turning more bullish. The three fundamentals we look at are: 1) earnings; 2) US housing; and 3) banks' balance sheets. Our three preferred measures are: 1) reported return on equity ex financials below its long-run average of 12.8% (latest 17.4%); 2) inventories of unsold homes below 8 months of sales (latest 12 months); and 3) senior loan officer (SLO) survey better than -20% of SLOs tightening lending standards (latest -64%).
"Other reasons to sell: after the biggest valuation overshoot ever, in 2000, we have not had a meaningful valuation undershoot. Weekly unemployment claims have continued to rise. Some fixed income markets have fallen to new lows even recently.
"Where could we be wrong? Our move today could easily be too early as the rally could continue for positioning and 'second derivative' reasons. In addition, if policy action is successful in repairing banks' balance sheets and putting a floor under house prices, the next bull market may have already started. Two of our signposts – the SLO survey and inventories of unsold homes – would tell us at some point that we have missed the turn and we should stop being bearish."
On top of that Morgan Stanley's strategists claimed the bear market was not yet over, despite recent stock market strength. They said:
"We have to decide whether this is towards the end of another bear market rally that we should sell into now, or the start of a much larger advance, maybe even a new bull market. Our decision is to sell into strength now."
David Buik of BGC Partners said:
"Frankly the market needs to clear itself out, take some profit – not too much, about 200-250 points and rebuild again. It was the US futures that persuaded London that it could not hold onto early gains. On both sides of the pond, equities are in quite good shape but there are still some fairly substantial economic fences to take a cut at. Also, first quarter earnings which start this week in the US and next week in the UK, may not make particularly pretty reading. It would also be helpful to get a little further down the road with toxic assets and quantitative easing before we start to feel comfortable with the market."
"We continue to prefer cash over equities as we have done throughout most of this bear market, and we continue to prefer earnings stability, strong balance sheets and low valuations. After the recent strength in equities, with European equities up 17% and the S&P 500 up 25% from their troughs, we now move 5% out of equities into bonds. Thus, our new asset allocation is +5% overweight cash, neutral bonds, -5% UW equities."
As for the bear market - correctly called by Draaisma - the team said:
"We have to decide whether this is towards the end of another bear market rally that we should sell into now that hope has grown, or the start of a much larger advance, maybe even a new bull market. Our decision is to sell into strength now.
"Our three signposts to identify the end of the bear market do not flash green. We wish to wait for fundamentals to be close to trough before turning more bullish. The three fundamentals we look at are: 1) earnings; 2) US housing; and 3) banks' balance sheets. Our three preferred measures are: 1) reported return on equity ex financials below its long-run average of 12.8% (latest 17.4%); 2) inventories of unsold homes below 8 months of sales (latest 12 months); and 3) senior loan officer (SLO) survey better than -20% of SLOs tightening lending standards (latest -64%).
"Other reasons to sell: after the biggest valuation overshoot ever, in 2000, we have not had a meaningful valuation undershoot. Weekly unemployment claims have continued to rise. Some fixed income markets have fallen to new lows even recently.
"Where could we be wrong? Our move today could easily be too early as the rally could continue for positioning and 'second derivative' reasons. In addition, if policy action is successful in repairing banks' balance sheets and putting a floor under house prices, the next bull market may have already started. Two of our signposts – the SLO survey and inventories of unsold homes – would tell us at some point that we have missed the turn and we should stop being bearish."
On top of that Morgan Stanley's strategists claimed the bear market was not yet over, despite recent stock market strength. They said:
"We have to decide whether this is towards the end of another bear market rally that we should sell into now, or the start of a much larger advance, maybe even a new bull market. Our decision is to sell into strength now."
