: US existing home sales tumbled 16.7% in December vs. consensus of -10%, providing the USD and JPY with modest stability. CAD is amid the biggest losers, as USDCAD regains 1.06 and CADJPY struggles at 85.00 GBPUSD shorts continue to see resistance at $1.6210-20, but could consider long GBPCAD plays to target initial 1.7240, followed by Dec 17 high of 1.7340s. Weekly stochastics on GBPCAD shows more upside than daily oscillators, which are currently overstreteched to the upside. AUDJPY continues to respect last weeks 2-hr chart http://chart.ly/2f933c capped failed 82 now at 81.30, looking to retest 80.90. Gold's failure to regain 1105 remains well noted by USD bulls.
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U.S. equities are trading higher this morning, which helped lift higher yielding currencies and force the U.S. dollar to give up some of its recent gains. Existing home sales was the only piece of meaningful U.S. economic data released today and despite the record decline in home sales, the initial impact on the dollar was nominal. After last week's blood bath, a relief rally has swept across the financial markets.
In December, 5.45 million units of previously owned homes were sold, down 16.7 percent from the previous month. On a percentage basis, this decline was the largest ever reported by the National Association of Retailers. A deeper look into the report reveals weakness across the nation as demand plunged ahead of the original Nov 30 expiration of government tax credits - the credits have now been extended to contracts signed by the end of April. The number of months that the homes have remained on market also increased, raising fear that the housing market has turned.
However we believe that it is premature to turn overly pessimistic on the real estate sector simply because of one month worth of data. The deadline and scope of the housing tax credits have been extended, providing continued support for the sector. The existing home sales report also indicated that the medium price of a home sold increased 1.5 percent, the first rise since Aug 2007 and the biggest increase since May. This suggests that homeowners may have grown a bit more optimistic about the outlook for the U.S. economy. Nonetheless, the possibility that this was only a temporary decline has not stopped the dollar from falling against the Japanese Yen and we expect to see further losses.
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Will Ben Bernanke be reconfirmed as the chairman of Federal Reserve? As markets start a new week of trading that question remains open even as Dr. Bernanke’s term is due to expire in just six days from now. The confirmation which seemed merely a formality just a few weeks ago has turned into high drama on Capitol Hill after several Republican and Democratic senators voiced their opposition to Dr. Bernanke’s second term as chairman.
Chairman Bernanke has become the latest victim of anti-incumbent sentiment sweeping across the American political landscape, as the electorate appears to have grown extremely frustrated with the policy response to the worst economic recession in the post war era. Of the 35 senators due for reelection this year, Dr. Bernanke enjoys support of only 8, opposition from 9 and no decision yet from the other 19.
Over the weekend Senate Republican leader Mitch McConnel l predicted that the chairman will have “bipartisan support in the Senate” assuaging some concerns that Dr. Bernanke may not get the requisite 60 votes to avoid a filibuster of his nomination. The news has sent risk FX a bit higher during the Asian session as the prospect for political turmoil in US monetary policy appears to have diminished.
Still, Dr. Bernanke’s reappointment is far from a done deal and should it face additional challenges as the week progresses, it will no doubt trigger further risk aversion flows as financial markets grapple with the uncertainty of the outcome. Although the dollar generally benefits during periods of market stress attracting safe harbor flows, this time the dynamic may be completely different. Currency markets will likely react very negatively to the vacuum in leadership in US monetary policy if Dr. Bernanke’s nomination fails. Last Friday’s unusual market flows that saw equities fall and EUR/USD rise could become a much more common occurrence the longer the Bernanke nomination remains in doubt with the euro rather than the dollar becoming the choice for safety as traders seek relative stability in an increasingly volatile G-10 universe.
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By InTheMoneyStocks.com on January 24th, 2010 5:25pm Eastern Time
Be ready for another wild week on Wall Street. After last weeks near 600 point dump on the DOW, traders are nervous about the coming days. With earnings like AAPL set to kick start the fireworks after the markets close on Monday, can this market get back on track? From a traders perspective the new year has been a fantastic start to 2010. Swing trading and day trading have been the best they have been in months. The volatility is just what the doctor ordered. Premium members of the Research Center and Intra Day Stock Chat have had an unbelievable couple weeks after positioning their swing traders short on January 11th, 2010. Day trades have been equally as lucrative with the whippy markets giving rise to massive profits. The boat has been loaded once again going into Monday after Chief Market Strategists gave their analysis after the close on Friday and all weekend. To gain premium access to these reports, stock picks and guidance, join the Research Center. You will get swing trades for Monday along with all the calls on the markets, gold, oil, dollar and indvidual stocks. Truly unbelievable.
