The Red Roadmaster’s Technical Report on the US Major Market Indices + ™ Featuring Gold, Silver, Crude Oil and Forex Technical Up-date s
Vol. 06132011 # 1 Copyright 6 June 2011
Date Line: Nassau, Bahamas
The Red Roadmaster™ Paul A. Ebeling, Jnr. Editor/Compiler/Analyst/Commentator Join us on Facebook: http://www.facebook.com/pages/Live-Trading-News/193639810672419 Subscribe to email updates and RSS feeds from Ebeling Heffernan Live Trading News Real time quotes and comprehensive trading platform up and running on LTN You can also follow us on Twitter. Please go to http//twitter.com/EbelingHefferna and join in. Spring Edition # 14 13 June 2011 6.00 am US EDT Dear Reader, You can read my Market Reports, and Up to Date International News daily and weekly on www.livetradingnews.com , www.paulebeling.com , and www.pinnacledigest.com as I round up relevant global market news and technical analysis up-dated daily. + You can see many of my articles and commentary on Nasdaq News, http://search.nasdaq.com/search?q="paul a. ebeling"&site=dotcom_collection&client=default_frontend&proxystylesheet=default_frontend&output=xml_ no_dtd&proxyreload=1 and Google News http//news.google.com/news/search? aq=f&pz=1&cf=all&ned=us&hl=en&q=paul+ebeling And the NASDAQ News http://search.nasdaq.com/search?q="paul+a+ebeling %2C+Jnr"&btnG.x=24&btnG.y=8&btnG=Search&btnG.x=21&btnG.y=14&client=default_frontend&proxyst ylesheet=default_frontend&output=xml_no_dtd&proxyreload=1&sort=date%3AD%3A
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Redâ€™s Bull and Bear Trade Alerts Redâ€™s Bull Trade Alert: Digital Realty Trust, Inc. Common (NYSE:DLR)
See them daily at www.livetradingnews.com Re-cap of the US Markets for the Week ended 10 June 2011 US Stocks closed out their 6th week of losses Friday as signs of a Global economic slowdown may have set the stage for more down side going forward. The DJIA closed below 12,000 for the 1st time since mid-March. Are you watching the VIX? Reflecting Bearish sentiment, options traders eyed calls on the CBOE Volatility Index .VIX, which moves inversely to the S&P 500's performance. The VIX rose 6.1% to finish at 18.86. The benchmark index broke below the April low, which was about 1,295 on the S&P 500 and that signals a test of the March lows if data next week is weak. Investors are very keen to act on any kind of news and since the markets are very oversold here, I expect to see the market rebound instantly on anything remotely good. On the Day: The DJIA .DJI fell 172.45 pts, or 1.42%, to finish at 11,951.91, the Standard & Poor's 500 .SPX fell 18.02 pts, or 1.40% to close at 1,270.98, and the NAS .IXIC finished minus 41.14 pts, or 1.53% at 2,643.73. On the Week: the DJIA was off 1.6%, the S&P 500 was off 2.2% and the NAS was down 3.3%. The S&P 500 has fallen about 6.6% from its intraday high early last month. Many see the Key index moving down to around 1,250, its March low, where valuations could drive investors back into equities. Volume and Breadth: About 7.47B/shrs traded on the NYSE, AMEX and NAS, compared with the daily average of 7.59B/shrs. Decliners beat advancers by 2,419 to 587 on the NYSE and on the NAS, decliners beat advancers by 1,987 to 593. The S&P 500 Energy Index was the worst performing of the 10 S&P sectors, closing down 1.9%. None of the stocks in the index closed in positive territory. Heavyweights Exxon Mobil (NYSE:XOM) 79.83, -1.35 and Chevron (NYSE:CVX) 99.67, -1.56 saw losses of 1.4% and 1.5% respectively. Shares of Toyota Motor (NYSE: TM) 80.68, -1.24 closed down 1.5% after the company issued downside net income guidance for its full year 2012. The company announced it expects full year Y 2012 revenues of JPY280B, well below the Capital IQ consensus of JPY432B. Fellow Japanese automaker Honda Motor Corp. (NYSE:HMC) 36.75, -0.45 lost 1.2% on the news. Financials saw a sharp reversal following reports that the Fed may require "Systemically Important Financial Institutions" to hold an additional 2.2%-2.5% capital buffer when previous reports suggested that number would be 3%. Heavyweights Wells Fargo (NYSE:WFC)26.27, +0.05, Bank of America (NYSE:BAC)10.80, +0.15, and Citigroup (NYSE:C) 37.92, +0.15 helped the turnaround.
Bank stocks, already under pressure with the KBW Banks Index .BKX dropping 0.4% after sliding more than 2% early in the day. The US Federal Reserve said it will subject more banks to annual stress tests to determine whether they have enough capital and can raise their dividends. Some of the biggest decliners were regional bank stocks that are now going to face annual tests. China's sales to the United States and the European Union (EU) fell to their lowest since late Y 2009, excluding Lunar New Year holidays. In another negative for stocks, the Euro fell more than 1% against the USD as fears about Greece's debt returned to the forefront and investors curbed expectations about the European Central Bank's interestrate hikes. Investors have been recently trading the correlation between stocks and the USD. Lululemon Athletica (NASDAQ:LULU) 89.94, +3.80 gained 4.4% after the Company announced Strong Q1 earnings. The Company made 0.46/shr, topping the consensus estimate of 0.38/shr. Revenues climbed 35.1% Y-Y to US$186.8M, and the Company issued upside guidance of 0.42-0.44 vs. the Capital IQ consensus of US$0.39. The Company also raised full year Y 2012 guidance, seeing earnings per share of US$2.10 to 2.16 and revenues of US$915-$930M. Harbin Electric (NASDAQ:HRBN) 16.27, +0.79 closed up 5.1% after the Company announced it received a letter from its Chairman and CEO, and Abax Global Capital, reaffirming their proposal to acquire the company for US$24.00/shr in cash.. Treasuries finished off their best levels of the day, but still closed with gains. The 10-yr yield slipped below its 2.95% support for the third consecutive session, but was once again unable to close below that level. It finished the week at 2.971%. The dollar index saw a strong gain today, finishing up close to 0.9% near 74.80. The euro closed just above its worst levels near 1.4340 after a differing of opinions between European Central Bank President Jean Claude Trichet and German Finance Minister Wolfgang Schauble regarding the new Greece rescue package weighed on the single currency.DJ30 -172.45 NASDAQ -41.14 SP500 -18.02 NASDAQ Adv/Vol/Dec 312/1.93B/1111 NYSE Adv/Vol/Dec 553/1.02B/2213 Crude Oil futures fell deep into the Red early in Friday's session, marking the session lows at 98.64 bbl. By the end of day, Crude Oil finished minus 2.6% at 99.30, just below session highs. Nat Gas showed gains today, while the rest of the energy complex was in negative territory. After trending steadily higher for most of Friday's session, Nat Gas closed 1.7% higher. Precious metals sold off sharply just after the open of pit trading Friday. Gold recovered some of its losses and finished minus 13.40 at 1529.20, and Silver did not perform as well and continued to extend losses, ending 1.16 lower at 36.27 oz.
