Month: November 2013

By www.CentralBankNews.info
    Last week India raised its main policy rate but cut its overnight borrowing rate as it finished unwinding extraordinary measures taken in July while Hungary continued its easing cycle, illustrating how many emerging market central banks are taking advantage of the ample global liquidity that is being fueled by the Federal Reserve’s ongoing asset purchases.
   After months of volatility from May through September when investors though the Fed was going to tighten the spigot, there is a now sense of relief among emerging market central banks that they can turn their attention to domestic concerns rather than defend their currencies from the onslaught of global markets.
    And yet, the selloff in emerging market assets this summer once again reminded central banks of their “vulnerabilities to sudden shifts in the external environment,” as Reserve Bank of India Governor Raghuram Rajan said this week, and how often the policy of emerging market central banks is hostage to U.S. policy.
    Barely a week goes by without policy makers questioning how to improve global monetary cooperation and how the spillover from U.S. monetary policy to other countries can be reduced while at the same time maintaining an independent policy.
    This week saw Bank of Mexico Governor Agustin Carstens in New York describe the outflows from emerging markets as “even more violent than after the Lehman collapse in 2008,” while Bank of Thailand Governor Prasern Trairatvorakul in Bangkok raised the prospect that some countries that raised rates to stem capital flows may have ended up tightening monetary policy more than intended “as a result of tensions caused by policy spillovers.”
    But it is not just U.S. monetary policy that spills over to the rest of the world, it is also dysfunctional U.S. politics, as the recent last-minute deal on the U.S. debt limit brought home.
    In his speech to a joint Bank of Thailand, International Monetary Fund conference, Trairatvorakul noted that the continuation of the U.S. dollar’s role as a safe, international reserve currency rests on certain requirements, including “a good track record of prudent macroeconomic policy,” and “one cannot separate the status of a reserve currency from the solvency of a sovereign.”
    “The use of the US dollar as an international store of value and medium of exchange very much depends on the continued credibility of the US Treasury in honoring its debt obligations,” Trairatvorakul said, reminding U.S. politicians of the long-term consequences of another debacle over the U.S. debt limit early next year.
    While India and Hungary changed their rates last week, along with a rate cut by the Bank of Central African States, seven banks maintained their rates, including Israel, Angola, the United States, Japan, Fiji, Egypt and New Zealand.
    Last week’s two rate cuts boosted this year’s number of rate reductions to 98, or 23.2 percent of this year’s 422 policy decisions by the 90 central banks followed by Central Bank News. This is slightly down from 23.4 percent the previous week and below 25.3 percent after the first six months of the year.
    Rates have been raised 23 times so far this year, accounting for 5.45 percent of this year’s rate decisions, up from 5.3 percent the previous week and 4.7 percent at the end of the first half.

LAST WEEK’S (WEEK 44) MONETARY POLICY DECISIONS:

    This week (week 45) 15 central banks are scheduled to hold policy meetings, including Uganda, Australia, Kenya, Morocco, Romania, Georgia, Iceland, Poland, Serbia, Malaysia, the United Kingdom, the European Central Bank, the Czech Republic, Peru and Russia.
    The main focus on the Bank of England this week is not on the outcome of the Monetary Policy Committee’s meeting, but on next week’s release of the BOE’s quarterly inflation report. The report is  expected to reflect the improving economy, with the unemployment rate falling to the BOE’s 7.0 percent threshold sooner than currently forecast and thus paving the way for a possible increase in its policy rate before mid-2016.

    www.CentralBankNews.info

By MoneyMorning.com.au

Preparing for your retirement wasn’t supposed to be difficult. The government had it all sorted for you.

The ATO made sure you saved and invested a certain proportion of your income into Super each year. The Treasurer managed the economy to make sure the stock market always goes up. The RBA made sure the cost of living didn’t get out of hand.

The FRB and ACCC protected your investments from too much and too little competition. APRA and ASIC made sure you don’t get defrauded. And there’s always the pension.

Unless you’re deeply sceptical of anything the government does, the chances of all those institutions getting it wrong may seem very low. But they have got it wrong. Terribly wrong.

Because Australians overinvested in shares via their Superannuation accounts, a HSBC report reached the conclusion that our retirement savings system was the world’s worst performer during the financial crisis. And our stock market still hasn’t recovered.

True, we haven’t had a recession in more than twenty years. But that also means we have a lot of very fragile and untested parts of the economy.

It’s just like the difference between brush fires and bush fires – if you don’t clear the tinder with occasional burnoffs, look out! Once we do have a recession, it will be worse. And most Australians won’t be prepared.

But the biggest risk Aussie retirees have discovered is the complete lack of accountability and oversight in the financial sector. In The Money for Life Letter I’ve exposed how up to 20% of Australian mortgages could be induced by fraud, leaving homeowners homeless and in debt.

The country’s mortgage debenture industry is going insolvent one mismanaged company after the other, destroying life savings in rural communities. The alleged misbehaviour of several Commonwealth Bank financial advisors was recently exposed. And Australia’s regulators are a laughing stock to those in the industry.

With friends like these handling your money, who needs enemies?

Back in 2008 I completed an internship at a prestigious investment bank which gave me a scholarship to university. I saw what the financial world is like from the inside while the façade of respectability was ripped off by a financial crisis. And I didn’t like it. But I decided I would learn the trade from the best and then set my own course in the investment world.

That’s when I got a text message from The Denning Report editor Dan Denning. I’d met him once before. ‘Want to move to Melbourne?’ was all it said.

