Month: May 2011

Little appears to be rumbling on the surface in the currency world of Scandinavia since last week. Sweden still dominates the forex market with record gains against all of its currency rivals. Norway has been growing steadily as oil prices surge and Denmark remains hesitantly linked to the debt fears of the euro zone.

What we can analyze for future currency moves, however, is the happenings among the banking world of these Norse giants. Business headlines across the region have loudly proclaimed the rise of banking profits since the start of 2011, primarily Sweden’s.

Nordea Bank, the largest bank in the Nordic region, recently posted a surprise 15% jump in Q1 profits with a $1.1 billion surge. The sudden influx of capital appears to be connected with recent optimism in Sweden regarding its position of working to tighten monetary policy and further enlarge bank capital requirements for loans, analysts have said. A 2011 study also suggests that Swedes are among the Nordic region’s best “savers.”

Leading news in Denmark is targeting the scandal of a transportation subsidiary, DSBFirst, which bilked the public coffers and failed to report on the reality of its own financial chaos, all while failing to produce results on effectively managing public transportation. The company also operates in Sweden which has recently threatened to strip DSBFirst of its operating license in Sweden should they fail to improve upon their current performance record. The impact of this scandal is not yet known for the Danish body politic.

In currency news, the Swedish krona (SEK) remains atop the ladder for best performers of FY 2010-2011 thus far. The Norwegian krone (NOK) experienced a short dip yesterday as oil prices fell due to a sudden surge in the US dollar brought about by the optimism which rocked markets after the announcement that Osama bin Laden had been killed by US commandos in Pakistan. The rise in USD values was short-lived, however, and Crude Oil looks to be finding support as of this morning.

Should the greenback persist in its recent bearishness, which appears to be supported by fundamentals and technical analysis, then the Scandinavian kroner should remain ahead of the crowd, remaining top performers among regional and global currencies.

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

We have received a number of emails this week asking about Taipan’s trading services. A couple of readers wanted more information on my service, WaveStrength Options Weekly, so I thought I would take a couple minutes to explain what it is I do.

(You also should know that Taipan offers many different services. They specialize in different markets like commodities, futures options and stocks, but also focus on different risk tolerances and strategies. I encourage you to take a look at all we have to offer.)

A Little About Me

Before all this, my life was very different. I was a member of several stock exchanges, and it was my job to trade options and make lots of money for my company. I had huge monthly costs and even bigger expectations from my bosses to deliver serious results. At every turn, Wall Street’s best and brightest traders were breathing down my neck, waiting for me to make a mistake so they could take my place.

It was my job to make money trading any order that came into my pit. When the public was buying, I was selling and vice-versa. It was a completely different frame of mind than most investors have today. I learned techniques there that cannot be learned anywhere else.

Most people with my skill set usually end up at a hedge fund, brokerage or bank, or on some major trading desk. In my opinion, it is much easier to be a trader and work for yourself than to manage other people’s money for them. Most of my colleagues feel the same way, which is why we rarely share our knowledge with the public.

But in recent years I have become a part of CNBC’s Fast Money team and just finished a book titled Your Options Handbook.

I now bring those tactics and skills to the public with a trading service. WaveStrength Options Weekly allows you to have control over your money, while giving you the information, timing and tactics you need to be successful.

(Sign up for Smart Investing Daily and let me and fellow editor Sara Nunnally simplify the market for you with our easy-to-understand articles.)

The Markets From My Eyes

My goal is to provide you with consistent, above-average returns using options. We focus on basic option strategies (long call, long put) that anyone can trade. I keep concepts as simple and straightforward as possible, so that there is minimal confusion.

Even though the ideas are simple, the research that goes into them is not. My analysis is complex… I put each idea through the ringer before I recommend anything… Stock charts, balance sheets, earnings reports… you name it, I look at it.

But it’s not just trading ideas! The main part of the service includes a weekly brief. I break down the macro economic trends, earnings, news and charts to get to a solid idea for that week. I try to offer readers the same plain speak you find here in SID, but with specific trade details and reasoning.

You will also find a lot of education and useful information in these briefs.

For example, I call upon other industry experts to give their opinion on a stock or on economic news. We usually have a guest expert each week.

Once we have found our way through the maze of data out there, we take advantage of the current trends. I outline an entry point, trade management techniques and an exit strategy.

The investment ideas generally last one week to three months. That means you don’t have to be at your computer at all times. This is a good timeline for the investor who still works or travels a lot.

If I find an opportunity outside of the normal weekly brief, I send out a dynamic email alert so you will always know if there is action that needs to be taken.

Obviously, there are no guarantees, but expert guidance can help avoid mistakes and improve results.

Getting Involved

Getting starting is literally a click away and you will begin receiving WOW briefs and alerts in your inbox ASAP.