The Major US Market Indexes Technical Analysis
Technical Analysis Support Resistance
10 Jun 2011 QQQ
10 Jun 2011 DIA
119.68 Neutral (-0.24)
10 Jun 2011 SPY
127.86 Bearish (-0.36)
Americas INDEX DJIA S&P 500 NAS S&P/TSX COMPOSITE MEXICO IPC BRAZIL BOVESPA
VALUE 11,951.90 1,270.98 2,643.73 13,084.00 34,963.80 62,697.20
CHANGE -172.45 -18.02 -41.14 -171.74 -269.62 -771.66
% CHANGE -1.42% -1.40% -1.53% -1.30% -0.77% -1.22%
TIME 16:30 16:32 17:16 17:05 16:07 16:17
% CHANGE -1.64% -1.55% -1.90% -1.25% -1.69% -1.33% -1.25% -1.49% -1.18%
TIME 17:03 11:35 12:06 12:30 11:38 11:30 12:06 11:30 11:31
Europe, Africa and Middle East INDEX Euro Stoxx 50 Pr FTSE 100 CAC 40 DAX IBEX 35 FTSE MIB AEX OMX STOCKHOLM 30 SWISS MARKET INDEX
VALUE 2,732.54 5,765.80 3,805.09 7,069.90 9,950.80 20,117.50 333.83 1,095.69 6,197.25
CHANGE -45.58 -90.54 -73.56 -89.76 -170.90 -272.10 -4.21 -16.55 -73.76
Asia-Pacific INDEX NIKKEI 225 HANG SENG INDEX S&P/ASX 200
VALUE 9,514.44 22,420.40 4,562.10
CHANGE 47.29 -189.46 12.50
% CHANGE 0.50% -0.84% 0.27%
TIME 02:28 04:01 02:35
Red's Bull Trader Alert: The US major market averages ended the day just above their worst levels of the session after an attempt at an afternoon rally faded. The NAS paced today's declines, falling 1.5% while DJIA and S&P 500 each fell 1.4%. Today marked the 6th week running for losses in the major averages as they closed at their worst levels since mid-March. Shayne and I are keen on the US Big Bank Stocks, watch for profiles on LTN Redâ€™s Bull Trade Alert: Digital Realty Trust, Inc. Common (NYSE:DLR) 13 June 2011 Profile: Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. It focuses on strategically located properties containing applications and operations critical to the day-to-day operations of technology industry tenants and corporate enterprise datacenter users, including the information technology departments of Fortune 1000
companies, and financial services companies. The companyâ€™s property portfolio consists of Internet gateway properties, corporate datacenter properties, technology manufacturing properties, and regional or national offices of technology companies. As of December 31, 2008, Digital Realtyâ€™s portfolio consisted of 75 properties, including 62 located in North America and 13 located in Europe. Digital Realty Trust has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its stockholders. The company was founded in Y 2004 and is headquartered in San Francisco, California with additional offices in Boston, Chicago, Dallas, Los Angeles, New York, Northern Virginia, and Phoenix, as well as in Dublin, London, and Paris. Website: http://www.digitalrealtytrust.com Latest News: These Stocks Hit 52-Week Highs as markets fall ahead of weekend http://finance.yahoo.com/news/These-Stocks-Hit-52-Week-wscheats-946633713.html?x=0&.v=1 LTN's Pattern Recognition Analyst, Paul A. Ebeling, Jnr. ID'd the beginning of a new Bullish trend for Digital Realty Trust, Inc. Shares DLR of closed Thursday at 63.97, and opened Friday at 63.77. DLR closed the session Friday at 62.57, -1.40. (2.19%). The price range Friday was between 62.51, and 64.25. Volume: 1,869,167/shrs twice its 3 mo average volume of 925,540/shrs. DLR is trading above it its 20 Day, 50 Day, and 200 Day Moving Averages. My Technical Indicators augur new Bullish price action in here as it tapped a 52-wk high and all time on Friday The stock's 52 wk low is 47.42, and 52 week high is 64.25, its P/E ratio is 74.30, its EPS is 0.82, its RSI is 58.85, Beta is 1.04, the Div & Yield is 2.72 (4.30), and the P/C ratio is 0.05. Performance Metrics for: Wk. +1.26 %, Mo. + 3.89%, Q:+11.61 %, 6 Mo. +20.95%: Yr. + 3.13 % Overall
Analysis Bullish (0.43) Neutral (0.12) Very Bullish (0.52) Very Bullish (0.67) Recent CandleStick Analysis Neutral Date
6 Jun 2011 Inverted Hammer
There are no open gaps on the chart Support and Resistance Type Value Conf. resist. 63.21 5
supp supp supp supp supp supp supp supp supp
62.30 61.37 59.80 58.89 56.66 54.94 54.42 53.90 51.61
2 12 3 6 5 4 2 2 2
Chart Indicators Ind. short Inter EMA VBu VBu MACD VBe VBu RSI Bu TDD Be Fibs Bu VBu Highs N N Lows VBu VBu Trends VBu VBu Stoch. VBe
Long VBu VBu
VBu N VBu VBu
1 yr Price Target Price Estimate: 75.08 Earnings Date: 28 April 2011 Analysts' Recommendation: Buy Disclaimer: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates are responsible for any errors or for results obtained from the use of this information. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in Good Faith, are subject to change without notice. Before acting on any information contained on the website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser
______________________________________________________________________ This Week on the Economic Front in the USA This week is a full week for news Retail Sales are out Tuesday as is the PPI. CPI and New York Manufacturing are out Wednesday along with Industrial Production and Capacity Utilization and Inventories. On Thursday: Initial Claims followed by Housing Starts and Building Permits and the US's current account balance. The Philly Fed is important too. On Friday: the Michigan Sentiment and Leading Indicator are out.
This Week on the Earnings Front in the USA Earnings season is over, but reports continue from some off-Quarter companies. Some of them set to report this week could be market-moving or sector-moving stocks.** LTN is looking at Best Buy Co. Inc. (NYSE:BBY), Finisar Corporation (NASDAQ:FNSR), China Finance Online Co. Ltd. (NASDAQ:JRJC), Kroger Co. (NYSE:KR), Pier 1 Imports Inc. (NYSE:PIR), Research In Motion Ltd. (NASDAQ: RIMM), and Smithfield Foods Inc. (NYSE:SFD). Best Buy Co. Inc. (NYSE:BBY) is due to report earnings Tuesday and the current expectation during the slowdown looks very weak. The good news is that now the stock very cheap and it does screen out as a “value stock” even if the bias is negative ahead of earnings. The estimates are 0.33 EPS and US$10.69B in revenue, and the estimates for the next Quarter are 0.54 EPS and $11.41B in revenue. Shares are trading around $28.70 and its 52-week range is $28.09 to $45.63. Finisar Corporation (NASDAQ: FNSR) is due to report on Wednesday. The estimates are 0.33 EPS and US$242.89M in revenue, and the estimates for the next Quarter are 0.38 EPS and US$253.9M in revenue. Shares are trading around $18.30 and its 52-week range is $11.98 to $46.09. If Finisar can meet its lowered expectations it is actually now showing up as a “value stock” for investors looking at companies that trade at under 10 times forward earnings. China Finance Online Co. Ltd. (NASDAQ:JRJC) this issue has been "China bashed", and we can find just one real estimate so this one. Its earnings report is due Thursday. The estimates of $0.06 EPS and $14.99M in revenue and the estimates for the next Quarter are 0.04 EPS and US$15.06M in revenue. Shares are trading around 3.91 and its 52-week range is 3.65 to 8.59. Kroger Co. (NYSE:KR) is set to report Thursday. Shares are trading around 23.40 and its 52-week range is 19.56 to 25.48. With cost pressures still causing low margins investors will be watching in here as companies are not yet able to pass on major price hikes in retail food sales. Pier 1 Imports Inc. (NYSE:PIR) is due to report on Thursday. The estimates of 0.12 EPS and US$334.96M in revenue, and the estimates for the next Quarter are 0.13 EPS and US$333.97M in revenue. Shares are trading around 11.05 and its 52-week range is 5.67 to 12.75. Pier 1 is back to making money, and the stock has held up well since its recovery since it was an "at-risk" brand during the recession. Research In Motion Ltd. (NASDAQ:RIMM) is the due to report Thursday too. After the recent warnings, and after the rise of Apple and Google, the expectations are low now. RIM is a Company which that may find itself "at-risk" in the years ahead should today's trends continue. The estimates of 1.32 EPS and US$5.15B in revenue, and the estimates for the next Quarter are 1.42 EPS and US$5.51B in revenue. Shares are trading around 36.75 and its 52-week range is 36.08 to 70.54. This stock may look and sound cheap from an earnings valuation standpoint, please know that many down-grades have been seen since its earnings warning. RIM appears a "value trap" rather than a value stock as shares continue to fall. RIM looks like a merger candidate to us. The Big Q is with who? . Smithfield Foods Inc. (NYSE:SFD) usually SFD is defensive because it is food, but input costs and transportation costs in the fresh meat and packaged meat producer area have put pressure on the margins. The estimates of 0.82 EPS and US$3.24B in revenue, and the estimates for the next Quarter are 0.71 EPS and US$3.23B in revenue. Shares are trading around 18.95 and its 52-week range is 13.34 to 24.93.