David Buik of BGC Partners said:
"Frankly the market needs to clear itself out, take some profit – not too much, about 200-250 points and rebuild again. It was the US futures that persuaded London that it could not hold onto early gains. On both sides of the pond, equities are in quite good shape but there are still some fairly substantial economic fences to take a cut at. Also, first quarter earnings which start this week in the US and next week in the UK, may not make particularly pretty reading. It would also be helpful to get a little further down the road with toxic assets and quantitative easing before we start to feel comfortable with the market."
Monday, April 6, 2009
Profit Taking Diperkirakan Masih Berlanjut
IHSG diperkirakan akan mengalami aksi profit taking berkat faktor teknikal yang overbought (technical resistance pivot rejection), mahalnya valuasi sejumlah saham unggulan dan munculnya sentimen negatif dari Analis Calyon Securities (rekomendasi sell saham bank diantaranya US Bancorp & Sun Trust), Morgan Stanley memangkas rating equity Eropa menjadi netral dari overweight dan melihat saham AS akan terkoreksi turun, komentar negatif dari billionaire George Soros mengenai ekonomi & program TARF AS dan gagalnya pembelian Sun Microsystems oleh IBM. Perkiraan GDP Q1 09 akan berada di kisaran 4% & penurunan harga komoditi dipimpin oleh tembaga dari tertinggi 5-pekan, diikuti harga minyak ke $50.88, emas $879, nikel $10,800, timah $10,835, DJ Coal -4.3% 165.63, dapat memberikan tekanan kepada saham unggulan (growth stock+komoditi) Sebelumnya IHSG mendapatkan keuntungan dari isu positif BUMI (kenaikan investasi), BBRI (pemberian kredit), ITMG (isu dividen 50% dari laba), ISAT (Penguatan rupiah ke 11,275 per dolar), INCO & ANTM (kenaikan harga nikel), diikuti laporan investor asing tercatat net buy saham senilai Rp 330 milyar (58% dari total pembelian hari Senin).
Potensi penurunan IHSG masih tetap terbuka selama gagal tembus ascending triangle upper line di 1,527 (high Senin)/1,530, candle spinning top (indikasi reversal), menjelang liburan akhir pekan (Pemilu & Paskah) dengan support di 1497/88/76, sesuai dengan kondisi teknikal DJIA (kegagalan tembus high 02 April & gagal tembus resistance kuat 8,158; hold sell on rally 7700-8k target 7300/7k) & S&P 500 (gagal ditutup diatas 850 untuk ke2 harinya), Nikkei 225 menunjukkan candle shooting star. Hari Selasa Alcoa akan menjadi saham unggulan pertama merilis lapkeu (rumor result better than expected). Rekomendasi HOLD strategi hari Senin (06/04).
Potensi penurunan IHSG masih tetap terbuka selama gagal tembus ascending triangle upper line di 1,527 (high Senin)/1,530, candle spinning top (indikasi reversal), menjelang liburan akhir pekan (Pemilu & Paskah) dengan support di 1497/88/76, sesuai dengan kondisi teknikal DJIA (kegagalan tembus high 02 April & gagal tembus resistance kuat 8,158; hold sell on rally 7700-8k target 7300/7k) & S&P 500 (gagal ditutup diatas 850 untuk ke2 harinya), Nikkei 225 menunjukkan candle shooting star. Hari Selasa Alcoa akan menjadi saham unggulan pertama merilis lapkeu (rumor result better than expected). Rekomendasi HOLD strategi hari Senin (06/04).
Investor Sentiment: Converting Bears To Bulls
By Guy Lerner on April 6, 2009
As the equity markets continued their surge this past week, more bears have been converted to bulls. The number of bulls is by no means extreme, but as key resistance levels are approached, it appears that there will be fewer investors on the sidelines (i.e., new buyers) that could possibly power the market higher.
The “Dumb Money” indicator is shown in figure 1, and it is in the neutral zone. The “dumb money” looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio.
This is the third week in a row where the “dumb money” is neutral. If the indicator remains neutral for 4 - 5 weeks while prices remain under their 40 week moving average, then there is a high likelihood that the market will rollover. I discussed these observations in the article, “Investor Sentiment: Some Context”.
