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Euro
The break above 1.4640 was the trigger for a rally higher yesterday and this level is now support. To the upside 1.4800 is resistance and I expect the first test of this level to hold, so it might be worth to sell any approach of this level today, with a tight stop above 1.4810. Have more support coming at 1.4445 (rising trend line). Looking at the chart in a longer term view the absolute key rising support is now coming in at 1.4260, which must hold to keep alive prospects for higher levels.Support: 1.4640, 1.4520, 1.4450 (key rising sup), 1.4258 (key swing level)Resistance: 1.4800 (key level), 1.4920, 1.4967 and 1.5000 240 min – Broke above falling resistance at 1.4623 and over resistance is now at 1.4911.
Cable
Yesterday’s break above 1.9640 was the trigger to take GBP much higher. Next key level is 1.9840 falling resistance (from the 2.11 highs) and a break above this trend line would technically halt the recent GBP weakness, so watch this level today. To the down side the key support is now yesterday’s break out level of 1.9640.Support: 1.9640, 1.9428, 1.9337 (key Jan low), 1.9310Resistance: 1.9840 (falling res), 1.9890, 2.0170 (Key level)120 min – Falling resistance at 1.9840 that needs to be taken out to move higher.
USDCHF
As indicated yesterday 1.0850 was key support and it just touched that late yesterday to shoot up this morning. Some resistance coming in at 1.1095 (falling res) today and you also have that reaction high from Tuesday at 1.1120, so basically this level is the key resistance to watch for now. To the downside the key support remains 1.0850. Do we have a double bottom at 1.0850?Support: 1.0880, 1.0850Resistance: 1.1091 (falling res), 1.1120, 1.1205(former support level), 1.1350(former support), 1.1456 and 1.1554 (key falling resistance from Jul 07 highs)120 min- Falling resistance at 1.1061 and minor rising support at 1.0875 on this chart.
USDJPY
Broke above resistance overnight at 107.50 and next resistance level to watch is 107.90-108.00 level that is now the key swing level. A break above this level is bullish. Support is now at 105.50 followed by 104.95. But watch stocks for further direction in USDJPY as any recovery in the stock market will see the USDJPY go higher and a break of 108.10 is bullish. To the downside 104.95 looks like solid support at the moment.Support: 105.50 (key level), 104.95Resistance: 107.92 (key level), 110.00, 110.70, 112.80 (key level) 114.60 (key level), 114.73 (reaction high 11/7-07)
EURJPY
Shoot up higher after breaking 157.20 resistance and next key level is 159.25 falling resistance from the 166.60 highs. This level should hold on the first test. As longs as stocks looks supported the EURJPY should stay fairly bid.Support: 152.91 (long term rising trend line), 157.20, 158.30Resistance: 159.25 (falling res from the 166.60 highs)120 min – Shoot up after taking out 157.20 resistance yesterday
USDCAD
The overhead at 1.0380 resistance held up Wednesday and it broke below trend line support at 10100 yesterday, which opens for lower levels near term and key resistance is now 1.0100 former support. Support: 1.000 (former overhead resistance line), 9830 (key level), 0.9703 (1 month low)Resistance: 1.0100 (former support), 1.0380 (key level, overhead res), 1.0400(former key support.)
EURGBP
Short term rising support coming in at 0.7420 today and basically bullish potential above this level. To the upside the 0.7540 level is key resistance. Support: 0.7420, 0,7350, 0.7282 (rising support)Resistance: 0.7540 (break down level from yesterday), 0.7612 (all time high)
___________________________________ _____
Risk Warning:Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results
Saturday, January 26, 2008
Tuesday, January 22, 2008
Trading the Equity/Carry Trade Connection Around a Recession
Standard and Poor's has done some statistical studies regarding how the S&P 500 (and therefore carry trade pairs) change price as the economy moves into and out of a recession which could serve as a guideline in 2008.
Trading The Dive
The first question is whether the economy has already entered a recession. While the NBER won't label one until months after it happens, David A. Rosenberg from Merrill, Bill Gross from PIMCO, economist Nouriel Roubini along with former Treasury Secretary Lawrence Summers believe the economy entered a recession in December 2007. According to the NBER, "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales" and the statistics so far would seem to bear this out. Additionally, the government's plan for a fiscal stimulus package and the Fed's allusion to "substantive further action" certainly indicate their concerns about the economy going forward.Standard & Poor's found that on average, its index fell 26% from the months leading up to a recession to the recession lows. From the market peak on Oct. 9, stocks as of Jan. 18 have lost more than 15 percent of their value, which implies another 10% loss on top of the 10% already lost this year. That could take the S&P 500 to the 1200 area and by extension, GBP/JPY to around 187 at the trough.
Trading The Rebound
According to the NBER, the typical recession since World War II has lasted 10 months. Standard & Poor's found that if you measure the market’s performance from recession lows, in the last 10 recessions stocks rose 26% on average in the six months after hitting the trough. It's likely that these statistics are very well known among market observers and that no matter how bad things look now, an end while come to the current downturn. So if the S&P does lose another 10% the thing to do would be to take a look at the economic situation. If economists are seeing some light at the end of the tunnel, a buying opportunity could present itself that might have you feeling very smart by next Christmas. Carry trade pairs like GBP/JPY will appreciate right along with the equity markets and 1000's of pips would be available in a bull market.