Paul A. Ebeling, Jnr. ** added are the Key estimates, and price activity. Note: some of the days and estimates may change prior to the reports. For the complete Earnings list go to: http://biz.yahoo.com/research/earncal/20110613.html ____________________________________________________________________________
The Most Asked Question Last Week The Big Q: Red where do I find safety in a falling market?
The Big A: Safety is an illusion. You have all heard and experienced that, ask yourself, Is it safe to walk down steps, take a walk, cross the street, drive your car, sail your boat, swim in the ocean, fly your plane, ski and scuba dive, etc, etc, etc. So it is fair to say that it is not likely to have complete safety in life. In the investment world, highly rated bonds were considered safe in the past, but that has been proved not necessarily so in the last 2 yrs. In the world of stock trading, safety is established with the exit strategy, and like most safety, it is imperfect at best. But it does work pretty well if you have established a good plan. And as a player/trader, you must begin with a clear understanding what is adequate safety for you. This column talks about the “Plan” throughout the year, Plan Your Work and Work Your Plan is a recurring theme here. It is your money, so for sure it is your responsibility. Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power! ___________________________________________________________________________________
Red’s Edge and in the Trenches Reflect and Resolve to Make Money The area that I believe to be of great importance to those of us who have a keen interest in trading markets is how to better Play the Game of trading and investing. The 1st thing to do, IMO, is to reflect on what was done last year and how well it was done. I believe it will be the common denominator that some stuff was done well and some not so well. That said it would be a good plan to work to be better at what was not done so well in this New Year. Looking into the past may be helpful to put together Resolutions that will bring positive changes that bode well for future action in the markets, in order to set up for continuing success. The common areas that most all traders/players work on to improve in order to continuously post good Percentage and Money records are: 1. Formulate a Trading Plan for their business; this is a business, though many of refer to it as a Game.
2. Follow and fine-tune the Trading Plan along the way. 3. Learn to Cut Losses 4. Stop Cutting Profits 5. Manage your money; remember Your Money and Your Responsibility. 6. Education, Education and more Education, Knowledge is Power. 7. Last but not least are; never enter a position without a Way Out (aka Exit Strategy) Lumped into 1 Key Trader/Player Resolution and followed will likely lead to improved trading results. That said, always strive to do your best, use the best tools, be patient with yourself and be happy. Each new day comes with new opportunities, challenges, and changes. All the best, Paul A. Ebeling, Jnr. PS: if you look at yourself as a player/trader, and you like doing it, then it is Key to understand what makes you "tick"; plus it is very helpful to understand the motivations for your actions and their timing in the entering and exiting positions. It is very important to strive to remove the emotion and focus on the business of trading the markets to win. When you acquire the discipline and the tools to remove the emotion you are on the way to winning and perhaps winning Big. PE To succeed in trading, a Player needs Knowledge; Gain it and use it wisely ____________________________________________________________________________________ The Key to Stock Market Understanding We all know that markets and stocks go up and they go down. Players will have winning trades and losing trades. Individual trades do not determine if a trader is a success or failure. A losing trade can be a successful trade if the trader has followed the disciplined Plan and cut a loss timely. So, that being said, and knowing that there will be times of drawdown for even the best trader, how is success measured in this business? Well, one way is to go back and look at steps along the path that brought you to trading. This will likely help you understand how well you are doing. Example: one of the first steps along the path to trading success was your learning how to use the computer, a basic skill that makes the work easier, faster and hopefully better, and it follows that improvements made in the steps along the path would likely improve overall success. Next is, have you completed and do you use a well-defined and controlled trading plan? And have you learned strategies to trade up down or sideways markets? Have you developed an exit strategy, whether
you have a discipline to cut losses-whether you are dedicating time to education through reading, or seminars and/or have you structured your time to permit regularly attending to the business of trading? Hopefully you are getting more knowledgeable, as knowledge is Key. So, then take the time to look back from where you are now, so you can analyze the steps that you have taken so far, looking at what you have done you can see what you have not done as well and that may lead you to improve our trading. You might look back and see that you have closed losing positions only after losses have mounted to the point where you feel hopeless. That revelation could lead you to establishing a more disciplined exit strategy. Instead of waiting for hopeless, instead decide to use the reversal of some indicator, or the break through a moving average as a more disciplined way to cut losses more quickly and more efficiently. I tell people this all the time when they call to ask. So, if you are not satisfied with your trading, look and see what actions can be improved going forward. Success is not static and can become better than you ever thought when you are willing to examine how you got where you are, with a look to how you can make the necessary changes to get where you want to be. Again, there are many ways to make and lose money in the markets. It is clearly worthwhile to learn how to make money and how to reduce or avoid losses if one is going to venture into this game. For if you are not armed with Knowledge, it is better to forget the possibility of financial gain in the markets and simply live life on the sidelines. The risks for the ignorant are huge, and in this action, Ignorance is not bliss. Safety Safety is an illusion. You have all heard and experienced that, ask yourself, Is it safe to walk down steps, take a walk, cross the street, drive your car, sail your boat, swim in the ocean, fly your plane, ski and scuba dive, etc, etc, etc. So it is fair to say that it is not likely to have complete safety in life. In the investment world, highly rated bonds were considered safe in the past, but that has been proved not necessarily so. In the world of stock trading, safety is established with the exit strategy, and like most safety, it is imperfect at best. But it does work pretty well if you have established a good plan. And as a player/trader, you must begin with a clear understanding what is adequate safety for you. This column talks about the â€œPlanâ€? throughout the year, Plan Your Work and Work Your Plan is a recurring theme here. It is your money, so for sure it is your responsibility. Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power! Again, the Reminder on Risk Risk is everywhere including trading the markets; you must learn to manage risk.
