USDCAD daily oscillators remain positive despite the failure of the 1.0430 high, which coincides with the 50% retracement of the decline from the May 6 high. The 24% slump in oil below $75 level is clearly reducing the once positive bias in CAD. 4-Hour chart may suggest a possible retreat towards to1.0300s especially in the event that a sustainable bounce in US indices succeeds in boosting Asian equities. But recovery stands to face 1.0420, followed by 1.0480 at the next round of equity sell-off. Market will closely watch Canadas CPI due Friday, which will impact the latest pricing of BoC rate hike
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USD stabilizes from day's highs as US equities attempt getting back into the black but disappointing NY Empire Manufacturing data could weigh on abny recovery in risk appetite. GBPUSD hit the $1.4250 target from overnight IMT. Tomorrow's UK CPI figures will determine the extent of cable's recovery beyond $1.4550s. Todays breach of the $1.2320 low to $1.2237 is likely to be followed by the familiar Monday rebound in equities, which could call up $1.2420 by mid week. WATCH ASHRAF's INTERVIEW ON BNN earlier today http://watch.bnn.ca/#clip302804 Ashraf
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What a rally it has been for the U.S. Dollar Index! As the Euro currency hits new lows the U.S. Dollar Index Soars to new highs for the year. Note the chart performance of the PowerShares DB US Dollar Index Bullish (NYSE:UUP). The rally in the dollar is now 24 weeks long and technically very strong on the weekly charts. However, the U.S. Dollar Index is now getting extended on the weekly chart and is currently at an important resistance level from $86.00 - $87.00. Pullbacks are possible from this level in the short term. Therefore, keep a close eye on the Euro currency as it will often trade inverse with the U.S. Dollar Index at this time.
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The S&P 500 Index [SPDR S&P 500 ETF (NYSE:SPY)] gained nearly 25.00 points this past week in a very volatile session. Last Monday on May 5th, 2010 the European Central Bank (ECB) and the International Monetary Fund (IMF) announced a $1 trillion European bank bailout. This helped to give the markets a huge rally early in the week. However, by late last week the major market indexes gave back most of those gains. Next week is options expiration which is always a volatile and choppy week. While the short term trend is down the S&P 500 Index remains above the weekly 50 moving average. Therefore, it is possible to see sideways action next week. There has been a lot of liquidity thrown at this market again which is keeping the S&P 500 Index above the $1100.00 level at this time. The weekly support levels for the broad based index is $1100.00 and $1070.00.
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By Gareth Soloway on May 14th, 2010 1:56pm Eastern Time
Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) are both leading the Dow Jones Industrial Average (INDEXDJX:.DJI) sharply lower today. Europe continues to be in a mess regardless of a one-trillion dollar bailout announced less than a week ago. As long as the EuroCurrencyShares Euro Trust (NYSE:FXE) and Pound CurrencyShares British Pound Ster. Trst (NYSE:FXB) fall, the U.S. Dollar PowerShares DB US Dollar Index Bullish (NYSE:UUP) continues to soar.
The Dollar ripping higher is killing commodity plays. Not only has oil been crushed in the past two weeks but again today it is getting hammered. Exxon Mobil and Chevron are leading the drop. Other lesser known players are continuing to collapse lower. Steel stocks like United States Steel Corporation (NYSE:X) and AK Steel Holding Corporation (NYSE:AKS) are under pressure as well as copper player Southern Copper Corporation (NYSE:SCCO).
Bottom line is this, as the Dollar soars, it puts major pressure on commodities. This kills stocks like Exxon, U.S. Steel and Southern Copper. Adding insult to injury, continued major problems in Europe also will create a lower demand curve. Less demand means lower prices. This is why we are seeing such a dramatic drop in commodity prices. This two sided monster does not want to quit and will hurt commodities until both reverse.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
To get more in-depth analysis, along with exact entries/exits, swing trades, and scalp trades, join our Research Center or Intra Day Stock Chat NOW and join the ranks of the Pros!
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By Gareth Soloway on May 14th, 2010 1:37pm Eastern Time
The markets have been crushed today, the week ending on a very sour note. The dollar has soared on the back of continued worry heading in to the weekend in Europe. As the dollar rips higher, the Euro and Pound are dropping more and more. Interestingly enough, gold has been sold sharply today after a gap higher. Over the last few weeks, gold has soared when problems in Europe caused the dollar to rip higher. So a little strange action on gold today for sure!
While stocks are getting hammered, many big name plays are coming into major support and could be a good bounce opportunity. JPMorgan Chase & Co. (NYSE:JPM) dropped sharply but right into a major pivot level from last Thursday's low. This was when the DOW was crushed almost 1000 points. The level here to watch for a bounce and possible move higher is $39.25.
Financial regulation continues to progress towards completion and that is causing other bank stocks to drop sharply. Goldman Sachs Group, Inc. (NYSE:GS) is trading at $142.27 -2.38 (-1.65%) while Bank of America Corporation (NYSE:BAC) is at $16.24 -0.63 (-3.73%). Wells Fargo & Company (NYSE:WFC) has been one of the stronger banks stocks of late, but today it is trading at $32.13 -0.95 (-2.87%).