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Banking Sector Shares Retreat Sharply on US Regulatory ThreatsBank shares on both sides of the Atlantic fell sharply over the week after President Obama moved to introduced legislation that would reduce the ability of banks to take risks. The proposed legislation would also put limits on the size of banks in an effort to remove the “too big to fail” concerns that caused much of the chaos in the sector in late 2008.Obama stressed, “We should no longer allow banks to stray too far from their central mission of serving their customers. My resolve to reform the system is only strengthened when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low and cannot refund taxpayers for the bailout. If these folks want a fight, it’s a fight I’m ready to have. Never again will the American taxpayer be held hostage by a bank that is too big to fail.”The populist move welcomed by the public but resented by most banks follows reports of record bonuses at some financial institutions with traders profiting from the unprecedented rally in the price of risky assets. Many commentators suggest the sharp appreciation in equity and commodity prices (leading to higher performance related bonuses) are a result of government intervention and stimulus measures rather than a fundamental improvement in performance of the banking and finance sector.Obama also aimed criticism specifically at bank’s proprietary trading systems suggesting the banks should be more focused on traditional community banking – lending to small businesses and home owners – rather than risking capital in market speculation which offers in many cases zero real economic benefits.Obama’s efforts if successful will restore the much of theme, if not the detail, of the Glass-Steagall reform originally introduced in the 1930’s which was undone by the Clinton administration following years of banking sector lobbying. The Glass-Steagall act forced banks to separate their investment banking and retail lending activities to remove much of the balance sheet risk from banks which held customer deposits.In the UK the Bank of England Governor, Mervyn King, has previously stated a similar desire suggesting “casino” banks should not be involved in commercial deposits and lending functions.Market insiders responded to Obama’s plans suggesting halting proprietary trading would reduce market liquidity.The proposals not only persuaded investors to sell off risky assets, with finance sector shares amongst the biggest decliners, but also prompted a sharp spike in volatility as the following charts highlight.Chart: US Financial Sector Daily to 22nd January. Source:http://www.StockCharts.com
Chart: Volatility Index Daily to 22nd January.
Gold Falls in Line with Risk AppetiteGold, like other risky assets, fell sharply towards the end of the trading week with commodity traders concerned that the Obama regulatory threats would hinder institutional trading activity and liquidity.However, most commentators suggest the recent dip in the price of gold is likely to be temporary with many traders looking for new entry positions as value returns to the market. The long term fundamentals remain positive with China’s commitment to diversifying its reserves and the strong economic recovery in India and elsewhere in Asia likely to support retail buying in the region.A key price support level is $1,070, close to the recent low seen in December.Chart: Gold Daily to 22nd January Source:http://www.StockCharts.com
IMF and World Bank See Recovery as FragileIn a week which saw the biggest falls in the prices of risky assets so far in 2010, investor confidence in the European and US economic recovery was further undermined by two reports, from the IMF and World Bank, both of which offered concern over the strength of the recovery out of recession.The International Monetary Fund cited weak employment growth and fragile consumer demand as obstacles to a sustainable recovery. The IMF also suggested governments should take caution regarding the timing of stimulus exit policies and observed many bad assets had not yet been fully written-off on bank and business balance sheets.Also highlighted were the high levels of public debt in developed economies, such as the US and UK. The IMF stated the record levels of debt would remain a significant concern until action to reduce the deficits was executed preferably as soon as economic growth was in place and sustainable.The IMF predicts global growth may reach 3.1% in 2010 with much of the momentum coming from Asia.The World Bank offered a less optimistic forecast and expects global growth of 2.7% in the current year with developing countries fairing better with a possible collective GDP expansion of 5.2%. Developed economies would enjoy much weaker growth of around 1.8%. The Bank suggested higher borrowing costs and the reduced availability of credit would hamper the global recovery.The World Bank, like the IMF, cited weak private demand in western economies as the Achilles heel in the sustainability of the recovery and that the UN’s efforts to reduce poverty in some of the world’s poorest countries had been set back years due to the 2008/09 global recession.Chinese Economy SoarsWhilst the previous