Month: January 2011

By Zac, CountingPips.com

Count Oanda in as another forex broker that will be offering the popular Metatrader4 to its forex trading customers. In its annual update sent out to current customers, Oanda CEO and President Michael Stumm said one of the company’s developments in 2011 will be a release of the Metatrader4 platform and categorized the release as “imminent”. MetaTrader4 will join the FxTrade trading platform that Oanda currently offers.

The Metatrader4 platform is extremely popular due to its openness for customization and automated capabilities. Metatrader4 is also offered by numerous forex brokers which allows traders to pick and choose their preferred broker while using the same platform.

The Securities and Exchange Commission is reportedly investigating whether financial firms violated bribery laws by making improper payments to sovereign wealth funds to encourage them to make investments. The Wall Street Journal first reported on the probe, citing unnamed sources familiar with the matter.

By Jared Levy, Editor, Smart Investing Daily, taipanpublishinggroup.com

By the time many of you read my notes, chances are good that Verizon (VZ:NYSE) and Apple (AAPL:NASDAQ) have formally announced the new Apple iPhone offering on the Verizon network. As we learn more, rest assured that I will offer updated commentary on the deal. (I started my writing late Monday night.)

There are so many considerations surrounding this deal. It’s actually not just about Verizon or even Apple, for that matter.

Before we even get into these two companies, one must back up a minute and look at the evolution of the mobile device and how the “smart phone” is changing the world that we are living in.

Flash Back to 2001

Just 10 years ago, if you were a techie who wanted to stay “plugged in” and mobile you probably needed to own and/or carry the following items:

1. Mobile phone and or pager — $499 for phone/$99 for basic pager
   1. Mobile phone service — $199+ for unlimited back in 2001
   2. Data service — no unlimited data plans (good luck browsing the web)
2. Camera — $399
3. GPS — $249
4. Digital organizer (pocket PC) — $499.99
5. Laptop — $1,699
6. Video Camera/Recorder — $449
7. Broadband connection — $75 per month

All told, your tech tab was close to $4,000 in hardware costs alone. That’s not including the per minute and gigabyte voice and data charges you had to pay a wireless carrier if you wanted to communicate off a landline and browse the web on the go (which was next to impossible back then).

Flash-forward to 2011 and you’ll find that the Apple iPhone (and a few of its competitors, including select Android, BlackBerry and even Microsoft phones) offers you the consumer more than the equivalent of all of the devices listed above.

You can currently buy a brand-new Apple iPhone 3GS for $49 (with a two-year contract) from AT&T (T:NYSE). The iPhone 4 will set you back $199.

Those price points, which are similar among many of the competing phones as well, make the smart phone a “no brainer” choice for most people (techie or not) around the world. You can try to resist all you want, but the reality is that if you can pick up an Apple iPhone for $49, with all those capabilities, it becomes really hard to say no.

The global smart phone penetration is somewhere around 14-18% (I am estimating based off a Goldman Sachs report from last year). This means that there is still much upside to be had in this sector, but it’s most likely not going to be for the carriers themselves and here is why.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

Mobile Phone Subsidies, Service and Competition

What many of us don’t realize is that carriers like AT&T, Verizon and Sprint subsidize the cost of the phone. They purchase the phone from Apple, Google, Samsung, etc. for, say, $499 and then sell it to you for $99, hopefully making the difference back in monthly usage fees and early termination costs if you try to leave.

We all know that our mobile phone bills and plans (especially in the U.S.) can be pricey and complicated, and it seems like those phone companies should be making money hand over fist, but the reality is that customer retention is tough and because many service areas overlap, there is always stiff competition. Plus, they are usually handling most of the front-end customer service and tech support calls and maintaining these complex networks, towers, technology, etc.

The phone companies are much less nimble and typically have lower profit margins than the phone makers themselves.

Since the first Apple iPhone went on sale June 29, 2007, AT&T stock is down 28% (in red), while Apple is up about 185%; where would you put your money?

View larger chart

Invest With the Leaders in a Growing Mobile Phone Industry

In my humble opinion, forget Verizon, AT&T and even Sprint; the smart phone revolution is not just an American fad! As the world grows and wants to connect, the smart phone is an inexpensive way for many to get several gadgets all rolled into one seamless, useful product.

Competition is fierce and there are dozens of mobile phone carriers around the world; here is a list of the largest. You will notice that Verizon and AT&T are 16th and 17th respectively. There are about six smart phone companies that produce the lion’s share of phones globally.