BlackRock, Inc. (NYSE:BLK) has been highlighted recently is articles as one financial play that seems to be holding its own in the last week. It continues to hover around support at $170.00 - $167.00. Today it is slightly lower at $169.95 -2.42 (-1.40%). Of all of the financial stocks, BlackRock seems the most stable in the last week.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
WHETHER TODAYS US DATA WILL MATTER in impacting the already accelerating FX flows may be uncertain as deteriorating risk appetite is already testing/breaching key technical levels in EURUSD and GBPUSD. See link for todays US releases on retail sales, industrial production and consumer sentiment http://bit.ly/5pdFAN The ensuing 2-day recovery in EURGBP to 0.86 means that GBPUSD has underperformed EURUSD in recent days despite the breach to new 14 month lows in EURUSD. EURGBP 2-hr chart probes the trendline support of 0.8560, a break of which to call up 0.8520 on further stochastic deterioration. This could mean renewed declines in EURUSD towards $1.2455 and stabilizing GBPUSD towards $1.4620. Should retail sales decline from the prior month as is expected in the calendar, investors will have very little reason to build on risk and lift the S&P500 and Dow-30 past the lower highs pattern.
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eurusd..daily data70 point box size by 3 reversal.hilo plot2460 got hit today.so we can assume that the chart will show a double- bottom break.to activate a downside count of 1.0100../orange line.we dont need to wait for the close,as it is a hilo plotno timescale..but it has made this chart turn really nasty
FROM STRESS TESTS TO RATING STRESS: Exactly One year after the major US banking institutions passed the stress tests on their debt paying ability with flying colors, they are no facing investigatory stress by the SEC over their handling of derivative sales (Goldman Sachs, Morgan Stanley & BoNY) and this week the preliminary probe by the NY Attorney General that into whether banks have misled credit rating agencies in order to secure high ratings for derivatives (MBS CDOs). And just when the US economy was beginning to show its MACRO superiority relative to the Eurozone in terms of GDP growth, recovering employment, rebounding consumer demand and stabilizing business investment, US financial shares are now facing a new source of risk, which could exasperate a rocky US equity market in the process of recovering from so-called trading errors. We warned on April 19 in this piece http://bit.ly/aXo4zn that US equities (S&P500 and Dow-30) had failed to rally beyond 2 important technical barriers; their 200-week moving average and the 61.8% retracement of their decline from the 2007 record highs to their 2009 lows. With the danger of the Eurozone sovereign crisis creeping into European banks and the threat of regulatory/legal action on US banks looming, investors are given more reasons to exit risk currencies to the favour of the USD and JPY. SELLING THE BOUNCE in the euro pair has become a favourite past-time in FX trading desks, while the sobering reality from the Bank of England has quashed all post-Tory/LibDem coalition rally. The confidence of our January forecast for a $1.30 EURUSD target in Q2 may now be matched by a our prediction for $1.17 before end of Q3.
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1.
Some traders consider trading as a sort of gambling. Without planning and calculations, they throw money at the market. They should distance themselves from gambling behavior. Why a scientific approach is applicable? Markets echo similar patterns over and over again. It allows identify reliable trends and select good trading vehicles.
2.
Think in terms of probabilities and act upon them.There are no certainties in trading. You can keep yourself out of trouble by thinking in terms of probabilities. Get comfortable with approximate predictions and interpretations.
3.
Hope, fear and greed are not strategies: they are emotions. Simple emotions are not an effective strategy. Positive emotions could cause us to fail to apply riskprecautions. Negative emotion could cause us to hesitate.
Trading is a psychological game. Most people think that they're playing against the market,but the market doesn't care. You're really playing against yourself.
4.
Prices have memory.
5.
Bulls live above 200-day moving averages, bears live below and try to eat up all rally attempts.
6.
Big volumes kill substantial price moves.
7.
Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
8.
Bottoms take longer to shape than tops. Greed acts more quickly than fear and pushes stocks to drop from their own weight.
9.
Losses are a simple cost of doing business. Don't try to justify a bad trade by convincing yourself that it will sooner or later turn into a good trade. Accept losses easily! Successful traders are able to ride through downturn periods. The confidence in their methods reassures them about their future success.
The markets offer endless and plentiful possibilities. Missed opportunities exist only in your mind. Prices keep changing and generate other opportunities. The goal of trading is make a net profit after a sequence of trades. It is, therefore, necessary to accept some losses and to look forward without punishing oneself.
10.
Don't be a hero. Don't fight the trend. Follow the money flow.
11.
Forget the news, remember the chart. The chart already knows the news is coming.
12.
Predetermine maximum losses in every potential trade. Do not risk more than 5% of your capital on any trade. Don't average your losses.
13.
Do not buy a stock because it is low priced (or sell because the price is high).
14.
Buy on rumors; sell on news.
15.
Trade active stocks, avoid thinly traded markets.
16.
Prepare your action plan before the market hours and follow it. Do not formulate a new opinion during market hours. Option trader must forecast for:
a price change in the underlying,
a change in implied volatility.
Option traders must understand and keep an eye on implied volatility. Implied volatility is the volatility percentage that justifies the option price and reflects the market's perception of the risk.
17.
Learn to monitor yourself and draw conclusions from your mistakes.
18.
Take a part of the profit to reward yourself.
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