sections in this report have highlighted the vulnerability in the global recovery there is, of course, one country that did not suffer a recession and continues to report ground-breaking growth – China.4th Quarter Gross Domestic Product growth raced to 10.9% annualised, from 9.1% annualised in the prior July to September period. The Q4 rate was the fastest in two years and has forced analysts to revise expectations for 2010. In response the Chinese authorities have clamped down on lending forcing banks to rein in the flow of money into the economy. Full year growth for 2009 totalled 8.7%.China has also surpassed Japan and is now the world’s 2nd largest economy after the US. It is predicted China may overtake the US to become the foremost economic power before 2030 and possibly as early as 2025.The Chinese monetary body is expected to increase interest rates in the 1st quarter in a further effort to cool the economy.Key data for the 4th quarter included a 17.5% jump in retail sales in the year to December whilst industrial production raced by 18.5% over the same period.UK Unemployment Falls Thanks to Part-time Work AvailabilityIn the three months to November the number in part-time employment jumped 99,000 helping to reduce the unemployment rate for the first time in 18 months. Despite the headline unemployment rate dropping, the number of “economically inactive” UK residents rose to a record 8.04 million indicating the volume of people not in work and not registered for benefits and including working age students continues to increase. The 8.04 million figure equates to 21.2% of the potential work force. Unemployment officially fell 7,000 to 2.458 million.The ILO jobless rate which includes jobseekers not claiming benefits fell from 7.9% in October to 7.8% during November.The unemployment rate for 16-24 year olds fell by 16,000 though the numbers are distorted due to the propensity for school and college leavers to stay in education rather than look for work in a recession.Despite the mixed signals most commentators suggest the job market is stabilising after a torrid two years for job-seekers. Economists also noted that despite the 2008/09 recession being the most severe for decades in terms of GDP contraction unemployment hasn’t risen to the 3 million plus suffered in the early 80’s recession. The trend towards part-time work when full-time unemployment is unavailable and the wider availability of adult education are the primary reasons for the lower headline rate.BoE Unanimous in Rate and QE DecisionBank of England minutes released this week in relation to the recent monetary policy committee meeting have highlighted a unanimous 9-0 vote in favour of keeping rates on hold at 0.50% and maintaining the quantitative easing program at £200bn.The minutes signalled the economy continues to slowly recovery but that an accommodative monetary policy needs to stay in place to secure growth into 2010. The minutes also noted a need for the government to take strong fiscal action to reduce the public debt deficit. The comments were a rare move verging on political policy highlighting the desperate state of UK public finances after years of over-spending.The BoE also noted the recovery (GDP is predicted to have risen in Q4), would have been harder to realise were it not for the weaker pound. The BoE predicts inflation will moderate from the recent spike and return below the 2% target rate during 2010 enabling the bank to maintain low rates.UK Inflation JumpsWhilst the Bank of England continues to predict low inflation through 2010 the latest official data suggests otherwise. Inflation, measured by the Consumer Price Index, jumped by the biggest rate on record between November and December from 1.9% to 2.9%. The consensus predicted a 2.6% rise. The sharp increase in CPI was largely attributable to higher fuel prices. The Retail Price Index which includes mortgage payments also rose more than expected by 2.4% in the year to December.Chart: FTSE Daily to 22nd January. Source:http://www.StockCharts.com
HSBC Boss Gets PoliticalFTSE 100 bosses tend to avoid attacking politicians and governments. It invites unpleasant anti-business legislation and makes for uneasy meetings when corporate bosses bump into politicians.Mike Geoghegan, the HSBC CEO, bucked the diplomatic trend this week and attacked the government’s handling of the recession mocking Labour’s excessive spending and suggesting its politicians needed to adopt a “mindset change”. Geoghegan also reflected that a change of government may be necessary to help the country secure fiscal prudence.Interestingly, the verbal onslaught comes just weeks before Geoghegan relocates from HSBC’s London office in Canary Wharf to Hong Kong as the bank increases its focus on Asia which continues to outstrip Europe and the UK by just about every economic measure.Labour’s recent move to double-tax bank bonuses no doubt fed Geoghegan’s desire to criticise.Chart: US Listed HSBC Weekly to 22nd January. Source:http://www.Stockcharts.com
By ITMS News on January 24th, 2010 1:04pm Eastern Time
Concern that short-sellers accelerate stock declines may prompt the Securities and Exchange Commission to adopt a rule next month aimed at curbing bearish bets when equities are plunging.