The Bottom Line for Mobile Phone Stocks

The iPhone launch at Verizon should be another big win for Apple, but that doesn’t mean you can’t make money with these other companies in 2011:

Google (GOOG:NASDAQ) — The spread of Android-based phones and Google’s continued position as leader of search and all things online give it exposure to the smart phone revolution. Expect it to use its massive cash reserves to grow its presence as well.

Research in Motion (RIMM:NASDAQ) — While this company has lagged, its product line is still very stable and widely accepted and growing. It also held several spots on Amazon’s top-10-selling smart phones in 2010. The stock is well valued at its current levels.

Motorola Mobility (MMI:NYSE) — This is the recent spinoff of Motorola’s mobile unit. The stock has not traded long, but is focusing its high-quality pedigree and history on creating some really exciting new products that could make this an interesting company to watch. Management spent the past year getting in touch with the global consumer, according to the chief market officer at the CES show last week. Sanjay Jha (who definitely doesn’t have Steve Jobs’ delivery) discussed the new product pipeline here, including the new Atrix 4G, which is being billed as the world’s most powerful smart phone to date (it’s pretty awesome and runs Android and Flash, which the iPhone doesn’t).

When investing in anything, don’t just look at the sector and buy any stock within — find those stocks that have not only the best growth potential, but the flexibility to keep up with the ever-changing times that we live, work and play in.

Editor’s Note: Have You Heard of “Technology Metals”? Without “technology metals” there would be no cell phones, no iPods and no personal computers. There would be no hybrid cars, solar panels or modern wind turbines. And you could say goodbye to almost all military technology. This URGENT FREE REPORT tells you exactly what “technology metals” are… why they are key to more than $4.6 trillion in global commerce… how China seized a choke hold on the market… and how you could make gains of 950% as shortages arrive.

About the Author

Jared Levy is Co-Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

By J.W. Jones, optionstradingsignals.com

By Zac, CountingPips.com

A new article out today has said that the National Futures Association is going to begin tighter scrutiny of its member  companies for possible “slippage” pricing abuses. The article, written by Sarah Morgan and published on the Wall Street Journal website, says the NFA will start analyzing trades by the 16 Forex firms registered with the NFA to make sure these firms are not taking advantage of any slippage improprieties.

Slippage occurs when a trader places a market order at a certain price but the order is executed at a different price. This can occur in fast-moving markets like the forex markets and can have a detrimental effect to your trade.

Two firms, Gain Capital and IkonFx, have already paid a fine this year due to investigations of slippage by the NFA without acknowledging or denying any wrongdoing.

Read the full article.

By CountingPips.com

US retail sales increased for the sixth consecutive month in December although gaining by slightly less than expected, according to the monthly report by the US Commerce Department. The advance estimate of the US monthly retail sales showed that sales increased by 0.6 percent to total sales of $380.9 billion in December. The data was just behind the market expectations that were predicting a 0.8 percent rise for the month. November’s sales data was unrevised at an increase of 0.8 percent.

On an annual basis, the December retail sales data increased by 7.9 percent above the December 2009 sales level following November’s annual increase of 7.5 percent.

Core retail sales, excluding automobiles and parts, rose by 0.5 percent in December following a 1.0 percent increase in November. The economic forecasts were expecting a monthly core sales to rise by 0.7 percent.

Contributing to the higher sales level for December was a rise in automotive sales by 1.1 percent while building material, garden and supply stores increased by 2.0 percent for the month. Gasoline stations sales increased by 1.6 percent and nonstore retailers rose by 2.6 percent in December while health and personal care store sales rose by 1.6 percent.

US Dollar gains in Forex Markets, Stocks edge  higher, Gold down sharply

The US dollar has been mostly stronger in the forex markets against the other major currencies since the start of the day. The American currency has been gaining ground so far versus the euro, Japanese yen, Swiss franc, Australian dollar, New Zealand dollar and the Canadian dollar while declining against the British pound sterling in today’s fx trading action.

The U.S. stock markets, meanwhile, have been modestly higher today with the Dow Jones increasing by over 20 points, the NASDAQ up by approximately 8 points and the S&P 500 rising by over 3 points in the middle of the US trading session.

Oil has edged lower by $0.46 to the $90.94 level while gold futures have decreased sharply by $29.90 to trade currently at the $1,357.00 level.