Today, four years later, I write The Money for Life Letter. It allows me to do what I want: Tell ordinary people that there is an alternative to the retirement system that has failed them.

Change Your Mindset Towards Retirement

That alternative starts with a change of mindset. Don’t just fiddle with which shares you own, how you structure your Super, or which financial advisor you see. Those changes won’t rescue your retirement. They’re like changing which political party you vote for. Has voting ever solved any of your personal problems? It’s a distraction. Instead, you need to make much deeper changes yourself.

Opt out of the idea that the stock market and property market always go up. Opt out of the idea that your financial advisor and broker have your interests at heart. Opt out of the ‘she’ll be right’ retirement mentality.

You need something different. And in The Money for Life Letter, you can find it. My latest ideas reveal…

• How to ‘crash-proof’ your retirement. Imagine being able to survive five years like 2008 unscathed. I can show you how, using a new ASX listed investment in a very particular way.

• How to get three of Australia’s biggest and safest companies to pay for every day of your retirement, including annual payouts of whatever sum you decide to invest in them now.

• Live the luxurious life of a millionaire without having to spend money like one, by retiring overseas. I shortlisted and analysed five retirement boltholes best suited to Australian retirees looking to escape the world’s highest cost of living.

• Be healthier, stronger and more active in your golden years, and save a potential $220,000 in medical costs by taking one $149 test from the comfort of your own home. (I revealed my own embarrassing results too.)

• How to turn one of retirement’s most important expenses into a profit using time travel.

There are a few things those ideas have in common. They won’t make your broker or financial advisor a penny wealthier (which is why you won’t hear about those ideas from them). They don’t rely on financial market prices going up. And they can make a much bigger difference to your retirement than any advice you’ll get elsewhere.

A Problem Hiding in Plain Sight

Because of the financial crisis, some retirees are fed up. They’re taking note of ideas like those in The Money for Life Letter. But you might be thinking it’s too late. The crash has happened. There’s no point in making changes now.

But the financial crisis of 2008 was just a wakeup call. Unfortunately, there are plenty of problems on the horizon for Aussie retirees. And the biggest problem is one that is hiding in plain sight. It’s so big that everyone can see it, but nobody knows what to do about it.

It’s no coincidence that all the ideas I just mentioned are specifically designed to deal with the dangerous event set to strike during your retirement. After all, I’m all about finding solutions, not problems. But what is this threat?

A few weeks ago, I came across this chart:

Click to enlarge

It shows the projected inflows and outflows of the Superannuation system as a whole, so contributions and payouts. It’s from 2004, so it’s out of date. I spent hours looking for an updated version, but there aren’t any. And researchers have bluntly refused to publish a new one. You’ll see why in a minute.

Here’s the problem that should horrify anyone paying money into Superannuation, the stock market and any other Australian investments: The two lines cross.

That means, at some point, Super contributions will be swamped by those taking money out of the Super system. One of the biggest sources of demand for Australian investments is going to disappear.

It will be replaced by an enormous amount of retirees selling their investments to pay for day to day expenses. The rug will be pulled out from underneath investment prices as supply overwhelms demand. Stock markets, property markets and other investments will plunge as retirees figure out that whoever sells first will get the best price.

Now the government is already working feverously to buy time. They’re going to raise the size of compulsory super contributions. They’re going to change the investment mix Super funds hold. And you’ve probably read about the hullabaloo involving property investing and self managed super funds.

But none of this changes the end result. Because that’s predetermined by demographics. There simply won’t be enough people in the work force to buy all the investments retirees are going to sell to fund their retirement.

The good news is, I mentioned the solutions above. Not all investments rely on prices for their payouts. Some pay income, like dividend paying shares. Retirees will be spending money, so corporate profits should remain high. That means high dividends too.

Other investments have a fixed, predetermined payout which you can pre-book for your retirement years. Regardless of the price of those investments in the meantime, you’ll know exactly when the payout is due and exactly how much you’ll get.

Another option is to adjust your living expenses by getting more bang for your buck. My favourite one involves an ancient form of time travel.

Even if you’re not a Money for Life Letter subscriber, I’m sure you can think of ways to shore up your retirement in the face of demographic change and a complete failure of the your government’s attempt to provide for your retirement. After all, there are alternatives.

Nick Hubble+
Editor, The Money For Letter

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By MoneyMorning.com.au

Despite the recent rally, there’s one sector of the Aussie market that remains severely beaten down.

It was once the heart of the Aussie market.

In fact, when the world looked at the Aussie market it used to see it as this sector and nothing else.

For the moment that has changed. Foreign investors now look in awe at something else. They look at the big dividend yields of the four major banks and other dividend paying stocks.

But when investors look back 10 or 15 years from now, they’ll see this as a short-term shift before the Aussie market returns to normal. That means turning back to one sector in particular. A sector that could be on the verge of a new multi-year boom…

Last week we popped along to the State Library of Victoria to listen to resource guru Rick Rule.

Rick is a must-see guy when it comes to resource stock investing. He was in town for the Mines & Money conference. But he agreed to speak to a group of Port Phillip Publishing subscribers first.

It’s always handy to get someone else’s take on a particular sector. For most of the past year we’ve focused on dividend paying stocks. That was because there were so many undervalued opportunities.

But now that everyone has the same idea it’s harder to find value. So while we’ll keep looking for income opportunities (that’s a must with record low interest rates), we’ll focus more of our attention on the best growth stocks the Aussie market has to offer.

And right now, that means looking at the resource sector…

A Breeding Ground for New Ideas

Rick told a few stories that helped remind everyone at the presentation about the art of contrarian investing.