There is no obligation, you are welcome to come and go as you please. Follow this link to subscribe to WaveStrength Options Weekly.

About the Author

Jared Levy is Editor of WaveStrength Options Weekly, our options trading research service and 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.

At first glance, the latest manufacturing growth figures for the Eurozone paints a positive picture but strip away a couple of the layers, and there is reason for concern. First, the good news – manufacturing growth as measured by the Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 58 from 57.5 in March. Any result above 50 is an indication of growth.

But now for the not-so-good news. The uptick in the Eurozone PMI is almost entirely due to strong growth in France, the Netherlands, and, in particular, Germany. Greece actually suffered a contraction while Spain was basically unchanged from March. The remaining Eurozone countries recorded positive growth for the month, but for the most part, this growth remained muted and served to underscore the growing gap between the few strong Eurozone economies and the majority that continue to under-perform.

China is the main reason for Germany’s recent success and demand for goods produced in Germany continues to build each month. Germany’s all-important auto sector especially has been on the receiving end of China’s seemingly insatiable appetite for luxury autos and has resulted in the expanding of plants and hiring of additional workers to meet demand.

Despite these gains, there is cause for a fair bit of queasiness for Germany – and by extension, the Eurozone. Keep in mind that China is facing its own challenges with stubborn inflation rates that refuse to stay within the Bank of China’s prescribed range. Indeed, even after implementing several recent interest rates hikes and forcing banks to be more restrictive when lending money, inflation continues to surge.

At some point, officials in China will be forced to incorporate even more drastic efforts to reduce expansion. Get this wrong however, and China could face a prolonged period of weak growth that will dramatically cut into demand for trade with Eurozone countries.

Challenges Facing the European Central Bank

Across the Eurozone, price inflation continues to run well above 2 percent with preliminary estimates showing a further 2.8 percent increase in April, compared to March’s 2.7 percent increase. This is adding even more to the argument supporting further interest rate hikes following the ECB’s quarter-point rate hike last month. Some estimates suggest that the central bank will be forced to implement a series of rate hikes that will see the benchmark rate jump from the current 1.25 percent to at least 2 percent by the end of the year.

The difficulty facing the ECB that it is even more evident now that the countries comprising the Eurozone are facing wildly diverging economic realities. France and Germany are likely in need of a little cooling and could withstand the slowing effect of an interest rate hike –even an appreciation of the euro following a rate increase is not likely to hurt export sales too much. The weaker Eurozone states on the other hand must be paralyzed with fright at the prospect of more rate hikes.

This is especially true for countries desperately trying to borrow money and fend off insolvency. Already, Greece and Portugal are paying heavy premiums in the face of credit rating warnings and downgrades and a rate hike will only add to these expenses. These countries are also facing higher unemployment and there is a worry that interest rates will lead to further pain in the job market. At roughly 21 percent unemployment, Spain is already struggling with unemployment nearly four times higher than Germany.

In the end, the ECB may have no choice but to place the needs of the leading economies over the weaker countries. If something is to be sacrificed, you can bet it won’t be one of the few economies actually contributing to the region’s growth.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

Jyske Bank interim financial report. First quarter of 2011.

Click here to read the report.

[email protected]

Legal information

Video courtesy of en.jyskebank.tv

Investors will be digesting economic data and the effect of the Bin Laden death on the markets this week. Good morning, I’m Sayoko Murase, with the Week Ahead Market Report for May 2, 2011.

Senior Strategist Ib Fredslund Madsen comment on the financial markets and lines up whats in store the coming week.

Legal information

Video courtesy of en.jyskebank.tv

Editor’s Note: Breaking news late last night announced that Osama Bin Laden has been killed and his body taken into custody. Our gratitude is with our men and women in service around the world, working tirelessly to keep our country safe, and our thoughts are with all those who have lost a loved one in this war on terror and in the attacks on 9/11.

May this world now begin to know peace.

Warren Buffett held a press conference on Saturday in Omaha, Neb. He answered questions about the trading scandal with David Sokol and Lubrizol. The public has been really focused on this story.

No surprise, really. David Sokol was on the short list of people who could take over for Buffett when he retires.

But there was another announcement that might be more important to investors.

It was about the $5 billion investment he made in Goldman Sachs (GS:NYSE) during the financial crisis. Buffett bought stock warrants, which are kind of like options. These warrants expire in 2013, and Buffett said his company will be holding those warrants almost until they expire.

Before we get into why, let me explain some of the nuts and bolts of what stock warrants are and how they work.

What Is the difference between a Stock Warrant and a Call Option?

A stock warrant is just like a call option. A warrant or call option will give you the right to buy a financial stock at a certain price by a certain date. Buying either a warrant or call option means that you think the financial stock’s share price will go higher.