When you seek profits in trading markets there is a certain factor that creeps in; it is the "Greed" factor; then comes the Risk factor that gives rise to the Fear factor in trading. Likely, many bad trades are the results of a misunderstanding of/or an initial failure to pay attention to risk. Once that risk becomes real for many folks, it can turn into fear and panic. Risk means we can lose something we have, and often, traders fail to realize just how much is at risk until it is too late for them One of the most compelling facts regarding risk of loss in the market is that if a position loses 50%, it must then double, i.e. move up 100% to get back to even. It is important to note that risk in the buying of stock in the market is one of the riskiest things on the planet. When buying a stock, the total investment is at risk. And as we have seen recently, formerly great companies can fall to Zero. You ask: Red, Are there ways to reduce the risk of losing my entire investment when buying stocks? Sure, we have discussed them in previous articles. One is employ stop loss orders in place or trailing stop loss orders. In most situations, these orders can work to prevent losing everything. It is unlikely that a stock will drop from USUS$50 to US$ Zero overnight, and most stocks that fail often post warning signs; and while they often fall fast, they usually take a bit of time to hit Zero bottom. In such circumstances, the stop loss may work to preserve capital. Here is another way to protect an asset (some of us call it Insurance). That is to buy a protective Put. A Put option is a contract whereby the buyer of the Put has the right, but not the obligation, to force someone to buy his stock at a pre-determined price, called the strike price, any time before the option expires. To obtain that right, the buyer of a Put pays a premium. The situation is at least analogous to an insurance policy where the insured (stock owner) pays a premium in order to assure that a loss is limited to the premium, plus any deductible. You can learn about managing risk with options, but the major risk in options strategies is that options expire, so your puts and calls only have value until expiration; and assuming no change in the price of the stock, the call becomes less and less valuable as time passes, until there is no time left. Insuranceâ€Ś Another thought that is often espoused is to diversify. There are differing schools of thought regarding diversification and there are many ways to diversify. The above discussion lists some of the ways traders reduce and manage risk in a stock purchase transaction. All of the above is intended to motivate you to seek a greater understanding of Risk and in doing so help you Win. Again, think Education First.
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My pal Wally Stein’s Words of Wisdom Buy Low, Sell High or at least in the Middle; that’s Wally’s Lullaby Sooner or later, those who win are those who believe they can! Red’s Quote of the Week: "If we could learn to like ourselves, even a little, maybe our cruelties and angers might melt away."-- John Steinbeck ___________________________________________________________________________________ In View: China's inland economy set to take off due to industrial relocation China's coastal areas, including the Yangtze River Delta in the East and the Pearl River Delta in the South, have led the Country's economic development since the reform and opening-up began in the late 1970's. China's vast interior has lagged far behind these areas, developmentally. But, now over the past few years, China's coastal industries have been looking inland, driven by rising labor costs and lured by development opportunities in the Country's interior regions brought by the government strategies to develop China's Central and Western regions. The International division of labor since the Global financial crisis has also been a boom to China's interior. Wu Keming, director of the development research center under the Anhui provincial government, said that industries are moving from some developed countries, as well as China's coasts, to China's interior. In the past, companies would only move their factories inland, keeping the rest of the industrial chain closer to home. But, now it is common to see entire industrial chains being transferred to inland areas, according to Yang Kelin, a member of the industry and information committee of the City of Guilin in South China's Guangxi Zhuang Autonomous Region. Shanghai's Huayi Group, a state-owned enterprise, is looking to move more than 50% of its business to inland areas. Liu Xunfeng, general manager of Huayi, said "a lack of land resources and other problems in Shanghai is hindering the further expansion of our company, so our investments will now go to Midwestern regions over the next several years." Zhuo Yongliang, director of the development and reform research institute of Zhejiang Province, said that the number of labor-intensive industries located in the province is being reduced by 0.7 percentage points every year, as these companies are investing more heavily in areas outside the province. "About 60% of listed companies' investments go to inland regions," Zhuo said.
Analysts have also noticed that many highly-skilled and diversified industries are seeking to settle down in inland areas. "Many multinational companies have also seen abundant opportunities in China's interior," Wu said. Inland provinces are now shaking off their once lackluster economic profile and assuming a new role as an economic powerhouse for the Country in the wake of the industrial relocation trend. Over the past 5 yrs, Anhui's gross domestic product (GDP) has grown by 13% Y-Y, from 535.02B Yuan in Y 2005 to more than 1.2T Yuan in Y 2010. "We will achieve impressive economic ends if we maintain our current momentum," Wu said. In order to seize the opportunities provided by industrial relocation, Inland Regions are strengthening their infrastructure in order to offer a sound investment environment. In Anhui's city of Wuhu, newly-built industrial parks are now home to many companies from both home and abroad. Local authorities from Linquan County in the Guangxi Zhuang Autonomous Region said that the County has invested 1B Yuan to construct an Industrial Zone, in the hope of attracting new investments. Although China's Inland is forging ahead at an unprecedented pace, experts have cautioned that problems may arise. Zhuo said that the rapid economic development of China's coastal areas over the last 3 decades has caused severe environmental problems for those regions. Inland areas should try to avoid developing their industries at the expense of the environment, Zhuo said. "The government should consider the improvement of people's livelihoods as their primary obligation, rather than aiming exclusively at boosting the GDP," Zhuo said. Paul A. Ebeling, Jnr. __________________________________________________________________________
Hot Topics As the US Dollar falls China will boost Gold's move to US$2,000 oz The World Gold price has not peaked, and the steady emergence of the wealthy Chinese Middle Class will help boost the price in the long term toward US$2, 000 (my work show 1945.60 over the next 5 yrs or sooner), Richard O'Brien, CEO of Newmont Mining Corp. (NYSE:NEM) said Sunday. In an interview, Mr. O'Brien said global Gold demand, and supply conditions are set to ensure that the Gold price will remains Strong over time, with the inherent weakness in the USD to continue as the US Congress shows no sign of taking control of the Country's budget problem, and the US Fed will have to continue printing money. "I've got to believe that the USD goes lower over time," he said on the sidelines of the World Economic Forum on East Asia. "I'm a firm believer that the Gold price has not reached its peak, but it will remain volatile," he added. "Five years from now, US$2,000 Gold will probably be in reach," Mr. O'Brien said. Next year, Gold will trade in a narrow range of US$1,500 to 1,600 oz, with the market focused on concerns about China's ability to sustain its expansion, and the potential for a Double-Dip recession in the US economy, he added. "That could be negative for Gold," but markets need to understand that whatever
happens, the Gold price will remain above US$1,000 oz for the foreseeable future, he said. "People need to get with the program," he added. Demand-side dynamics are set to remain Strong while global Gold supply tracks down off in coming years as projects become more expensive to develop and government approvals are harder to come by, and some central banks are also beginning to buy Gold again, he said. Demand from both China and India for Gold as both jewellery and as an investment is set to be strong, he said.