The regulation would require the trades be executed above the best existing bid in the market when shares fall 10 percent in a day, said Brian Hyndman, the senior vice president in transaction services at Nasdaq OMX Group Inc. Jan. 23 (Bloomberg) By Nina Mehta
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Posted by dentist 007 on January 23, 2010 at 7:45pm
dollar index...5 minute data plottop ;looks to have formed, 78.20 supp needs to be watched and 78.80 res area.a break below 78.20 looks bullish for stocks,uneless more bad news is on the way.last signal was bullish.lets ee what happens
By InTheMoneyStocks.com on January 22nd, 2010 5:44pm Eastern Time
January 11th, 2010, the bulls were running. Scanning the media outlets showed nothing but bulls and bullish sentiment. Wait, wait one minute. There was a top called, it was called that very day by Chief Market Strategist Gareth Soloway at InTheMoneyStocks.com. The top called was at $115.00 on the SPY on the gapup on January 11th, 2010. The market never went higher. Chief Market Strategist Gareth Soloway and Nick Santiago were the only two in the financial world willing to stick their necks out on the line and call a top. In doing so, their premium subscribers loaded the boat on shorts. They did not have to wait long. The market concluded a 3 day drop losing 5%. While everyone else was bullish, InTheMoneyStocks anlayzed the markets and avoided the Wall Street hype. They nailed it and with it has come world recognition. Calls and emails are flooding in from all over the world for interviews and financial advice.
-PR Editor InTheMoneyStocks
"It takes some guts to go against the crowd sometimes, however, we read the charts and make the call. I never had a second thought about making the call of a top. The billionaires of the world take risks, educated and calculated risks. The charts told me there was a 90% chance of a major market tumble. I listened and spread the word to my premium subscribers of the Research Center and Intra Day Stock Chat. They all made tons of money and I could not be happier for them. If it comes with fame for us that is just a bonus. I work for the small, new, eager trader, swing trader, investor. I fight for the small investor, not the big firms."
Quote
-Chief Market Strategist Gareth Soloway
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By TRADER X on January 22nd, 2010 3:28pm Eastern Time
The SPY sold off again today in a rare Friday decline. The volume has been huge during the past trading sessions. There is some support on the SPY intraday at 109.50. However, caution must be used as panic could be setting in.
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By Nicholas Santiago on January 22nd, 2010 12:44pm Eastern Time
The market has had a recent sell off from the January 19th, 2009 short term top in the Dow Jones Industrial Average(DJIA). Since that time the DJIA has fallen over 350 points. This looks as if it can be the start of a pullback or perhaps even a correction. Many of the leading stocks have been hit hard after earnings and this can be viewed as the catalyst. Companies such as American Express(NYSE:AXP), Capital One Financial(NYSE:COF), and Google(NASDAQ:GOOG) are just a few to come under fire since last nights earnings report. Really the negative reactions to earnings is a trend that has started since aluminum giant Alcoa(NYSE:AA) reported earnings about two weeks ago.
What does this mean for today? Over the past year or so we have had very few Friday's that have been down significantly on a Friday. In the past year there have been about 7-8 Friday's when the market has been down over 100 points. Therefore, today is really not a surprise to see this market trade around the flat line into the close.
Why do we see this phenomenon on Friday's? Ever since the financial meltdown in 2008 the markets have mysteriously been supported on Friday's. There have been a few reasons that one could suspect for this. First, the institutional money that controls the movement of the market does not want to spook the Asian markets over the weekend. Second, most crashes that occurred on Monday's usually started on Friday's as the negative sentiment and momentum just built up over the weekend causing a sharp Monday decline. Third, the powers that be do not want a bad headline on the evening news when people are getting ready to to shopping and spend money over the weekend.
Remember the average person will watch the news or read the newspaper over the weekend and just glance at the Friday's numbers. They are not paying attention to the day to day movements. This is why we call this the 'Friday Effect'.
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InTheMoneyStocks.com's Chief Market Strategists continue to make dead on calls!!
After calling the exact top on the market a week ago, the markets have tumbled over 3%. Research Center and Intra Day Stock Chat members were given short swing trades, day trades, guidance and education. They banked it all!
Join now and be there for the next call tomorrow!
By InTheMoneyStocks.com on January 21st, 2010 7:12pm Eastern Time
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