The main difference between a stock warrant and a call option is that warrants are issued by the company, while options aren’t. That means that stock warrants are also guaranteed by the company.

Companies, like Goldman Sachs in this case, will issue stock warrants to help fund some of its debt.

Let’s move on…

The stock warrants that Buffett bought have a “strike price” of $115. This means that he can buy shares of Goldman Sachs at $115… no matter what price the financial stock is actually trading at.

On Friday, Goldman Sachs closed above $151. If Buffett were to exercise his warrants, meaning “cashing in” his warrants for shares of the company, he would immediately have a $36 profit on every share of stock. That’s an instant gain of more than 31%.

But Buffett says he’s holding his warrants.

He’s betting that Goldman Sach’s share price will continue to increase.

(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.)

Less Profitable Banks than Goldman Sachs…

That’s why I found it a little confusing when he said at the same press conference that some banks will be less profitable in the future. He said, “U.S. banking profitability will be considerably less in my view in the period ahead than it was in the early part of this century.”

This could be because banks will probably be deleveraging. Most companies deleverage by getting rid of excessive debt. Debt can be risky, so companies that are trying to deleverage might be in danger of defaulting.

Also, paying down debt eats into profits. Share prices could suffer, even though companies might be doing the right thing by paying their debts.

So why is Buffett holding his Goldman Sachs warrants instead of taking a huge 31% gain?

A Question of Timing

It may just be a question of timing. Some big banks have seen some harsh first quarters. In fact, Bloomberg reports:

Revenue at six of the largest U.S. banks declined by the biggest percentage in three years in the first quarter, as lending dropped and fees were reduced. With unemployment stuck above 8 percent, housing prices falling again and restrictions on charges, the banks are underperforming the broader market.

At the same time, banks have been reducing loan losses.

What this means is that banks might not be a good investment right today, but they will be a year from now. Buffett’s explanation? “Banks periodically go crazy. It’s always on the asset side.”

Here’s how the KBW Bank Index of the 24 biggest lenders in the U.S. have been performing against the Dow Jones Industrial Average.

View larger chart

Over the past three months, banks have been making lower highs and lower lows. This could signal that banks are headed lower.

What’s the Next Step?

So what should you do if you’re holding financial stocks? It truly depends on your own situation. If you’re holding a profit right now, it might be time to play with the house’s money.

In other words, take your original investment capital back out of the trade and bank it. Then you can let the rest ride, and never take a loss. If you’re holding a significant profit, you might want to take a larger portion out of the trade to protect some of your gains.

How much is entirely up to you and what you’re comfortable with… But be prepared to leave the rest of your investment for a while.

We can’t be sure how much more bank stocks could fall. It could be 10%, it could be 5%. So moving forward, playing with profits, you could also use a stop-loss.

For those of you who are holding some losses with bank stocks, you have two choices: cut and run, or hold through the bottom.

Which you decide will depend on how big a loss you are holding. Of course, most advisors will tell you that holding a loss is just tying up your money.

As I said, we don’t know where the bottom is for financial stocks, but we do know they are still falling.

Here’s the thing. Buffett can afford to hold through a downturn because he’s already sitting on a profit. If you’re holding a loss, the smartest thing to do would be to have an exit strategy. If you’re sitting on a 20% loss, and you figure you might as well hold and hope for some little rise in the stock price, you’re setting yourself up for more losses.

Get out, and save your money. You can always buy more shares of that company once it puts in a clear bottom.

P.S. Government Conspiracy Ignites Historic Profit Opportunity! If you don’t mind making money at the U.S. government’s expense, I urge you to read the following Investigative Exposé immediately. It will make you mad as hell. It could also make you very rich, very soon.

Follow this link to get your exclusive investment report…

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ECB rate speculation – Euro bulls looking to 1.500

The general consensus is that the European Central Bank will signal its intent s to raise rates higher later this week.

EURUSD bulls are looking to the 1.500 key figure which is also the previous swing high as per the attached chart below.

ECB officials are more than likely very concerned about ongoing inflationary pressures and the market is marking up the Euro accordingly.

Later this week, on Thursday, the ECB will have all FX market participants hanging on every word Trichet has to say and searching for hints as to future policy.

For further analysis see the Forex-FX-4X Forex, Gold and Silver Analysis blog.

EUR/USD

Time: 11.45  Rate 1.4808

Strategy: Short/long

Daily time frame

Most probably the price will retrace for the upper side of the break out channel (broken red). The break out of the level of 1.4880 will continue its course of the Euro upward towards the levels in the daily and monthly time frame. However, the decline of the price under the upper side of the channel (broken red) and under the lower side of the second channel and most probably will retrace for the last upward movement.