California leads all other states with largest minority-owned businesses in US Increasing the flow of capital for minority-owned businesses must be a National priority to re-energize the US economy and increase competitiveness in the Global marketplace. California leads other states with the largest minority-owned businesses in the United States from Y 2002 to 2007 while nationwide minority-owned businesses grew from 4M to 5.8M, according to a survey released this week by the US Census Bureau. In Y 2007, minority-owned firms numbered 5.8M, up from 4.0M in Y 2002, an increase of 45.5%, more than double the 17.9% increase for all US businesses, according to the US Census Bureau's 2007 Survey of Business Owners. The 3 states with the largest number of minority-owned firms in Y 2007 were California, Texas and Florida. California had 1.2M minority-owned firms, or more than a 20 % of all minority-owned firms in the United States. Texas had 723,057 minority-owned firms, or 12.6% of all minority-owned firms, and Florida had 680,069 minority-owned firms, or 11.8% Among counties, Los Angeles County had the most minority-owned firms with 466,312, accounting for 44.5% of the county's total firms; followed by Miami-Dade County, Fla. with 286,596, 71.0%; Harris County, Texas, with 169,381, 45.7%; and Cook County, Ill., with 154,811, 30.3%, firms. Receipts of minority-owned firms increased 55% to US$1Tover the 5-yr period, compared with the 32.9% increase for all businesses nationwide. In Y 2007, more than 21.3% of the nation's 27.1 million firms were minority-owned. Of the 5.8 million minority-owned firms, 766,533 had paid employees, an increase of 21.7% from Y 2002. These firms employed 5.8 million people, a 24.4% increase from Y 2002, and their payrolls totaled US$164.1B, an increase of 42.2%. Receipts of minority-owned employer firms totaled US$860.5B, an increase of 54.3% from Y 2002. In Y 2007, minority firms with no paid employees (non-employers) numbered 5.0 million, an increase of 50% from Y 2002. These firms had receipts totaling US$164.3B, an increase of 58.9%. "Just as the 2010 Census has documented our increasingly diverse population, so too the Survey of Business Owners demonstrates the increasing diversity of US business ownership," Tom Mesenbourg, deputy director of the US Census Bureau, said in a statement. "The growth in the number of minority-
owned firms - both employers and non-employers, has far outpaced that of businesses overall," he added. "Asian-owned businesses continued to be one of the strongest segments of our nation's economy, bringing in more than US$500B in sales in Y 2007 and employing more than 2.8million people," said Mr. Mesanbourg. Hispanic-owned businesses generated US$345.2B in sales in Y2007, up nearly 56% compared with Y 2002. Black-owned businesses increased by nearly 61% to 1.9 million, more than 3 times the national rate. Women-owned 7.8 million businesses and accounted for 28.7% of all businesses Nationwide. For most minority groups, the gains in the number of women owners were higher than for men. Meanwhile, according to a report developed under a contract with the US Department of Commerce' s Minority Business Development Agency, capital access remains the most important factor limiting the establishment, expansion and growth of minority-owned businesses. Given this well established constraint, the current financial environment has placed a greater burden on minority entrepreneurs who are trying to keep their businesses thriving in today's economy. The report said that if it were not for the employment growth created by minority firms, American firms, excluding publicly-held firms, would have experienced a greater job loss between Ys 1997 and 2002. While paid employment grew by 4% among minority-owned firms, it declined by 7% among non-minority firms during this period. Minority-owned businesses continue to be the engine of employment in emerging and minority communities. Their business growth depends on a variety of capital, from seed funding to establish new firms, to working capital and business loans to expand their businesses, to private equity for acquiring and merging with other firms, according to the report. Without adequate capital minority-owned firms will fail to realize their full potential. In Y 2002 there were 4 million minority-owned firms, grossing US$661B in receipts and employing 4.7 million workers. If minority-owned firms would have reached parity with the representation of minorities in the US population, these firms would have employed over 16.1 million workers, grossed over US$2.5T in receipts, and numbered 6.5 million firms, according to the report. Increasing the flow of capital for minority-owned businesses must be a National priority to re-energize the US economy and increase competitiveness in the Global marketplace, the report said.
United Airlines to expand operations adding 1,300 jobs at home United Airlines (NYSE:UAL) is expanding its operations and adding 1,300 new jobs in its domestic services, local officials said. "I'm most pleased with this because Chicago is an aviation leader," said Rahm Emanuel, the new Mayor of Chicago, in an appearance with United Airlines President and CEO Jeff Smisek at the airlines' new Willis Tower HQ.
"Chicago is one of the most important cities in the World and in the area of aviation, which is a growing sector in this country and growing sector in the world," said Mayor Emanuel, who vowed to keep Chicago's position as a Global aviation hub. Mr. Smisek said the 1,300 new jobs are "good, well-paying" positions in operations and technology. Most of the jobs will be coming from "within the system" of United Airlines, and many are coming from the airlines' operations in Houston and San Francisco, Mr. Smisek said. The new jobs will be in addition to the 14,000 ones across Illinois, including 4,000 already in Chicago, he said. As of Y 2009, the aviation industry brought in US$48.5B and 356,000 jobs in Illinois according to figures from the latest report by the US Federal Aviation Administration (FAA). Former UAL Corporation, parent of United Airlines, merged with Continental Airlines last October to create the world's largest airline by traffic: United Continental Holdings. United and Continental continue to operate as separate carriers until they receive their single operating certificate, which is expected by the end of Y 2011. Illinois Governor Pat Quinn issued a statement praising the job announcement, saying the investment will have a "major impact" in the State.
US President says, the Private Sector must lead in creating jobs
US President Barack Obama said the private sector must take the lead in creating jobs as the economy recovers, with the government assisting by making sure workers have the necessary skills. “Government is not, and should not be, the main engine of job-creation in this country,” Mr. Obama said in his weekly address on the radio and Internet. “That’s the role of the private sector.” President Obama said the government can work as a partner with businesses to enhance training and education for the jobs that are available. With the Nation’s unemployment rate at 9.1% in May, up 0.1% from the prior month, the administration is focusing on measures that can encourage hiring. On June 8 Obama visited a community college outside of Washington to highlight a program where students are being prepared for manufacturing jobs in a US$2B government program to train about 500,000 workers over the next 5 yrs. On June 13 Obama will meet in North Carolina with executives who are on his Jobs and Competitiveness Council to talk about proposals to encourage private-sector hiring without additional government spending. In Saturday’s address, President Obama said a good education is “a prerequisite for success” in the workplace, so he is pushing states to improve schools. The US President also said that the government needs to continue to spend on clean energy technology to help create the industries of the future.
“These are steps we know will make a difference in people’s lives,” he said. “Not just 20 yrs from now, or 10 yrs from now, but now, and in the months to come.” In the Republican address, Representative Adam Kinzinger of Illinois said the President is continues to pursue a “failed agenda” that has not helped the economy recover from the worst recession in more than 80 yrs. None of the promises made by the administration about the stimulus passed in Y 2009 have panned out, he said.
Audi, Corvette Win close 2011 24 Hours of Le Mans Endurance races are most often won by laps, not this time. This year's 24 Hours of Le Mans was won by seconds after Audi and Corvette held a fierce competition. The best racing, the biggest crashes, the closest times, and a very special victory for the Germans and Americans. "Drama, excitement, all the way to the end" is how Radio Le Mans described the race and anyone watching the last few hours will signal their agreement for talking about this race for the rest of their lives. In the overall race, it was the Audi R18 and the Peugeot 908 battling it out for the overall victory from the beginning. But after just a few minutes into the race Allan McNish in the #3 Audi R18 crashed in spectacular fashion, followed later that night by Mike Rockenfeller in his Audi R18 destroying his car. With just one car left, the trio of Audi drivers in the #2 R18 had to fight off the trio of approaching Peugeot 908s for more than 230 laps alone. At 23.5 hours there was just 6.7 seconds separating the #2 Audi of Lotterer and the #9 Peugeot of Pagenaud. The #2 Audi bravely held off the Peugeots to win the race, followed by Pagenaud in his car driving through the falling rain on old tires. In the GTEPro class, the Corvette C6 ZR1s were both on the lead lap until late in the evening when Jan Magnussen in the leading Corvette went off in an accident with a Porsche put the Ferraris in the lead, leaving Garcia in the Chevrolet Corvette to fight his way back over the Af Course 458 Italia Ferrari for a single lap victory. And in GTEam the Ford GT of the USA's Robertson Racing celebrating the wedding anniversary of Andrea and Davis Robertson made it to the podium with a 3rd place finish with Andrea at the wheel. Finally, in LMP2 the Zytek Nissan edged out the Signatech Nissan by seven laps. There was something to celebrate for the French, the Germans, and the boys from Detroit. It was a victory for safety over speed, with everyone surviving their accidents. But the biggest win was for the people watching, who had a full 24 hours of entertainment me included.