Most people think that contrarian investing means investing in the opposite way to everyone else. But that’s not how contrarian investing works.

Contrarian investing is about identifying trends and turning points in the market. It’s about spotting the moment that the market has become irrationally exuberant so you can sell.

It’s about spotting the moment when the market has become so gloom-ridden and bearish that you can find the sectors and specific companies that are set to rebound.

But that’s not all. As we say, it’s also about finding new trends. The ability to do this is one of the key requirements to be a successful small-cap investor. Small-cap stocks are a breeding ground for new trends and new ideas.

It’s something we look for every month in Australian Small-Cap Investigator. We look for innovation. We look for disruptive companies…firms that are set to ‘tear up the rule book’ of a specific industry.

For instance, last month we picked up on a tiny Aussie stock that could be the ‘Aussie Google’ when it comes to the advertising sector.

But when you think of new trends and innovation we’ll bet the sector you think of least is the resource sector. And yet, when it comes to innovation, without the resource sector most of the technology you see around you today wouldn’t exist…

Make a ‘Lightweight’ Commodity as Strong as Steel

Perhaps the best example of this is rare earths. Rare earths were a hot sector from 2006 to 2010. Stocks in this sector saw two booms, on either side of the 2008 crash.

The rare earths story is half resource story and half tech story. This collection of virtually unheard of natural elements is vital to today’s technology.

Without them technologies such as flat screen TV’s, mobile phones, and satellite systems may not exist. These elements that make up a tiny part of the overall end product help put the ‘smarts’ into these devices. And yet few have heard of them.

But that’s not the end of it. New technology begets new technology. It helps improve manufacturing processes and create new products.

It can make even the most boring commodity technologically advanced. It’s how a commodity lying around your home that’s ‘soft’ enough to crush or tear with your bare hands can be become as strong as steel.

This partly explains why we’re backing the resource sector again. Rick Rule’s presentation helped reinforce our thoughts. The time to buy into a sector is when few others are interested. Right now, stock prices are proof that few care about resource stocks – for now.

But the fact remains that resources are a vital part of the Aussie and global economy. The demand for iron ore, copper, coal, and oil isn’t about to dry up. These resources will always be in demand.

The same goes for the new process that can turn a ‘lightweight’ commodity into something that’s as strong as steel.

This new boom may not begin tomorrow or even next month. But as Rick Rule said, the best time to buy resource stocks is when no one else is interested. That’s certainly the case right now, but as we see it, that attitude won’t last for long.

Cheers,
Kris+

From the Port Phillip Publishing Library

Special Report: Read This or Retire Poor

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Article by Investazor.com

You have probably already heard that it is important for traders to set up a Trading Plan. This should be a must, in my opinion, for novice traders but also for those who have experience (but they know this by now).

One of the most important attributes of a Trading Plan is that it helps the trader to be disciplined. Discipline is a quality that cannot be taught that easily, but it can be learned in time. Another attribute would be that it keeps details that a human being at some point would forget. It also helps the trader to avoid the mistakes that he already did in the past, but also those that comes from negative emotions like greed and fear.

Trading Strategy

For a novice in this domain to get to have a strategy, he/she would first have to learn about the markets, to get to know the opportunities and to get to know the risks. When a trader found a working strategy or strategies he/she would then have to write every detail of the strategy in the Trading Plan, so that nothing to be forgot. This way the trader will always keep an eye on the trading strategy and will lower his probability to make unnecessarily and unforced mistakes.

Money Management

At least as important as a good strategy is a good Money Management. If you fully understand your trading strategy you can, then, adjust the money management so that you will get even more money from the market.

A good money management, adapted to each situation is one of the best weapons that traders have in their arsenal. You will find different types of Money Management in the trading books, but you cannot take them and apply without any changes. As well as for the trading system, each trader should consider adjusting their Money Management to their own personality.

Trading Schedule

It is important for a trader to set up a trading schedule. Taking into consideration the strategy that he/she has, the time that has at disposal for this activity. It is important to how much time to invest in reading the news, analyze the market, review your instruments and apply the strategy. If you do not allocate properly your time you might end up doing mistakes.

Trading Journal

Each Trading Plan should include also a Trading Journal. Writing the motives of your entries, the emotions that appeared during the trader, but also other details that could help in the future is very important in each trader’s evolution. With the help of the Trading Journal the trader can fine tune his strategy or adjust the money management and the emotion management to improve the results.

These are the main points to be discussed that can be included in the Trading Plan. Even though everybody knows about them, but there are few who use the full power of this weapon.

The post Trading Plan – A must in the Trader’s Arsenal appeared first on investazor.com.

By Investment U

This Halloween season, the scariest story for energy investors is how the price of crude oil keeps sliding. But don’t worry – there are ways to profit when oil prices go down.

But first, why are oil prices slumping anyway?

• Production Is Booming. In fact, oil production during the week ending October 18 averaged nearly 7.9 million barrels per day (bpd). That’s the highest U.S. weekly output of crude oil since March 1989.

• Supplies Are Building. According to the U.S. Energy Information Administration, crude oil inventories recently rose for five weeks in a row. The buildup brings stockpiles to within 20 million barrels of a record high.

• Economic Growth Remains Weak. Although the U.S. economy is growing, the bad news is the data points to weaker economic growth. In particular, private payroll growth recently came in way below expectations. Factory orders also slowed, and housing is losing steam.