Last week I stated: “…I think it is very likely that lower prices should bring out the dip buyers and those still on the sidelines looking to get long because they missed their opportunity three weeks ago.” If the rally pushes on in the coming weeks, there will be fewer and fewer buyers and investors on the sidelines as more bears are converted to bulls. Unfortunately, for these latecomers, key resistance levels would be hit as the number of bulls becomes extreme.
Figure 2 is a weekly chart of the S&P 500 (^GSPC: 842.50 0.00 0.00%), and we can see that 876 is that key resistance level.
Since this rally started 4 weeks ago, I have always contended that this was a contra trend rally within an ongoing bear market. I still don’t see any technical evidence to change my opinion. This continues to be a bear market rally. Therefore, it is my expectation that we will be selling strength in a several weeks as momentum wanes and resistance levels are hit.
For completeness sake, I have included the “Smart Money” indicator in figure 3. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The “smart money” remains neutral and this is surprising considering the 20 plus percent run in the major indices over the past 4 weeks. I would expect the indicator to turn down over the next couple of weeks (i.e., become less bullish) as prices approach key resistance levels.
As the equity markets continued their surge this past week, more bears have been converted to bulls. The number of bulls is by no means extreme, but as key resistance levels are approached, it appears that there will be fewer investors on the sidelines (i.e., new buyers) that could possibly power the market higher.
The “Dumb Money” indicator is shown in figure 1, and it is in the neutral zone. The “dumb money” looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio.
This is the third week in a row where the “dumb money” is neutral. If the indicator remains neutral for 4 - 5 weeks while prices remain under their 40 week moving average, then there is a high likelihood that the market will rollover. I discussed these observations in the article, “Investor Sentiment: Some Context”.
Last week I stated: “…I think it is very likely that lower prices should bring out the dip buyers and those still on the sidelines looking to get long because they missed their opportunity three weeks ago.” If the rally pushes on in the coming weeks, there will be fewer and fewer buyers and investors on the sidelines as more bears are converted to bulls. Unfortunately, for these latecomers, key resistance levels would be hit as the number of bulls becomes extreme.
Figure 2 is a weekly chart of the S&P 500 (^GSPC: 842.50 0.00 0.00%), and we can see that 876 is that key resistance level.
Since this rally started 4 weeks ago, I have always contended that this was a contra trend rally within an ongoing bear market. I still don’t see any technical evidence to change my opinion. This continues to be a bear market rally. Therefore, it is my expectation that we will be selling strength in a several weeks as momentum wanes and resistance levels are hit.
For completeness sake, I have included the “Smart Money” indicator in figure 3. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The “smart money” remains neutral and this is surprising considering the 20 plus percent run in the major indices over the past 4 weeks. I would expect the indicator to turn down over the next couple of weeks (i.e., become less bullish) as prices approach key resistance levels.
China: Signs Of A Recovery – Already?
By Prieur du Plessis on April 6, 2009 | More Posts By Prieur du Plessis
This post is a guest contribution by James Pressler* of Northern Trust Company.
We are just over six months into this global financial crisis, and most major economies have yet to get back on their feet. Yet somehow, the numbers coming out of Beijing suggest that the Chinese economy has already dusted itself off and is preparing to take off at a dramatic pace. Is such a quick recovery possible, and if so, how do other countries get in on it?
Our first piece of evidence is found within the PMI release for March. Given the particular survey methodology behind this index, we do not give the PMI significant attention, although it does carry weight in the markets at large. The overall PMI rose above the breakeven line of 50, and new orders broke above the line for the second consecutive month. These numbers suggest that the manufacturing sector of the economy was in contraction for about five months and below its usual pace for about nine months. Considering the wealth of anecdotal discussion of widespread shutdowns and mass layoffs, it seems odd to think that the worst has passed.