See all of the Latest World News on www.livetradingnews.com up-dated hourly 24/7
At the Movies with Monica Petrucci from Tinsel Town "Kung Fu Panda 2" Commands US$56.5M Internationally The DreamWorks Animation feature bests 'Pirates of the Caribbean: On Stranger Tides' on the foreign circuit. DreamWorks Animation’s Kung Fu Panda 2 made its debut in the weekend’s # 1 box office spot on the foreign theatrical circuit, grossing $56.5 million from 11,025 screens in 45 territories. The tally was buoyed by the 3-D animation sequel’s solid openings in 17 overseas markets. Total foreign gross for Panda 2 has exceeded the $200-million mark, the take is $205 million, as per distributor Paramount. Panda 2 took the Top spot in the UK and Ireland with an opening tally of $10 million from 516 venues. A Mexico bow delivered $8.3 million from 527 sites. Brazil kicked in $5.8 million from 404 situations while Argentina generated $2.3 million from 118 spots. Panda 2 in its Peru opening grossed $1.3 million from 52 locations for a $25,000 per-screen average, the biggest market opening of Y 2011. With a tally of $41.1 million—down 41% from the prior round—Pirates of the Caribbean: On Stranger Tides ended its three-stanza hold on the No. 1 overseas box office title. Ranking # 3 this time, the Disney release starring Johnny Depp played at 14,602 venues in 72 markets, moving its foreign gross total up to $678 million, more than 3 times its domestic take. Top market remains Japan where Tides drew a # 1 ranking with a weekend gross of $6 million, pushing the market take to $74.5 million. Tides is easily the biggest-grossing Pirates title of the four franchise installments thus far, handily outpacing the previous foreign frontrunner, 2007’s Pirates of the Caribbean: At World’s End, by $24 million. Worldwide take stands at $886.8 million, making Tides the 19th biggest global grosser of all time.
Super 8, which premiered # 1 in the U.S. and Canada, opened in nine mostly 2nd-tier Southeast Asian markets on the weekend, drawing $6.7 million from a total of 652 screens and ranking # 5 offshore overall. Opening weekend worldwide comes to $44.7 million The sci-fi adventure, written and directed by J.J. Abrams and produced by Steven Spielberg, premiered # 3 in Australia to what distributor Paramount described as “an excellent holiday weekend gross” of $2.7 million drawn from 652 sites. Super 8’s Hong Kong bow drew a # 1 marketing ranking with $575,000 yielded from 42 situations for a per-screen average of $13,690. # 1 openings were also recorded in Taiwan, Thailand and Vietnam. Openings in 16 territories loom this week including Russia, Sweden and South Korea. Finishing second on the weekend was 20th Century Fox’s X-Men: First Class, which tallied $42.2 million from 10,643 screens in 66 markets.
Overseas cume now stands at $124.2 million after only a dozen days of release on the foreign circuit. The latest installment of the billion-dollar comic book franchise took the top spot in France for the second consecutive weekend, grossing $3.25 million from 687 sites for a market take of $11.5 million. Warner Bros.’ The Hangover Part II crossed the $200-million foreign gross mark, the take is $215.5 million thanks to a $38.3 million weekend at some 7,200 screens in 55 markets. In just 18 days of foreign release, the comedy sequel has surpassed the $191.6 million overseas gross total recorded by 2009’s original, The Hangover. The sequel ranks No. 4 on the weekend overall. Top market was Germany where Hangover 2 grossed $7.9 million from 872 sites, ranking a dominant # 1 in the market. Universal’s Fast Five hoisted its foreign gross total to $378.3 million thanks to a $5.9 million weekend at 5,450 play dates in 63 territories. The overseas take to date, a Japan opening is due in October, makes the latest installment of the car action franchise the biggest-grossing title of the series, besting previous foreign frontrunner, 2009’s Fast & Furious, by $170.3 million. In the UK Universal opened Honey 2, a dance drama from Marc Platt Productions, in the market’s fifth spot. Opening tally was $850,000 from 301 sites. An opening in Germany is next on June 23, while a France bow is due July 20. Other international cumes: Sony’s Priest, $44 million; Fox’s Diary of a Wimpy Kid 2, $15.6 million; Universal’s Hop, $67.3 million; Sony, Focus Features and other distributors’ Hanna, $14.8 million; Universal’s Paul, $55.1 million; Fox’s Rio, $329.5 million; Universal’s Senna, $4.8 million from seven territories; Fox’s Black Swan, $216.8 million; Universal’s The Adjustment Bureau, $59.8 million; Fox’s Water For Elephants, $55.3 million Have some fun, see a movie this week. Monica Petrucci __________________________________________________________________________________
US Major Markets Support and Resistance Marks DJIA Close: 11,951.91 Resistance: The 50-Day EMA: 12,342 12,283 the March 2011 high 12,391 the February 2011 high 12,605 the mid-May 2011 high 12,876 the May 2011 high 13,058 the May 2008 high
Support 12,110 the March 2007 closing low 12,094 the April 2011 low 11,893 the March 2008 closing low 11,867 the August 2009 high. 11,734 from November 1998 high The 200-Day SMA: 11,687
S&P 500 Close: 1270.98 Resistance: 1275 the January 2010 low 1295 the April 2011 low: the bottom of the trading range 1313 the August 2008 interim high 1318.5 the May 2011 low The 50-Day EMA:1318 1325 the March 2008 closing low 1332 the early March 2011 high 1340 the early April 2011 high 1344 the February 2011 high 1364 the March 2007 low 1370 the August 2007 low 1371 the May 2011 high Support 1255 from the late December 2010 consolidation range The 200-Day SMA: 1253
1249 the March 2011 low 1235 the mid-December 2010 consolidation low 1227 the November 2010 high 1220 the April 2010 high
NAS Close: 2643.73 Resistance: 2676 the January 2010 low 2686 the January 2011 closing low 2706 the April 2011 low; bottom of the trading range 2723/05 the bottom of the January to May 2011 trading range 2759 the May 2011 low 2762 the February 2011 low The 50-Day EMA: 2768 2796 the February 2011 Gap Open down mark 2816 the early April 2011 high 2825 the 2007 closing high. 2841 the February 2011 high 2888 the May 2011 high 2956 from November 2000 3026 the October 2000 low 3042 the May 2000 low Support 2645-2650 the December 2010 consolidation marks The 200-Day SMA: 2628
2603 the March 2011 low 2580 the November 2010 closing high 2569 the November Gap Open up point into the April 2010 high ____________________________________________________________________________________
US Market Sentiment + Bulls vs. Bears Are you watching the VIX? The VIX is a bet confusing if you believe that the selling points to increased in volatility. Over the last 6 weeks, S&P 500 tracked South off of the late April highs, as the VIX moved laterally, and last then Friday it moved North to tap at its 200-Day EMA (the Top of its current trading range). The numbers say that players do not think there will be that much more action to the Southside. Contrarians will now likely bet the other way and hope for a move to 10,600 on the DJIA. The VIX does not look like it wants to move higher in here to Shayne and me, suggesting that the market is going bounce as it approaches a Key support mark. The volatility action in here suggests that a rebound is setting up, because as I and other analysts that I read see it holding in its range during the selloff in major indexes. So, we are looking for that bounce in here. 1. VIX: 18.86; +1.09 2. VXN: 19.85; +0.97 3. VXO: 19.3; +1.32 4.Put/Call Ratio (CBOE): 1.18; +0.12 Bulls vs. Bears The Bulls are at 40.9% vs. 45.2% last. It is good news that the Bulls are headed South in here, we need less Bullishness, and the fading back from the level considered Bearish, 35% is the mark that suggests Bullishness. For your reference: To be really Bearish the Bulls need to be at the 60% to 65% mark. The Bears are at 22.6% vs. 20.4% last. The Bears are moving up on 23.1% where they were at the start of April. They were at 28.3% in September 2010,but below the 35% level, above which many of us considered Bullish for the market. For your reference: Bearishness hit a 5 year high at 54.4% the last week of October 2008 that is negative sentiment in the extreme.