• Iran May Be About to Open the Oil Floodgates. Western sanctions have slowly squeezed Iranian oil exports by 1 million bpd. But Iran is now reaching out to its former oil buyers. It is telling those potential buyers that it’s ready to cut prices if Western sanctions against it are eased. And that might happen because Iran is becoming more cooperative with the West on its nuclear program. President Hasan Rouhani, who was elected in June, is opening the door to a possible diplomatic resolution.

If Iran can sell a lot more oil – and sells it at a discount – that would send oil prices lower in a hurry.

To be sure, the best cure for low prices is low prices. Texas oilmen are already warning that many energy producers need oil prices around $96 a barrel to profit on deposits, including the Cline Shale and the Northern Mississippian Lime. And if oil prices drop to $80 per barrel, parts of the oil-rich Permian zones beneath Texas and New Mexico will become real money-losers.

If prices fall below the cost of production, we’ll see producers start to shut in wells. They will only restart those wells when oil costs go higher again.

But in the meantime, it sure looks like oil is breaking down from its recent range, and we could see it test support around $90… or lower.

This leaves many energy investors scratching their heads, wondering how to play such volatility.

Here are three suggestions for playing low oil prices:

• Buy Dividend Payers on the Dips. Many energy companies pay very nice dividends, and those dividends can be secure even if the share price is riding a roller coaster. So, use price pullbacks to your advantage. Wait for a dividend payer to get near the bottom of its range, and then buy. Even if the company’s share price goes lower, you’ll be paid handsomely to be patient.

• Buy an ETF of Stocks That Rise as Oil Prices Fall. One example would be the iShares Dow Jones Transportation Average (NYSE: IYT). It makes sense that transportation stocks will benefit from dropping oil prices, as fuel is a major cost for trucking firms and other transportation companies. Just be prepared to ditch the fund when oil prices go higher again.

• Buy a Refiner. As oil prices weaken, the profit margins of oil refiners can widen to Grand Canyon proportions as they see lower input costs. This is especially true now that so much of refined oil products are exported overseas.

These are just three of the many ways to play a pullback in oil prices. It’s hard to predict the price of oil. But energy investors shouldn’t let recent price volatility scare them this Halloween season. There are plenty of treats – profits – to be bagged as well.

Good investing,

Sean

Article By Investment U

Original Article: How to Profit From Low Oil Prices

By www.thepracticalinvestor.com

Weekend Update

November 1, 2013

— VIX appears to have completed the second right shoulder of a very complex inverted Head & Shoulders pattern over a year and a half in duration.  On Wednesday, VIX spiked several times as high as 21.26, then the spikes were erased.  Was that a trial run for next week?

SPX pulled back from Cycle Top resistance.

— SPX jammed up against its Weekly Cycle Top resistance and trendline at 1763.64 at the beginning of the week, then retreated beneath it at the close on Friday.  Trendline resistance held as the SPX finally ramped the close to get a positive reading for the week.

(ZeroHedge)  Thus the taper trade continued for the second day in a row in all asset classes, except stocks of course. Despite breifly dipping into the red shortly after today’s conflicting manufacturing reports, the late day ramp was once again on location, and helped push ES nearly to a new intraday high in the minutes before the close, before a shakedown took place just after the close, sending ES sliding after hours, and wiping out the entire 3:30 pm ramp in seconds.

NDX retreated from its the Broadening Top trendline.

–NDX pulled away from its Broadening Wedge trendline after completing the formation.  The Broadening Wedge formation has the same lower trendline as the Ending Diagonal, suggesting an average decline to 2344.00 once it declines beneath 3100.00.   A decline beneath the Diagonal formation may quickly lead to a break of the formation as well, triggering multiple bearish formations.

(ZeroHedge)  Just when you thought Healthcare.gov was the worst designed system and that nothing could match government incompetence, here comes Nasdaq, and adding insult to repeated shutdown injury from over the past several months, has just announced it will not unhalt the Options Market before the weekend, and will cancel all open orders. As for the scapegoat: “a significant increase in order entries.” In other words, a blast of HFT quote churn again – just like the flash crash.

The Euro retreats from its Cycle Top.

.  

           — The Euro sold off from its Cycle Top resistance at 138.55.  The amazing uptrend in the Euro finally came to an end.  Last week I opined, “The Cycles suggest a change in trend may happen over the weekend.”  Check.

(ZeroHedge)  Those following the Euro FX pairs saw a plunge at 6 am Eastern, when Eurostat released the latest Eurozone unemployment and inflation statistics. They were, in a word, abysmal. After the August unemployment data finally saw a modest drop forcing many to announce the end of the European depression, not only did the the September number revise the August print from 12.0% to 12.2%, a new record high as 73,000 thousand people became unemployed, but more importantly made the September unemployment rate 12.2% as well following another 60,000 Eurozoneans losing their jobs, effectively meaning that for all the talk of a European recovery, its unemployment rate keeps hitting new all time record highs every single month.

The Yen is beginning its breakdown.

–The Yen finished its Triangle formation and broke beneath all of its support lines.  The Cycles Model suggests an imminent sharp decline that may challenge the Head & Shoulders neckline at 96.00. As the Yen loses its supports, the decline may shortly resume beneath the neckline in a Cycle Wave V, carrying it to new lows.

(ZeroHedge)  This morning, as part of the US Treasury’s report on global currencies, Secretary Lew made the following remark:

• *LEW SAYS JAPAN ‘APPEARS TO BE TURNING AN ECONOMIC CORNER’   Which got us thinking… when have we heard the US Treasury say exactly the same thing… (for exactly the same “policy-based” reason)…

The US Dollar breaks above its Falling Wedge.