Coinstar gave some 4Q guidance late yesterday that was disappointing. CEO Paul Davis admits the company made a couple demand miscalculations and experienced inventory management issues within the quarter. Shares fell 24% after hours Thursday. Sanofi Aventis and Genzyme – Sanofi is trying to broker a deal to buy Genzyme for $76 per share. Google getting hit from all sides today. The search-giant’s $700M acquisition of travel software company, ITA is being challenged by the U.S. government. The Justice Department is looking into antitrust issues concerning that deal, while in South Korea the site is accused of breaking federal laws with it’s Street View mapping application. Also use caution around Citigroup stock today, the TARP Special Inspector General Neil Barofsky said in a report yesterday that it’ s 2008 bailout was ‘ad-hoc’. He says there is serious ‘moral hazard associated with the continued existence of institutions that remain ‘too big to fail’. So keep your eye on the financials on Friday. Finally, the last stock to look out for today, Intel may see a boost. The tech-company had beat the street’s earnings expectations late yesterday. Intel put out it’s best quarterly and yearly results ever and made an optimistic forecast for the year ahead, projecting 10% increase in revenue in 2011 versus 2010. Shares went up 2% in after hours trade. We interviewed Mahesh Sanganeria from RBC Capital Markets so make sure you watch that clip on Intel earnings for further detail on the stock.

By CountingPips.com

U.S. Consumer Prices increased in December for a sixth straight month as rising gasoline prices boosted the index higher, according to a report released today by the U.S. Department of Labor. The Consumer Price Index, a key measurement of inflation, increased by 0.5 percent in December following an increase of 0.1 percent in November. Today’s data surpassed economic forecasts that were expecting a 0.4 percent increase.

The annual rate of consumer prices rose by 1.5 percent when compared to December 2009 following an annual increase in November by 1.1 percent.

Rising gasoline prices contributed to 80 percent of the increased inflation for the month as the report showed that gasoline prices rose by 8.5 percent. Gasoline prices had increased by just 0.7 percent in November.

The core inflation reading, excluding volatile food and energy prices, edged higher by 0.1 percent for the month and matched the market forecasts. The annual rate of core inflation increased by 0.8 percent for December following an increase of 0.8 percent in November.

Food prices increased by 0.1 percent for the month while overall energy prices rose by 4.6 percent after an increase of just 0.2 percent in November.

By Sara Nunnally, Editor, Smart Investing Daily, taipanpublishinggroup.com

The price fluctuations in gold have panned out quite nearly how we thought they would. (Pun intended.)

Last Thursday, I told you that I thought the correction in commodity prices — specifically gold — wasn’t over. By that point, the price of gold had dropped below $1,370, down from highs at the very end of 2010 of more than $1,420 an ounce.

But gold experienced a bit of a bounce, and I warned readers not to be fooled by a two-day correction in commodities.

I noted:

First, gold appears to have broken its near-term uptrend. Second, the most recent peak failed to make a higher high than early December’s high price. This could signal more downside.

How much? The first point gold could find support would be in the $1,375 range, the point where we saw gold prices start to stabilize on Wednesday. Should this point fail, the next level of support should come at $1,350.

I expect we’ll see gold trade in wide swings between $1,350 and $1,400.

And that’s what’s been happening over the last five trading days.

Take a look at this chart from Yahoo! Finance representing January futures traded on the COMEX.

View larger chart

Between Friday, Jan. 7, and Wednesday, Jan. 12, gold futures have traded more than $30 higher per ounce!

That’s a sizable move, and one that might give gold the momentum to push back into that uptrend…

Might.

Could the Price of Gold Break Down Further?

You see, gold has been forming an Ascending Triangle. These formations have a flat top line representing resistant for higher price movements, and a rising bottom trend line forcing prices into that resistance.

(See Thomas Bulkowski’s write-up for this pattern here.)

These formations can break out in either direction, and we saw gold prices drop below that bottom trend line last week.

Price movements this week represent a throwback common to this formation during downside breakouts.

For downside breakouts, that means gold should find resistance at that former trend line (at just under $1,390) and prices should move lower from there. Ascending Triangle formations that break down have an average move of 19%, putting gold prices at about $1,126.

A correction like that seems a bit harsh for this economic environment, but I wouldn’t be surprised to see the price of gold drop back below $1,360… at which point, I would consider gold a buy.

Our levels of support that I mentioned in last Thursday’s Smart Investing Daily are still relevant: Look for support at $1,375, and if that level is broken, look for support at $1,350. I did mention that if $1,350 support were broken, we could see prices fall to $1,250, which could be the drop from the Ascending Triangle formation…

Again, a move like that would be — in my opinion — way overdone, but it’s in the chart, so we can’t ignore the possibility.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the stock market for you with our easy-to-understand investment articles.)

Big Move in JJG and DBA — Did We Miss It?