It also seems odd to see that another key category of the overall PMI - export orders - is doing surprisingly well. While neither the export orders index nor the imports index has crossed above 50, they both have come back from horrible droughts and appear set to break the line in April. Again, this is reassuring to see, but it does seem odd that this same kind of turnaround has not been witnessed in China’s main trading partners. For all the energy of China’s export recovery, few countries are showing any increased import demand these days, and those countries that supply China with economic inputs have not been bragging about a recovery in sales.
One indicator that we do pay particular attention to is bank credit, and several sources in Beijing suggest that lending has been dramatic through Q1. The People’s Bank of China (PBoC) reports that lending has spiked since November, with the main indicators exceeding the 17% rate officials are comfortable with. This growth is driven primarily by the government’s fiscal stimulus drive and its call for banks to lend more vigorously to offset the economic slowdown. From this perspective it is difficult to argue against the figures, and we recognize that plenty of entities will be putting large amounts of yuan to work in the coming months.
Our main concern for the near-term, however, focuses on how these funds will be put to use. The Chinese banking system has been improving its balance sheets over the past few months, but a significant amount of non-performing loans and ‘special mention’ loans still weigh on the sector’s ability to generate credit. If this wild growth in credit generation does not ignite self-sustaining economic activity, there is every chance that today’s big loans could become tomorrow’s burdens. For now we remain cautious - more so than the rallying Asian markets - and wait for more signals that can either confirm or refute all this economic activity.
Source: James Pressler, Northern Trust - Daily Global Commentary, April 2, 2009.
This post is a guest contribution by James Pressler* of Northern Trust Company.
We are just over six months into this global financial crisis, and most major economies have yet to get back on their feet. Yet somehow, the numbers coming out of Beijing suggest that the Chinese economy has already dusted itself off and is preparing to take off at a dramatic pace. Is such a quick recovery possible, and if so, how do other countries get in on it?
Our first piece of evidence is found within the PMI release for March. Given the particular survey methodology behind this index, we do not give the PMI significant attention, although it does carry weight in the markets at large. The overall PMI rose above the breakeven line of 50, and new orders broke above the line for the second consecutive month. These numbers suggest that the manufacturing sector of the economy was in contraction for about five months and below its usual pace for about nine months. Considering the wealth of anecdotal discussion of widespread shutdowns and mass layoffs, it seems odd to think that the worst has passed.
It also seems odd to see that another key category of the overall PMI - export orders - is doing surprisingly well. While neither the export orders index nor the imports index has crossed above 50, they both have come back from horrible droughts and appear set to break the line in April. Again, this is reassuring to see, but it does seem odd that this same kind of turnaround has not been witnessed in China’s main trading partners. For all the energy of China’s export recovery, few countries are showing any increased import demand these days, and those countries that supply China with economic inputs have not been bragging about a recovery in sales.
One indicator that we do pay particular attention to is bank credit, and several sources in Beijing suggest that lending has been dramatic through Q1. The People’s Bank of China (PBoC) reports that lending has spiked since November, with the main indicators exceeding the 17% rate officials are comfortable with. This growth is driven primarily by the government’s fiscal stimulus drive and its call for banks to lend more vigorously to offset the economic slowdown. From this perspective it is difficult to argue against the figures, and we recognize that plenty of entities will be putting large amounts of yuan to work in the coming months.
Our main concern for the near-term, however, focuses on how these funds will be put to use. The Chinese banking system has been improving its balance sheets over the past few months, but a significant amount of non-performing loans and ‘special mention’ loans still weigh on the sector’s ability to generate credit. If this wild growth in credit generation does not ignite self-sustaining economic activity, there is every chance that today’s big loans could become tomorrow’s burdens. For now we remain cautious - more so than the rallying Asian markets - and wait for more signals that can either confirm or refute all this economic activity.
Source: James Pressler, Northern Trust - Daily Global Commentary, April 2, 2009.