— In just a week’s time, the USD emerged from beneath its Falling Wedge to breaking above it.  It also rose above weekly Short-term resistance at 80.56 and its mid-Cycle resistance at 80.67.  The long-term uptrend has regained the upper hand in a very negative environment.  Dollar shorts have gone from “taking profits” to taking cover.

(Reuters) – Currency speculators raised their bets against the U.S. dollar, according to data from the Commodity Futures Trading Commission released on Friday and Reuters calculation.

The value of the dollar’s net short position was $3.64 billion in the week ended Oct. 22 compared with a net short position of $1.24 billion the previous week. The week of Oct. 8 was the first net short position since the week of Feb. 12.

Gold is deflected at its trendline.

— Gold appears to be deflected from trendline resistance near 1360.00.  Gold still holds considerable attraction for investors as it appears provide a temporary “safe haven” for hot money.  However, it has broken beneath weekly Intermediate-term support at 1332.51, leaving the Cycle Bottom at1276.94 as the last support.  Gold may make a lot of people look foolish.

(Kitco News) – Gold prices are expected to fall next week, a majority of participants in the weekly Kitco News Gold Survey said.

In the Kitco News Gold Survey, out of 34 participants, 19 responded this week. Of these, three see prices up, while 13 see prices down and three see prices sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.Last week, a majority number of survey participants were bullish. As of noon EDT Friday, December gold on the Comex division of the New York Mercantile Exchange was down about $44 an ounce for the week.

Treasuries also reverse at the trendline.

— USB appears to have been deflected at the top of its trend channel.  If so, it may be due for a reversal beneath its Broadening Wedge and Ending Diagonal formations.  USB has an appointment with an important low in mid-November.

(Bloomberg)  Treasury 10-year note yields (USGG10YR) rose to the highest levels in three weeks after a gauge of U.S. manufacturing expanded at a faster pace than forecast, weakening the case for the Federal Reserve to maintain stimulus.

The benchmark securities extended the first five-day drop in three weeks as Fed Bank of St. Louis President James Bullard said labor market gains in the past year could warrant a cut in the bond buying. Fed policy makers said Oct. 30 that the economy showed signs of “underlying strength” even as they maintained their $85 billion of monthly asset purchases.

Crude declined beneath mid-Cycle support.

— Crude declined beneath weekly mid-Cycle support this week, but may have ended a very powerful Primary Cycle decline on Friday.  Should it gain ground next week above its Long-term support/resistance at 98.62, it may be able to complete the formation suggested on the chart.  The Cycles Model suggests that, should it rally above critical support, it may continue to rise into early December.  If so, we could see crude priced near $125.00-130.00 by the end of the year.

China stocks bounced at Intermediate-term support.

–The Shanghai Index bounced at its weekly Intermediate-term support at 2115.07, but has a double resistance directly overhead.  It appears that the rally attempt may fail.  The Cycles Model suggests the decline may extend through mid-November.

(Bloomberg)  Manufacturing strengthened from China to South Korea last month in a sign that growth risks are abating in Asia and expansion may pick up this quarter.

China’s official manufacturing Purchasing Managers’ Index (CPMINMAN) rose more than estimated to an 18-month high and a measure from HSBC Holdings Plc and Markit Economics topped projections. HSBC’s reading for South Korea was above the expansion-contraction dividing line of 50 for the first time since May and Taiwan’s PMI rose to 53 from 52. Australian and U.K. indexes also showed growth.

The India Nifty makes a final surge to its Cycle Top.

— The India Nifty index may be making a very fast decline to its Cycle Bottom in short order.  It has completed its final reversal and the trigger to activate the Orthodox Broadening Top formation lies at the bottom trendline at 5400.00  The probable target for Intermediate Wave (C) appears to be the Lip of the Cup with Handle near 4550.00.  The decline from this top may be very fast.

(BBCNews)  India’s main stock index, the Sensex, has hit a record high, propelled by an increased inflow of foreign capital.  The index reached 21,293.88 early on Friday, surpassing its previous high of 21,206 set during the stock market boom of 2008, before closing at 21,196.81.  The rise marks a remarkable turn around from two months earlier, when foreign investors were pulling out money from the country amid worries over growth.

The Bank Index slipped below the trendline.

— BKX  has hast lost the month-long battle to stay above its trendline.  In addition, it did not make a new high as most other indexes did this week, as it also slipped bneneath weekly Intermediate-term support at 64.40.  Aside from Long-term support at 60.12, there is little to keep it from a 50% decline to its Cycle Bottom.

(ZeroHedge)  Back in January,  we highlighted the main problem plaguing the Greek financial system, and why a bailout (at least third, but likely fourth and fifth, and so on) is inevitable because “the amount of non-performing loans has exploded by a laughable amount, rising some 50% from December 2011, when it was “only” 16% and stood at a gargantuan 24% last month (indicatively, in the US this would mean that some $1.7 trillion in loans was nonperforming). And therein lies the rub, because as Kathimerini prudently notes, the “bad loans come to a considerable 55 billion euros. This means that the sum of NPLs already exceeds the total funds set aside for the recapitalization of the local credit system, which amounts to €50 billion.”

(ABCNews)  The taxpayer-owned Royal Bank of Scotland said Friday it will segregate about 38 billion pounds ($62 billion) of soured investments to clean up its balance sheet in the aftermath of the financial crisis.

The move is part of a plan to get the bank in shape so the government can eventually sell its majority stake. But it will come at a cost — Friday’s move will result in a charge of 4 billion pounds to 4.5 billion pounds in the fourth quarter. Shares slumped 5.4 percent to 346.7 pence on the news.