If we look at other commodities, we can see that the majority of them have all started bouncing. Oil closed at nearly $92 a barrel on lower supply data, and agricultural commodities have popped due to lower production forecasts of soybeans and corn here in the U.S., and the horrible flooding in Australia (which has also affected coal mining).

Look at the gains grain futures made yesterday:

View larger chart

Those two agricultural opportunities I noted last Thursday, the iPath DJ-UBS Grains TR Sub-Idx ETN (JJG:NYSE) and the PowerShares DB Agriculture (DBA:NYSE), climbed 3.45% and 1.62% respectively.

These moves were sudden, with massive gap-ups first thing in the morning.

We have to be careful with gaps… they can be filled, meaning the gains these two have made could be lost over the next couple days. That means we might not want to jump into these just yet.

On the other hand, these gaps could be Breakaway Gaps, which could indicate the start of a new trend. In the case of JJG and DBA, that could mean moves higher.

Either way, we should be OK to wait to see. According to Bulkowski, performance improves two-thirds of the time. We can afford to make sure these gaps don’t get filled before we consider JJG and DBA.

I will put a note in our weekly wrap-up on Saturday detailing any changes or confirmations for Smart Investing Daily.

As always, feel free to write us with your comments, questions and suggestions. Smart Investing Daily reader S.E. wrote to us, and we profiled his question in Monday’s article, “Should You Invest in Rare Earth Metals?” We’d love to hear from you, too. You can email us at: [email protected].

Editor’s Note: President Obama Wants to Confiscate Your Gold! Buried deep in the 956-page healthcare reform bill is a little-known provision that could set the stage for the federal government to take away your gold. But there is one safe gold investment class that could make you 12 times your money in the next 18 months… Learn all about this gold investment.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

In Brief

Sentiment toward the euro has improved following successful bond auctions by Spain and Italy.

ECB President Trichet has raised the possibility of increasing EU interest rates – further boosting optimism.

In the UK the December PPI figures (measuring the price of goods produced by manufacturers) have jumped – boosting sterling.

Chinese President Hu Jintao is scheduled to meet Barack Obama in Washington next week.

EU

Good morning! The euro has spiked to 0.8439 against sterling in the last 24 hours following a series of positive events in Europe.

First off: Spain and Italy sold €9 billion in debt to the markets on Thursday during some important bond auctions. Both nations faced higher borrowing costs – Spain paid 4.5% on its bonds compared to 3.6% last time for instance, meaning the markets required added assurance from Spain to buy the bonds. But the auctions have nonetheless been received well, and sparked hopes that neither Spain nor Italy will request ECB (European Central Bank) bailouts in 2011.

Furthermore the President of the ECB Jean-Claude Trichet told journalists on Thursday that he might raise euro zone interest rates above 1.0% (the present rate) to combat rising inflation. This has been received well because higher interest rates spark higher returns for investors in EU bonds, meaning the markets could flock to the euro zone. President Trichet’s announcement caused the euro to jump against the US dollar especially – rising to 1.3456 – owing to low interest rates in the States.

Finally in the euro zone today, the German CPI (Consumer Price Index) increased to 1.7% in December 2010 compared to 1.5% twelve months earlier. The CPI measures the price of German goods and services, and a higher rating is thought positive for the German economy. Hence the news has also been received well on the markets.

GB

In the UK meanwhile, the chances of a double dip recession have hit 20% according to a new report from the CEBR (Centre for Economics and Business Research.) This is owing both to the increase in VAT to 20% from 17.5% and the subsequent rise in inflation this causes. Inflation is predicted to increase 1.2% on the back of the VAT increase alone.

It’s not all bad news for Britain this morning though. The PPI (Producer Price Index) numbers for December have jumped 4.2% meaning good news for sterling. The PPI measures the price change in the goods produced by manufacturers, and thereby the price charged to consumers in the shops. Hence higher numbers tend to be bad for shoppers – but good for the pound.

US

This morning the upcoming meeting between US President Barack Obama and Chinese President Hu Jintao is dominating the US landscape. The US feels that China is playing dirty on the financial markets at the moment – for instance intentionally devaluing the yuan (the Chinese currency) to increase Chinese exports and steal business from the US. Hence the meeting (starting next week) could have a strong impact on the US dollar.

Today meanwhile the US retail sales figures for December are released. If these increase it means that shoppers are spending more in the US, and indicates strong consumer confidence.

Coming Up

The US retail sales numbers will occupy the attention of the markets this afternoon. In addition US industrial production figures for December are released later on too.

By Peter Lavelle with specialist money transfer service Pure FX.