NB: Watching the VIX. It always tells us when we are moving back to a more rational market. *The Market Volatility Index (VIX) measures the volatility of the market. A recent news story described it as "the options market's gauge of investor fear." Traders use VIX as a general inverse indicator of market volatility and sentiment. High numbers mean that there's excess bearishness, and low numbers indicate excess bullishness. The VIX is updated intra-day by the Chicago Board Options Exchange (CBOE), using Standard & Poorâ€™s 500 Index (SPX) bid/ask quotes. It was created in 1993.
**The CBOE NAS Volatility Index (VXN) employs the same formula used to calculate US$VIX, which is based on the implied volatility of S&P 500 index options. This formula is derived from a basket of put and call options. Some are out of the money, some in the money, and some at the money. The resulting US$VXN represents the implied volatility of a hypothetical 30-day option that is at the money. ***The VXO is the ticker created to track the "original VIX" that was calculated using the prices of S&P 100 options. The new VIX uses the ticker US$VIX and is calculated using the prices of S&P 500 options. The fundamental nature of the VXO is the same as the VIX, but it is less robust and not as simple as the VIX.
What to expect this week and down the lineâ€Ś This week is a full on news week. There may be some more Southside to start this week, as US market closed close to its session low Friday on higher trade. My work show that the US market is oversold and that means to me that there will be a bounce off of the Key support Zone, but it look now like just a bounce and may likely attract more sellers into the North side action. The up/down/up action always shows opportunity to make money for savvy, nimble players. And that bounce off of from the 200-Day EMA on the S&P 500 may just take it back up into the March/April high marks, making the move very tradable IMO. The up-trend looks like it is still in place, but there is a lot of jawboning to talk the market down, and that for a number of reasons, not the least of which is the US Fed Chairman not giving a signal for more Money Printing (aka QE) that we here at LTN will come in one form or another sooner rather than later as the US goes into a Presidential election year, and that means a liquidity move fed by the huge injections of liquidity that the US Federal Reserve has put in the system and will continue to do. Pundits are all saying the US Economic growth is or has stalled. I do not believe that is the case and there is no Double Dip recession of Great Depression on the horizon for the USA. Sure there are some problems, # 1 is the US federal debt, and not addressed means that the USD will lose its place in the World as The Reserve Currency. Once the GBP held that place then lost 90% of its value after-WWII as the "Greenback" took over. The Chinese Yuan is in the wings... Things look Negative in here and if you are not a holder of Aristocrat stocks, then the plays are from a defensive POV IMO. No worries money is made on both North and Southside moves. The US market has had a great move of the March 9, 2009, and savvy players will be nimble and cashed up for the next leg North. There are lots of good stocks that move against the downside action, and are defensive in nature. Shayne and I profile them daily on LTN. So turn off the negative Noise.
On the energy front, there is so much Crude Oil and Nat Gas in the USA, Canada and Mexico, and that means independence. But, Washington must deliver good policy now. We see Energy as a positive in the long run and priced at 60 to 80 bbl. So, once again always take what the market gives. Have a terrific week. All the best, Paul A. Ebeling, Jnr.
_____________________________________________________________________________ _ Red's Weekly Report on Gold, Silver and Crude Oil Charts by eSignal.com
Paul A. Ebeling, Jnr. www.livetradingnews.com The Overall Fundamentals for the week ending 10 June 2011 Last week, 4 major central banks, RBA, RBNZ, ECB and BOE, announced no changes in monetary policies. Among them, ECB's statement was hawkish and eye-catching. The use of the reference 'strong vigilance' signaled a rate hike is imminent in July. Nevertheless, the focus of the commodity market was on the OPEC meeting, where there had been speculation that the cartel would increase production quotas to cap Crude Oil price North sides but cohesion of member countries greatly deteriorated and no change in quotas was the result. In the coming week, both the SNB and the BOJ are expected to leave monetary policies on hold as well. Another Key theme will be the release of Chinese macro-economic data. Inflation is expected to remain elevated after moderating to +5.3% Y-Y in April while other indicators, including retail sales, industrial production and fixed asset investment likely grew. The Precious Metals Sector Gold and Silver fluctuated within narrow ranges last week. During the week, Gold price was affected by US Fed Chairman Ben Bernanke's speech on US growth and the ECB meeting. Chairman Ben Bernanke said at a conference in Atlanta on June 7 that US economic recovery remained 'uneven' and 'frustratingly slow', that 'the economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed'. Moreover, rising inflation is a 'concern' while there has been not 'much evidence that inflation is becoming broad-based or ingrained' in the economy.
The Fed Chairman added 'the longer-run health of the economy requires that the Fed be vigilant in preserving its hard-won credibility for maintaining price stability'. That being the case the Fed funds rate will not change anytime soon. The US market was disappointed by his comments. What is more frustrating was that Bernanke mentioned no new measures to stimulate the economy. With that the USD advanced as the Fed has not signaled further easing measures to stimulate the economy and this weighed on Sold. On Thursday, the ECB left the main refinancing rate unchanged at 1% and said 'strong vigilance' is warranted on price stability. The reference signals a rate hike is imminent in July. However, mild revisions in growth forecast disappointed investors. GDP in 2011 was revised up to +1.9% from March's projection of +1.7% while the Y 2012 projection was revised lower to +1.7% from +1.8%. According to the Governing Council, risks to growth remain 'broadly balanced'. If that is the case, growth in coming Quarters this year will weaken significantly. Concerning inflation, the HICP for Y 2011 was revised up to +2.6% from +2.3%, the March projection, while the Y 2012 HICP projection remained unchanged at +1.7%. Inflation rates are expected to 'stay clearly above 2% in the coming months'. Gold initially continued crawling higher despite weakness in the Euro as investors sought safe-haven investments on worrisome growth outlook, and lingering sovereign debt concerns in the European periphery. The precious Yellow metal then reversed gains on the broad-based decline in commodities Friday. PGMs outperformed in the complex last week amid growing hopes of higher auto production in 2-H of Y 2011. US auto sales were disappointing in May. Sales fell -10.4% M-M to 11.8M during the month. On an annual basis, growth was just +1.33%. But, the market turned optimistic as Toyota expects Global production to recover to normal levels by November or December. On the supply side: ongoing problems in power supply, safety and wage negotiations in South Africa indicated disruption in mine production remains a likely event in coming weeks. This provides further upside supports for PGM prices. Crude Oil Crude Oil trade was choppy, and dominated by the Key theme of OPEC's meeting, last week. Prices fell earlier in the week amid speculations that the cartel would raise production quotas to cap upside in Crude Oil prices. After member countries failed to reach a deal to boost output, quotas were announced to remain unchanged and this bolstered oil prices. During late trading session Friday, Crude Oil fell again as Saudi Arabia said it would raise production to meet rising demand. The Saudi Oil Minister Ali al-Naimi described the meeting as 'one of the worst' the members have ever had. No doubt, failure of the meeting unveiled deteriorating cohesion between member countries.