(ZeroHedge)  When even Bank of America’s Michael Hartnett has a note titled “It’s getting frothy, man”, and joins such other bubble-warners as JPM, Bill Gross, Larry Fink, and David Einhorn, one can be absolutely positive that the Fed will do… absolutely nothing.

Regards,

Tony

Anthony M. Cherniawski

The Practical Investor, LLC

Disclaimer: Nothing in this email should be construed as a personal recommendation to buy, hold or sell short any security.  The Practical Investor, LLC (TPI) may provide a status report of certain indexes or their proxies using a proprietary model.  At no time shall a reader be justified in inferring that personal investment advice is intended.  Investing carries certain risks of losses and leveraged products and futures may be especially volatile.  Information provided by TPI is expressed in good faith, but is not guaranteed.  A perfect market service does not exist.  Long-term success in the market demands recognition that error and uncertainty are a part of any effort to assess the probable outcome of any given investment.  Please consult your financial advisor to explain all risks before making any investment decision.  It is not possible to invest in any index.

The use of web-linked articles is meant to be informational in nature.  It is not intended as an endorsement of their content and does not necessarily reflect the opinion of Anthony M. Cherniawski or The Practical Investor, LLC.

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USDCHF – With USDCHF rallying strongly on correction the past week, a follow through higher is envisaged in the new week. In such a case, watch out for the 0.9177 level, a level that must be violated for continued recovery to occur. Further out, resistance resides at the 0.9278 level followed by the 0.9454 level. A cut through here will pave the way for a run at the 0.9496 level where a breach will set the stage for a run at the 0.9750 level. Its weekly RSI is bullish and pointing higher supporting this view. Conversely, a failure to follow through higher on its past week recovery will mean a return to the 0.8889 level where a violation will aim at the 0.8800 level. A turn below here will shift attention to the 0.8750 level followed by the 0.8700 level. On the whole, the pair remains biased to the downside in the medium term despite its recovery attempts.

fxtechstrategy.com

By MoneyMorning.com.au

TECHNOLOGY:
This Tag Team is Set to Take over Email

A couple of weeks ago I wrote about ‘How to Beat the NSA Using the Deep Web‘. I explained how using the ‘Onion Network’ you can keep your identity hidden from prying eyes.

Part of this was a story about Lavabit, an encrypted email service provider. Lavabit shut their business because the FBI got too close for comfort. So close in fact they were going to send the founder to jail. That led Lavabit to put the security and privacy of their 400,000 users above the demands of the FBI. Hence they closed the doors. It was a strong statement to the US government about privacy and freedom of information.

Another company involved in the encrypted communication is Silent Circle. They’ve built their own network of tools to allow secure, encrypted global communication. All you need to do is subscribe to one of their packages, download an app and you’re on the road to privacy.

Now every call you make, text you send or file you transfer is encrypted and secured. Of course Silent Circle might end up going down the same path as Lavabit. Hopefully they won’t, but you never know the kind of threatening tactics the NSA, FBI or CIA might just throw their way.

But Silent Circle does have some sympathy for Lavabit. They are both trying to achieve the same thing, protection of privacy. And this sympathy has led Silent Circle and Lavabit to team up on a new project.

This combined effort has launched a new alliance. It’s the Dark Mail Alliance. It’s a new way to email with tight end-to-end encryption.

It’s pretty early doors so far, but the site is up and running for people to register their interest. Not much information is available about the project or the technology. And you can understand why.

What we do know is it’s likely you’ll need both users (the recipient and the sender) to use the DarkMail program for the system to properly work. However, if I send you an email and we both use DarkMail then the NSA’s got no hope.

I know I’m going to get on to the website and register my interest. I encourage you to do so also. And with recent news the NSA has intercepted data from both Google and Yahoo’s data centres, it makes more sense than ever to look for more privacy online.

I get the feeling this tag-team effort to ‘stick it to the man’ might just end up being one of the biggest digital project of all time. With sufficient support we might all be using the DarkMail Alliance soon enough. It could very well be the first choice for email of everyone, everywhere.

HEALTH:
Stem Cells will re-shape the way we think about Medicine

We are entering a new era of medicine. The whole world is shifting in how we approach our health and wellbeing. And medical technology is reshaping the very concept of medicine as we know it.

Personalised Medicine and Regenerative Medicine are the key catalysts for this massive shift in thinking. Both of these are crucial to the progress of human life.

Personalised medicine is about getting genetic information. Armed with this information you put preventative measures in place to improve your health. DNA analysis and genome mapping are two tools used to get this genetic information. And it all leads to huge amounts of personal information, like a crystal ball for your future health.

Then there’s Regenerative Medicine. Regenerative medicine is about repairing and healing your body when illness or disease strikes. It might be bad joints, or a problem heart or even a degenerative brain condition. Regenerative medicine holds the potential to reverse irreversible conditions, and even reverse the entire aging process.

Both the Personalised and Regenerative Medicine movements are leading to medical miracles. And a recent gene therapy success has highlighted how important these movements are.

Five children recently received gene therapy treatment for an immunodeficiency disease known as ADA-SCID. Those inflicted have no immune system and cannot survive in a world filled with germs and bacteria.

One of the five children treated was baby Nina. As reported by New Scientist Magazine,

‘Stem cells were harvested from Nina’s bone marrow and given a working version of the ADA gene, before being injected back in. That was in April, and she wasn’t expected to show much of an improvement before December. But by August her white blood cell count had nearly doubled, and today she has the immune system of a healthy newborn baby.‘

The story of Baby Nina is just one example of the exciting new world of medicine. Stem cells and gene therapy are part of the new future. It’s an exciting time to be alive and an exciting time to watch these technologies become ‘company makers’.