Chance For A Rebound
If the Fed reduces rates another 100 basis points as expected, while the government passes a Fiscal Stimulus package, there's a good chance for those monetary and fiscal policies to cushion the blow and eventually exert a positive effect on the overall economy and in the Equity/Carry trade markets. Stock valuations (P/E ratios) which approached 40 in the final stages of the 2001 recession are only around half of that now, which indicates stocks aren’t nearly as expensive. And because profits are expected to dip in Q4 07 and Q1 08, a small bounce in Q2 profits could be taken as a sign that a bottom has been reached.
On the Other Hand
The dynamics of this decline are far different. The "financial innovation" of securitization has had the effect of spreading the losses from the U.S. sub prime debacle on a global scale that's never been seen before. Most, if not all mortgage backed securities were bought with insurance from bond insurers who may ultimately default on payments to the holders of all that bad paper. Also, there's the matter of untold $Billions of "side bets" in credit default swaps which could go belly-up in the case of an industry wide, bond insurer melt down. If this happens, all bets are off as regards a relatively short, mild 2001-style recession.
Housing Should Signal the Bottom
Given the above scenario doesn't materialize the crucial indicator will be housing, which started the economy's decline. There's an old expression that's well known in the markets-"Housing leads the economy into and out of recession" and there's no question that's exactly what happened this time around. Inventories are currently sitting at an abnormal 11 month overhang of supply and I would look for a decline in inventories to between 5 and 6 month's supply as a sign that housing has bottomed. That might the best indicator to use in finding a bottom for the market and a base from which a 26% improvement may be seen.
Trading The Dive
The first question is whether the economy has already entered a recession. While the NBER won't label one until months after it happens, David A. Rosenberg from Merrill, Bill Gross from PIMCO, economist Nouriel Roubini along with former Treasury Secretary Lawrence Summers believe the economy entered a recession in December 2007. According to the NBER, "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales" and the statistics so far would seem to bear this out. Additionally, the government's plan for a fiscal stimulus package and the Fed's allusion to "substantive further action" certainly indicate their concerns about the economy going forward.Standard & Poor's found that on average, its index fell 26% from the months leading up to a recession to the recession lows. From the market peak on Oct. 9, stocks as of Jan. 18 have lost more than 15 percent of their value, which implies another 10% loss on top of the 10% already lost this year. That could take the S&P 500 to the 1200 area and by extension, GBP/JPY to around 187 at the trough.
Trading The Rebound
According to the NBER, the typical recession since World War II has lasted 10 months. Standard & Poor's found that if you measure the market’s performance from recession lows, in the last 10 recessions stocks rose 26% on average in the six months after hitting the trough. It's likely that these statistics are very well known among market observers and that no matter how bad things look now, an end while come to the current downturn. So if the S&P does lose another 10% the thing to do would be to take a look at the economic situation. If economists are seeing some light at the end of the tunnel, a buying opportunity could present itself that might have you feeling very smart by next Christmas. Carry trade pairs like GBP/JPY will appreciate right along with the equity markets and 1000's of pips would be available in a bull market.
Chance For A Rebound
If the Fed reduces rates another 100 basis points as expected, while the government passes a Fiscal Stimulus package, there's a good chance for those monetary and fiscal policies to cushion the blow and eventually exert a positive effect on the overall economy and in the Equity/Carry trade markets. Stock valuations (P/E ratios) which approached 40 in the final stages of the 2001 recession are only around half of that now, which indicates stocks aren’t nearly as expensive. And because profits are expected to dip in Q4 07 and Q1 08, a small bounce in Q2 profits could be taken as a sign that a bottom has been reached.
On the Other Hand
The dynamics of this decline are far different. The "financial innovation" of securitization has had the effect of spreading the losses from the U.S. sub prime debacle on a global scale that's never been seen before. Most, if not all mortgage backed securities were bought with insurance from bond insurers who may ultimately default on payments to the holders of all that bad paper. Also, there's the matter of untold $Billions of "side bets" in credit default swaps which could go belly-up in the case of an industry wide, bond insurer melt down. If this happens, all bets are off as regards a relatively short, mild 2001-style recession.
Housing Should Signal the Bottom
Given the above scenario doesn't materialize the crucial indicator will be housing, which started the economy's decline. There's an old expression that's well known in the markets-"Housing leads the economy into and out of recession" and there's no question that's exactly what happened this time around. Inventories are currently sitting at an abnormal 11 month overhang of supply and I would look for a decline in inventories to between 5 and 6 month's supply as a sign that housing has bottomed. That might the best indicator to use in finding a bottom for the market and a base from which a 26% improvement may be seen.