There are several reasons explaining the situation. Geo-political tensions in the MENA region since February have caused a crack in ties among member nations. Qatar and UAE have involved in a NATO-led military action against Libya while Iran, currently the rotating head of OPEC, is threatening Saudi Arabian borders in Bahrain and Yemen. Divided political adherence has broken the close relationship among member countries. From economic POVs, some countries in the cartel are far richer than others. Therefore, interests among members vary considerably. For instance, per-capita GDP in Qatar is expected to reach US$76.2K in Y 2010, compared with only US$1.39K in Nigeria. Note: the 4 main countries, Saudi Arabia, Kuwait, Qatar and the UAE, supporting a raise in limits were the 4 richest countries in terms of per-capita GDP in Y 2010. The Overall Technical Outlook Comex Gold (GC) Gold lost upside momentum last week as seen with 55 days EMA crossing below the Signal line. A break below 1520.4, the minor support, indicates that choppy recovery from 1462.5 has likely completed with 3 waves up already. If that is the case, the correction from 1577.4 should have started for another low below 1462.5 towards 50% retracement of 1309.l to 1577.4 at 1443.3. Note: I still favor that the choppy recovery from 1462.5 is merely the 2nd leg of the consolidation from 1577.4. So, even in case of another rise, I expect resistance at 1577.4 to limit upside to bring another fall to extend the consolidation. The Big Picture: a short term Top was made at 1577.4 IMO after Gold hit its medium term rising channel resistance. But, there is no indication of long term trend reversal yet. Deeper pull back could still come back into 1309.1/1432.5 support Zone. There I anticipate Strong support from medium term channel, now at 1420 to contain any downside action, and finally bring up-trend resumption through 1600, the psych level, after the consolidations. But, sustained trading below the 1400 level will raise the possibility of trend reversal, and will turn focus back to 1309.1, Key support, for confirmation. The Long Term Picture: the rise from 681 is treated as resumption of the long term up-trend from 1999 low of 253. 100% projection of 253 to 1033.9 from 681 at 1462 is already met but there is no sign of reversal yet. Sustained trading above 1462.6 may pave the way towards 161.8% projection at 1945.6 in the longer term. But, a clear break of 1309.1,Key support, will indicate that a medium term Top has formed, and correction form 1577.4 would then likely head back to 55 months EMA now at 1052.6. Stay tuned...
Comex Silver (SI) Silver continued in a sideway consolidation last week and more choppy trading could still be seen in near term. But, a break below 35.065 will turn bias to the Southside for 32.30 low first. Break there confirms the resumption of fall from 49.82 and should target 30, the psych mark, next. In case of another recovery, I will stay Bearish as long as 39.47, the Key resistance, holds, a clear break of 39.47 will augur that the correction from 49.82 finished at 32.30, and a stronger rally could come on to retest this level. The Big Picture: the steep sell off from 49.82 indicates that a medium term Top formed there, ahead of 50, the psych mark Silver should now be correcting the whole 5 wave sequence from 14.65; 9.845, 17.735, 31.275, 26.30, 49.82. The correction will likely extend into 26.30/31.275 support Zone before completion. Should that occur, I then anticipate 1 more rising wave before Silver completes the 5 wave up trend from 8.4, the 2008 low, and finally makes an important Top.
The Long Term Picture: the deep sell off from 49.82 raises the possibility that long term up-trend from 4.01 is near to completion as faces Strong resistance from 261.8% projection of 4.01 to 21.44 from 8.4 at 54.032. But, it is to early to confirm long term reversal yet, ad an important Top should be near, if not at 49.82. Upon confirmation of reversal, Silver will likely fall towards 55 months EMA at 20.056. Stay tuned...
Nymex Crude Oil (CL) Crude Oil's sideway consolidation continued last week. Looking at the structure of the price actions from 94.63, the consolidation is in the form of symmetrical triangle, and should be near to completion. I would anticipate a Southside breakout soon, likely this week. A break below 97.74 turns the bias to the Southside from my POV. A clear break of 94.63 confirms the resumption of the fall from 114.83, and targets 61.8% projection of 114.83 to 94.63 from 102.44 at 89.96, which is close to 90, the psych mark. On the Upside: a clear break of 104.60, the Key resistance, is needed to signal a reversal, barring that action I will remain Bearish. The Big Picture: the medium term rebound from 33.2 is treated as the 2nd leg of consolidation pattern from 147.24. The break of 96.22 support serves as the 1st alert of medium term reversal after Crude Oil failed 100% projection of 33.2 to 83.95 from 64.23 at 114.98. The focus is now on next cluster support at 83.85, 61.8% retracement of 64.23 to 114.83 at 83.65, 38.2% retracement of 33.2 to 114.83 at 84.10. A clear break there confirms the case of medium term reversal and turn outlook Bearish for a target of
64.23, Key support, and below. But, a Strong rebound above this Cluster support mark will retain the medium term Bullish outlook, and bring another rise to above 115 level before the reversal. The Long Term Picture: my work shows that Crude Oil is in a long term consolidation pattern from 147.27, with the 1st wave completed at 33.2, 2nd wave from there unfolding. A clear break of 83.85, Key support, confirms that the 2nd wave finished, and the 3rd wave, a downward wave, will have started targeting a retest of 33.2, the low. Stay tuned...
Red's Weekly Forex Up-date: EUR-USD Charts by: FXaccu
Paul A. Ebeling, Jnr. www.livetradingnews.com
EUR-USD to complete Wave A in a Correction Short to Medium-Term After the ECB's Trichet's "Hawkish Signal" for a July rate hike, the market sold and the EUR-USD is now down about 250 pips from 1.47 to 1.4450. The correction has retraced 61.8% of the rally from 1.43 to 1.47.
Also, please notice the 5-wave decline that looks like an impulse wave. If a rally comes off of this 1.4450 area expect another Bearish attempt to come on. The 4H chart shows the market at this 1.4450 support Zone, which is also a pivot established at the end of May. There may come a bounce here, but if there is a Bearish continuation below 1.4450, the next critical support is a pivot at 1.4340, which is near 50% retracement level. Stay tuned
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are 1) check the volume for a buying or selling patterns, 2) recognize support and resistance levels and utilizing key charting patterns. I use www.stockta.com for my data. Knowledge is Power (and Money) Over my 30+ yrs playing the stock market in earnest, I have learned that there are winning stocks that most traders and investors completely ignore and abhor. And when played right, these overly unappreciated issues often lead to huge gains, but it is all about timing. There is no mystery here; you all know and/or have heard about “penny stocks” i.e. those that trade under USUS$5.00/shr on US markets (10’s of thousands of stocks trade on other world markets under USUS$5.00/shr and are not referred to in the same pejorative manner). This is just a label (designed to diminish their value and keep you away, IMO). The fact is that there are many, many studies made over the years that prove that these stocks outperform the overall market, and when there is a steady new Bull Market, the little stocks (small caps, micro and mini caps) lead the Charge. As a class, they are the most undiscovered and underappreciated sector of stocks and the sector where the biggest chance ends up big winners on a consistent basis. I call them Little Gems; they are indeed Wall Street's buried treasure for those who wish to go treasure hunting. Here, in the RedRoadmaster, I work to uncover solid, moneymaking companies whose shares are grossly undervalued and virtually undiscovered, and they sell for USUS$5 or less a share. And do not forget to always include some small, mini and micro cap (pennies and juniors) sues in your sights; they can give you explosive percentage returns like no others. Savvy traders do not wait for the stock market to hit bottom, recover or get toppy; they do not double down or resort to tricky, desperation moves. They make simple moves on good data and bank some gains. Do not think get rich - think get rich slowly; it works. Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress. You can’t reverse your “bad plays”. Breathe through your nose, count to 10 and move ahead. Go forward, and only focus on what the opportunities are in front of you to win in the stock market game. You do not live in the scrapbook, and always take what the market gives. A journey of a thousand miles begins with the first step (Confucius); Download and read and study “Knowledge is Power,” my e-Book, its Free. Always remember that we look at the risk first and decide how to manage it before ever entering a position. Yes, losses will be incurred; it is part of this and any business, and not a bad thing if they are controlled. Again, think “get rich steady" and not "get rich quick" and think Education! The Bull is charging, and this perhaps this the best investing scenario since the early 80's. It is happening now and savvy players and investors are positioned and in the action. Remember to always be nimble and take what the market gives. Have a great week, and stay tuned.
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