.

As the years roll on we’ll all benefit from these technologies. It will help us to live longer, live healthier and for those who take action…make some healthy profits.

ENERGY:
How to take a 1,750 mile road trip that costs $0 in fuel

This road trip might cost you $0 in fuel. But it might cost you anywhere from $69,000 to $100,000 in the price of the car.

The leading electric car maker Tesla has officially opened the first connected network of recharge stations in America. It’s the ‘West Coast Supercharger Corridor’ and it stretches from San Diego to Vancouver, Canada.

Here’s what the Supercharger corridor looks like,

Click to enlarge

The red dots along the left side of the picture are indeed the West Coast corridor (for the orientation impaired). In effect the distance from San Diego to Vancouver is 1,750 miles.

Let’s look at the base model (Model S) that gets about 208 miles to the charge. So that means leaving San Diego you’d be able to make it to Los Angeles, and recharge there (in 20 minutes). Then on to recharge at Atascadero, Fremont and Corning all located in California. Then on to Woodburn and Springfield in Oregon.

Next stop Centralia and then Burlington in Washington. From Burlington you’d have enough charge to get to Vancouver, drive around for a while and then get back to Burlington and head back down the coast again.

Over 1,750km you’d only need to stop 8 times. And spend 2 hours and 40 minutes charging over the entire trip. Oh and it’d cost you exactly $0.

Compare this to an equivalent car, the Audi A6. The two-litre TFSI A6 does a combined mileage of about 28 miles per gallon. And has a 19.8 gallon fuel tank. So over the course of the same journey the Audi would need to stop 4 times at the pump filling the tank each time (it would need 3.15 tanks of fuel to make the journey). So you’d only need to stop half as many times in a petrol powered car. So from a time perspective the Audi wins.

However…the Audi would cost about $243 in premium petrol, one way. So where the Tesla would cost $0 for the round trip, the Audi would be $486.

Now whichever way you look at it there is no other premium car on the market that even comes close to the benefit of the Tesla Model S.

Further to that, Tesla will have the entire East-West corridor of America connected by the end of winter. And it doesn’t stop there. Tesla’s next major market is Europe. Their aim is to have all of Western Europe and England connected by the end of 2014.

There seems to be no stopping this juggernaut of the motoring world. The next vehicle, the Model X is due to hit the market next year. And the ‘affordable’ $30,000 model is to come in 2015.

Tesla is a ripping company, with class leading technology. Their CEO, Elon Musk, has the Midas touch, and they’re building the required infrastructure to make this all worthwhile. For what it’s worth I love the company, but I hate the stock price. The hype and hysteria around it is usually a sign something’s going right. But in the fundamentals of buying stocks you need to make sure you avoid buying high.

Sam Volkering+
Technology Analyst, Revolutionary Tech Investor

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By MoneyMorning.com.au

Every now and again you get a reminder of how stupid and crazy governments are. China and Japan had another spat over the disputed Senkaku/Diaoyu islands in the East China Sea this week. 

Take the Japanese government, in this instance. Japan is into its third ‘lost decade’ since its bubble economy collapsed in 1990. The government has a debt burden of over 200% of GDP in the face of a rapidly ageing population and a declining trade balance with the rest of the world.

The currency has deliberately been debased to drive its value down, hurting the average citizen, whose costs have gone up. And there is still the cost and burden of the aftermath of the tsunami.

One of its few bright spots is its trade surplus with China. And yet the Japanese government seems prepared to jeopardise this for the sake of these rocks.

Perhaps it’s all a ruse to justify the Japanese military build-up. Perhaps it’s the lucrative fishing waters. We don’t know.

But we do think this dispute could alter the trade flows of a major industry and could cost Japan and their major automakers an astonishing amount of money.

But that doesn’t mean investors here have to miss out on ways to play this lucrative market…

Who Will Triumph in This Market?

We’re talking about the Chinese car market. It’s the biggest on the planet. And the news should have been good for Japan this week.

Take this from the Australian:

‘Japan’s biggest car makers said their production in China surged from a year earlier, when territorial disputes sparked anti-Japan protests…this month, the three [Toyota, Nissan, Honda] posted healthy sales data for September.‘

That was September. You can imagine a few Japanese auto execs with their head in their hands if the latest showdown causes anti-Japanese sentiment to rise in China again and starts showing up in their sales figures. They’ve spent 12 months and no doubt millions in marketing to win Chinese consumers back over.
 
Japanese carmakers currently have a 15% market share in China. This is still actually down from last year’s 18.5%. The competition from South Korea, Germany and Chinese domestic brands is pretty stiff already.

China’s a profitable place to do business too, by the looks of it. The Australian reports Great Wall Motor, a large Chinese SUV maker, is the most profitable carmaker in the world, with higher operating margins than Ferrari. ‘Great Wall’s Hong Kong shares have rallied 93 per cent this year, even as the Hang Send index has stayed flat.‘

But the key takeaway is this:

‘China’s car industry has been a bright spot in an otherwise lagging mainland economy.‘   

With rising incomes, and a staggering amount of money spent upgrading its road infrastructure over the last decade, a car and a ‘road trip’ style holiday is increasingly accessible to millions of Chinese citizens.  A car is an important status symbol in Chinese society too.

It’s a lucrative market. But there’s one problem, and it’s a major one: pollution. 