Wednesday, January 16, 2008
FYI: Forex dealers on NFAs "ceased operations" list
Many have expressed interest in knowing this, and I finally received today, from the NFA, a list of the forex dealers who have "ceased operations" now that the new capital requirements are in place. I've added a contact number for each. Many of these companies' websites have been taken down or are "under construction," but if you had money in an account with one of them, the NFA says they "closely monitored each of the firms to ensure that customer funds were transferred to another, fully-capitalized firm." You can read the full release using the first link below.If you're not sure what I'm talking about, you might want to read these two updates: 1.
http://www.pfxglobal.com/index.php?o...848&Itemid=1882. http://www.pfxglobal.com/index.php?o...459&Itemid=116
Here's the list:American National
Trading Corp. (Recently purchased by Peregrine Financial, who is a safe Forex Dealer Member. (310) 552-2900)
Direct Forex FX (312-786-9000)
Farr Financial Group (800 543 5955)
Forex Liquidity (949 955 1096)
Hamilton Williams LLC (800-783-6056)
One World Capital Group LLC (847.446.8100)
Royal Forex Trading LLC (Freedom FX LLC) (3,000 clients, according to website, www.rfxt.com. 888-347-2185)
SNC Investments, Inc. (866-723-6739)
Solid Gold Financial Services, Inc. - (415-433-8888)
XpressTrade LLC (Owned by securities broker OptionsXpress. (888) 280-8020)
For more information about Forex,please Choose at google advestisment below.(ads by google).
More detail information with ads by google
http://www.pfxglobal.com/index.php?o...848&Itemid=1882. http://www.pfxglobal.com/index.php?o...459&Itemid=116
Here's the list:American National
Trading Corp. (Recently purchased by Peregrine Financial, who is a safe Forex Dealer Member. (310) 552-2900)
Direct Forex FX (312-786-9000)
Farr Financial Group (800 543 5955)
Forex Liquidity (949 955 1096)
Hamilton Williams LLC (800-783-6056)
One World Capital Group LLC (847.446.8100)
Royal Forex Trading LLC (Freedom FX LLC) (3,000 clients, according to website, www.rfxt.com. 888-347-2185)
SNC Investments, Inc. (866-723-6739)
Solid Gold Financial Services, Inc. - (415-433-8888)
XpressTrade LLC (Owned by securities broker OptionsXpress. (888) 280-8020)
For more information about Forex,please Choose at google advestisment below.(ads by google).
More detail information with ads by google
Tuesday, January 15, 2008
Best Times To Trade
Best Times to Trade
One thing that I find more amusing than annoying now is trying to be on the screen at the "best" time to day trade. Previously the decision on what hours to trade were based entirely on volume. The more volume, the better the day-trading, was how our thinking went. It wasn't all that long ago, a few years ago perhaps, when US hours were considered "best". Those days are long gone now, despite the heavier volumes. My own forex mentor taught me that London hours are the best, so this is very much hard-wired into my head. Tokyo hours our thinking went, while a wildcard, were generally a temptation and a fade for day-traders. That assumption now, with a strong yen being such a powerful influence on so many of the other currency pairs, is just wrong. Below is a chart of EURJPY with volume. It's easy in this case to see how volume picks up right at midnight CST, or 6AM London, and just past lunch in Tokyo. In this case that's also when we see good "trend trade".
Traders have to make the decision as to when to trade based on both volume and what's best for their biological clock, or lifestyle. Despite my own biological clocks preference for getting up w/ the sun, the best time for me to get up to day-trade is, sigh, midnight, which doesn't fit my early to bed early to rise lifestyle. At least here in Chgo it doesn't...now if I lived somewhere in the Mediterranean...one of these days...
Jay Norris 800-971-2154
www.brewerfx.com/jnorris/http://www.brewerfuturesgroup.com/edu/jnorris/index.htm
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and may not be suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
One thing that I find more amusing than annoying now is trying to be on the screen at the "best" time to day trade. Previously the decision on what hours to trade were based entirely on volume. The more volume, the better the day-trading, was how our thinking went. It wasn't all that long ago, a few years ago perhaps, when US hours were considered "best". Those days are long gone now, despite the heavier volumes. My own forex mentor taught me that London hours are the best, so this is very much hard-wired into my head. Tokyo hours our thinking went, while a wildcard, were generally a temptation and a fade for day-traders. That assumption now, with a strong yen being such a powerful influence on so many of the other currency pairs, is just wrong. Below is a chart of EURJPY with volume. It's easy in this case to see how volume picks up right at midnight CST, or 6AM London, and just past lunch in Tokyo. In this case that's also when we see good "trend trade".
Traders have to make the decision as to when to trade based on both volume and what's best for their biological clock, or lifestyle. Despite my own biological clocks preference for getting up w/ the sun, the best time for me to get up to day-trade is, sigh, midnight, which doesn't fit my early to bed early to rise lifestyle. At least here in Chgo it doesn't...now if I lived somewhere in the Mediterranean...one of these days...
Jay Norris 800-971-2154
www.brewerfx.com/jnorris/http://www.brewerfuturesgroup.com/edu/jnorris/index.htm
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and may not be suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
Saturday, January 12, 2008
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