As can be seen by the graph bellow:

4 hour time frame

Strategy: short

In the breakdown of the price level 1.4770, the first target is 1.4670 and after which the target of the “wave wolf” pattern, the connecting line between 1 and 4. The breakout of the price of the level of 1.4900 and the upward movement will continue over the big graphic targets.

Potential Trade

Short

Enter: 1.4765

Stop: 1.4885

Target: 1.4670

As can be seen by the graph bellow:

GBP/USD

Time: 11.55  Rate: 1.6708

Strategy: Long

Daily time frame

The price broke out the upper side of the A-symmetric triangle and got to the target of “ABCD” the level of 1.6680. The next target is 1.6770.

As can be seen by the graph bellow:

4 hour time frame

The complete target of the range is at the level of 1.6870 and the target of this pattern “ABCD” coincides with this target. The break out of the level 1.6750 and the price will most probably get to the level of 1.6870.

Potential Trade

Long

Enter: 1.6755

Stop: 1.6625

Target: 1.6870

As can be seen by the graph bellow:

Important news for the 02.05.2011

Time: 02.15- CHF Retail sales y/y

Time: 08:00- GBP BOE government king speaks

Time: 09:00 -USD ISM manufacturing PMI

F10.1 news for the 02.05.2011

: bly get to the level of 1.6870.

t to the r which e of the seocnd

URUSD
EURUSD is consolidation on 4 hour chart, break of 1.4753 support further going down side toward 1.4606 and break of 1.4866 resistance, next target will be 1.4926 on intraday. EURUSD is consolidation, possible breakout up side as per complex pattern and break of this consolidation, next target will be 1.4935. If EURUSD won’t break of daily PP then retracement possible toward 1.4606, 1.4435 or break of 1.4925 resistances further going up side toward 1.5350 next targets. In EURUSD minor support is at 1.4733, also trend line passes there. If EURUSD will reverse from 1.4606, 1.4435 then extension at 1.5074, 1.5350 which is also 161.8% extension of 1.4288 to 1.2579. EURUSD reversed 78.6% (1.2984) extension 127.2% (1.4750), 161.8% (1.5350) of 1.4288 to 1.2579 still in progress.
New High:  1.4842, 1.4880, 1.4844.
New Low:  1.4767, 1.4805, 1.4769.
Pivot Point: R3-1.4903, R2-1.4874, R1-1.4857, PP-1.4829, S1-1.4800, S2-1.4783, S3-1.4754.

GBPUSD
GBPUSD reversed from 78.6% (1.6718) of 1.6744 to 1.6625, extension 127.2% (1.6589), 161.8% (1.6547),like “M” shape pattern, confirm at 1.6547.GBPUSD retraced 38.2% (1.6625) of 1.6429 to 1.6745, extension 1.6830, 1.6940, possible going up side from here if break of 1.6717 resistance, otherwise “M” shape pattern form. GBPUSD break of 1.6649 supports further going down side toward 1.6525 on intraday. In GBPUSP minor support is at 1.6624. If GBPUSD will reverse from 1.6523, 1.6383 area, extension is at 1.6895, 1.7091.
New High:  1.6714, 1.6763, 1.6755.
New Low:  1.6616, 1.6665, 1.6657.
Pivot Point: R3-1.6781, R2-1.6744, R1-1.6721, PP-1.6683, S1-1.6645, S2-1.6622, S3-1.6584.

AUDUSD
AUDUSD broke neutral up trend line on 1hour chart. If AUDUSD won’t break of 1.0862 support, then again going up side toward extension 1.1049. In AUDUSD minor support is at 1.0884, and reverses from 1.0884 then extension at 1.1099. AUDUSD break of 1.0862 support, next target will be 1.0806 on intraday.  In AUDUSD strong support is at 1.0862. In AUDUSD retracement will be possible after 1.1049 extension.
New High: 1.0974, 1.1022, 1.1018.
New Low:  1.0878, 1.0926, 1.0922.
Pivot Point: R3-1.1038, R2-1.1002, R1-1.0979, PP-1.0942, S1-1.0905, S2-1.0883, S3-1.0846.

USDCAD
USDCAD is near to extension 127.2% at 0.9404 of 0.9523 to 0.9973, 161.8% (.9254). USDCAD break of 0.9404 next target will be 0.9381 on intraday and if not break of 0.9404 then retracement possible toward 0.9525, 0.9598 areas. USDCAD strong resistance is at 0.9563 break of 0.9563 down trend change as neutral up trend. In bigger range USDCAD revered  from 38.2% (0.9692), extension 127.2% (0.9404), 161.8% (0.9247) on daily chart.
New High:  0.9499, 0.9551, 0.9501.
New Low:   0.9394, 0.9446, 0.9396.
Pivot Point: R3-0.9585, R2-0.9545, R1-0.9520, PP-0.9480, S1-0.9440, S2-0.9415, S3-0.9375

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