China’s Big Problem

According to Tom Miller in his book China’s Urban Billion, ‘Fewer than 20% of China’s cities meet World Health Organization standards for sulphur dioxide and nitrogen dioxide levels, and almost none for particulate matter… China is already the world’s biggest greenhouse gas emitter, and emissions will continue to grow as the country urbanizes.‘

And the Chinese know it. Miller points out that Chinese cities are willing to spend millions investing in mass transit systems, both subways and above ground to ease congestion and improve air quality. 

If the automakers want to hang on to this market, they need to get the emissions down and their cars as ‘green’ as can be. It’s good news for all of us, actually. Pollution doesn’t stop at the border.

As ever, where you find problems, you find entrepreneurs working on solutions. It can be a happy hunting ground for investors too.

It sounds odd, but this is where it becomes a resource story. There’s more than one way to play this idea too. Our colleague Byron King over in the US thinks the demand for platinum and palladium will soar once China mandates that its millions of diesel engines, which belch out toxic exhaust, be fitted with catalytic converters. 

You might member, too, that we reported a few weeks ago how the editors over at Revolutionary Tech Investor had discovered a company developing a unique material to bring the weight of cars down, and hence the emissions.

But that idea hasn’t made it to the final production line (yet).

But what about right now? This is where it gets intriguing. Over at Australian Small Cap Investigator, Kris Sayce has discovered an innovation in car manufacturing being used as we speak. He reckons it’s going to spur a resurgence for a very specific commodity in Australia. He calls it the ‘Wonder Weld’ and he’ll show you why later this afternoon.

Callum Newman+
Editor, Money Weekend

Special Report: Read This or Retire Poor

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Elliott Wave International

In this trading lesson, Elliott Wave International’s Jeffrey Kennedy shows you how you can use Fibonacci to forecast potential turning points in your charts. You’ll learn the most common Fibonacci retracements and where to expect them in your charts. At the end of the lesson, learn how you can get a 14-page Fibonacci eBook, free!

The primary Fibonacci ratios that I use in identifying wave retracements are .236, .382, .500, .618 and .786. Some of you might say that .500 and .786 are not Fibonacci ratios; well, it’s all in the math. If you divide the second month of Leonardo’s rabbit example by the third month, the answer is .500, 1 divided by 2; .786 is simply the square root of .618. There are many different Fibonacci ratios used to determine retracement levels. The most common are .382 and .618. The accompanying charts also demonstrate the relevance of .236, .382, .500 .618 and .786. It’s worth noting that Fibonacci retracements can be used on any time frame to identify potential reversal points. An important aspect to remember is that a Fibonacci retracement of a previous wave on a weekly chart is more significant than what you would find on a 60-minute chart. With five chances, there are not many things I couldn’t accomplish. Likewise, with five retracement levels, there won’t be many pullbacks that I’ll miss. So how do you use Fibonacci retracements in the real world, when you’re trading? Do you buy or sell a .382 retracement or wait for a test of the .618 level, only to realize that prices reversed at the .500 level?

The Elliott Wave Principle provides us with a framework that allows us to focus on certain levels at certain times. For example, the most common retracements for waves two, B and X are .500 or .618 of the previous wave. Wave four typically ends at or near a .382 retracement of the prior third wave that it is correcting.

In addition to the above guidelines, I have come up with a few of my own over the past 10 years. The first is that the best third waves originate from deep second waves. In the wave two position, I like to see a test of the .618 retracement of wave one or even .786. Chances are that a shallower wave two is actually a B or an X wave. In the fourth-wave position, I find the most common Fibonacci retracements to be .382 or .500. On occasion, you will see wave four retrace .618 of wave three. However, when this occurs, it is often sharp and quickly reversed. My rule of thumb for fourth waves is that whatever is done in price, won’t be done in time. What I mean by this is that if wave four is time-consuming, the relevant Fibonacci retracement is usually shallow, .236 or .382. For example, in a contracting triangle where prices seem to chop around forever, wave e of the pattern will end at or near a .236 or .382 retracement of wave three. When wave four is proportional in time to the first three waves, I find the .500 retracement significant. A fourth wave that consumes less time than wave two will often test the .618 retracement of wave three and suggests that more players are entering the market, as evidenced by the price volatility. And finally, in a fast market, like a “third of a third wave,” you’ll find that retracements are shallow, .236 or .382. In closing, there are two things I would like to mention. First, in each of the accompanying examples, you’ll notice that retracement levels repeat. Within the decline from the high in July Sugar (first chart), each countertrend move was a .618 retracement of the previous wave. The second chart demonstrates the same tendency with the .786 retracement. This event is common and is caused by the fractal nature of the markets. Second, Fibonacci retracements identify high probability targets for the termination of a wave; they do not represent an absolute must-hold level. So when using Fibonacci retracements, don’t be surprised to see prices reverse a few ticks above or below a Fibonacci target. This occurs because other traders are viewing the same levels and trade accordingly. Fibonacci retracements help to focus your attention on a specific price level at a specific time; how prices react at that point determines the significance of the level.

Learn How You Can Use Fibonacci to Improve Your TradingIf you’d like to learn more about Fibonacci and how to apply it to your trading strategy, download the 14-page free eBook, How You Can Use Fibonacci to Improve Your Trading. EWI Senior Tutorial Instructor Wayne Gorman explains: The Golden Spiral, the Golden Ratio, and the Golden Section How to use Fibonacci Ratios/Multiples in forecasting How to identify market targets and turning points in the markets you trade And more! See how easy it is to use Fibonacci in your trading. Download your free eBook today >>