Author: FX_Trdr

By CountingPips.com

The U.S. dollar reversed course from yesterday’s gains in the forex markets to fall sharply against the other major currencies today. The dollar has lost ground today versus the euro, Swiss franc, British pound, Canadian dollar, New Zealand dollar and the Australian dollar while trading close to unchanged versus the Japanese yen, according to currency data by Oanda at 5:25pm EST.

The U.S. stock markets, meanwhile, had a positive session today with the Dow Jones gaining by roughly 44 points, the Nasdaq increasing over 15 points and the S&P 500 showing almost a 9 point gain. Oil and gold both rose as oil climbed $2.02 to the $81.82 level while gold jumped $17.10 to the $1122.20 per ounce.

Today’s major economic event was the Federal Open Market Committee statement on the U.S. federal funds interest rate. The FOMC, as expected, concluded its monetary policy meeting today by keeping the U.S. interest rate steady at its record low level.  The committee last cut the federal funds interest rate to the current target range of 0 percent to 0.25 percent in December 2008.

Today’s statement on the economy said that “economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.”

Most of the anticipation for the last few meetings has been on whether the FOMC would give any hint on when the interest rate level might change. Today, the statement continued to use the same language as in the past, saying the rate is likely to remain at “exceptionally low levels” and for “an extended period.”

For a second consecutive Fed meeting, the decision was not unanimous as Kansas City Fed President Thomas M. Hoenig disagreed with the other nine FOMC members. According to the release, Hoenig thought that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”

Housing Starts, Building Permits decline

Also released out of the U.S. earlier today was U.S. housing data for February. Housing starts and building permits fell in February while housing completions rose for the month, according to data released by the Commerce Department on new residential construction. Housing Starts declined by 5.9 percent in February to a seasonally adjusted annual rate of 575,000 starts following an annual rate of 611,000 in January. February’s data, despite the decline, was better than the economic forecasts that were predicting a fall for the month to a 570,000 starts pace.

Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 612,000 permits in February which was a decrease of 1.6 percent when compared to January. Building permits also surpassed matched forecasts that were expecting permits to number approximately 601,000 annually.

Housing Completions for February increased when compared to January as completions rose to an annual rate of 700,000 privately-owned housing completions. This is an advance by 5.4 percent from January’s completion totals which numbered a revised 664,000 completions.

AUD/USD Chart – The Australian dollar today surging higher versus the US dollar in forex trading. The AUD/USD rose to its highest level since January 19th to trade above the 0.9200 level.

By GCI Fx Research

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The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3770 level and was supported around the $1.3655 level.  As expected, the Federal Open Market Committee kept its benchmark federal funds target rate unchanged at 0.25%.  The FOMC reported “Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.  With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.  The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability. In light of improved functioning of financial markets, the Federal Reserve has been closing the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.” Kansas City Fed President Hoenig dissented with the decision, arguing “that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.” Data released in the U.S. today saw February housing starts off 5.9% to an annualized 575,000 units while February building permits were off 1.6% m/m to an annualized 612,000.  Also, the February import price index was off 0.3% m/m and up 11.2% y/y.  Data to be released in the U.S. tomorrow include February producer price inflation data.  In eurozone news, Standard & Poor’s affirmed Greece’s BBB+ credit rating and removed the country from “creditwatch negative.”  Eurozone finance ministers last night reiterated their plan to “take coordinated action” but did not provide much additional information other than to suggest any assistance would take the form of bilateral loans rather than loan guarantees.  Data released in the eurozone today saw the EMU-16 consumer price index expand 0.3% while the core consumer price index expanded 0.4% m/m, up from -0.1% in January; consumer prices were also up 0.9% y/y.  Also, the EMU-16 March ZEW economic sentiment survey fell to 37.9 from the prior reading of 40.2.  The German March ZEW survey’s economic sentiment and current situation indices improved to 44.5 and -51.9, respectively.  European Central Bank member Stark called on more regulation for credit default swaps and called on countries to improve their fiscal finances.  Euro bids are cited around the US$ 1.3335 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.00 figure and was capped around the ¥90.75 level.  Traders await Bank of Japan Policy Board’s interest rate decision tonight with strong expectations of additional monetary easing.  The central bank may expand a ¥10 trillion fund that provides funding to banks when policymakers convene on 16-17 March and this is important because an unlimited uncollateralized loan facility expires on 31 March.  Some BoJ-watchers believe the facility could expand by at least ¥5 trillion. The central bank remains under significant pressure to do more to combat the deflation problem further. Finance minister Kan today reported “Fiscal policy focusing on stimulating demand will have some impact against deflation.  The central bank can make an inflationary impact with monetary policy…I want to overcome deflation as soon as possible in cooperation with monetary policies.”  National Strategies Minister Sengoku called on the central bank to enact policies that will be positive for “production activity, capital investment, and consumer spending.”  Former MoF mouthpiece “Mr Yan” Sakakibara reported deflation is a “structural problem” that monetary policy cannot remedy.  Data released in Japan overnight saw February machine tool orders climb 217.4% y/y and dealers await the release of January tertiary index data.  The Nikkei 225 stock index lost 0.28% to close at ¥10,721.71.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥124.60 level and was supported around the ¥123.20 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥137.45 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.80 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8260 in the over-the-counter market, down from CNY 6.8262.  People’s Bank of China reported inflation expectations are rising in a quarterly survey released today and this could render it difficult for the government to meet its 3% annual inflation target.  Higher inflation expectations will likely propel interest rates higher.

₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5200 figure and was supported around the $1.4975 level.  Data released in the U.K. today saw the DCLG January house price index expand 6.2% y/y, the highest increase since February 2008.  Bank of England Monetary Policy Committee member Barker yesterday reported the U.K. economy could recede again, adding the economic recovery will continue to be “bumpy and fragile.”  Cable continues to suffer from political uncertainty ahead of the upcoming mandatory General Election.  Prime Minister Brown is expected to lose to Tory leader Cameron but Cameron may not be able to form a majority government if he wins, and this could lead to a weaker pound.  Many data will be released in the U.K. including February jobless claims along with the BoE MPC meeting minutes.   Cable bids are cited around the US$ 1.4455 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the US$ 0.9045 level and was capped around the $0.9120 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0545 level and was capped around the CHF 1.0625 level.  Notably, the franc rocketed to its highest level vis-à-vis the euro since October 2008 as the common currency plumbed the CHF 1.45 handle. Traders are speculating Swiss National Bank will be less inclined to intervene by selling francs as the Swiss economic recovery strengthens.  SECO released economic forecasts today that are calling for economic growth of about 1.4% in 2010, up from the +0.7% forecast issued in December.  Unemployment is expected to decline to 4.3% from 4.9% in 2010 and private spending is expected to ramp up.  Data released in Switzerland yesterday saw February producer and import prices decline 0.3% m/m and fall 1.0% y/y.  U.S. dollar offers are cited around the CHF 1.1045 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4505 level while the British pound moved higher and tested offers around the CHF 1.6050 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

I am often amazed to see that there are many forex traders out there that don’t know how to use the basic tools of the platform. Unless you’re sitting in front of the screen 24 hours a day – there are some features on our platform that you must master, otherwise losing seems to be a very logical outcome.

The first thing that you need to understand is the different options you have to open a new position. There are 4 different ways to open a position:

1. Market Order – This is the simplest way to open a position. It means that I want to enter the market right now at the current price.
2. Entry Stop Order – This order allows you to enter the market at a future price, and to join the trend. For example, let’s assume that the current price of the EUR/USD is 1.3700. I think that if the EUR/USD will reach the 1.4000 level, it will probably continue to rise. So I will set an entry stop order for a EUR/USD buy position at the rate of 1.4000.
3. Entry Limit Order – This order allows you to enter the market at a future price, and go against the trend. For example, again, let’s assume that the price of the EUR/USD is 1.3700. I think that if he EUR/USD will reach the 1.4000 level, the uptrend will probably halt, and the EUR/USD will later drop. So I will set an entry limit sell position at the rate of 1.4000.
4. An OCO Order – The OCO is exactly like placing both entry limit and entry stop orders for the same currency pair, with one big benefit: Once one of the orders is triggered, the other one is automatically cancelled. For example, I’m setting the following OCO order – an entry stop sell at the rate of 1.3200 and an entry limit sell at the rate of 1.4000. Now if the market will reach one of these prices, this will trigger one order, and cancel the other.

Now that you know how to open positions, let’s understand what our options are in terms of closing a position.

Once again, we have 4 different ways to close a position:

1. Market Order – Remember the market order for opening a position? Well this is exactly the same. This means that I want to exit the market right now at the current price.
2. Limit (take profit) Order – The limit order gives me the ability to determine how much I wish to profit from a position. For example, if the EUR/USD is currently trading at the 1.3700 level and I have a buy position open, I can then set a limit for 1.4000 – this means that once the pair will reach the 1.4000 price level, my position will be automatically closed by the trading platform.
3. Stop (stop-loss) Order – The stop order allows me to determine how much I’m willing to risk from a position. For example, if I have a sell EUR/USD position that was opened at the 1.3600 price level, and I’m willing to risk as much as a 300 pip drop – then I will set a stop order for the price of 1.3900.
4. Trailing Stop Order – The trailing stop order is a dynamic stop loss order. Instead of setting a specific level that you are not willing to reach below, you can automatically let the platform readjust the level of your stop according to movement of the market. Let’s say that we opened a long EUR/USD position at the price of 1.4000, and we set a trailing stop order for 30 pips. So now, the trailing stop is located at 1.3970. However, if the market moves in our direction and the pair is now traded at 1.4040, then the trailing stop relocates itself in accordance, and is now placed at the 1.4010 level. The beautiful thing about it is that it will never go lower then its highest high. In our case, the worse scenario for us is that it will close the position if the pair will reach the 1.4010 level again, leaving us with a 10 pips profit. In a better scenario, the pair will continue its bullish momentum and reach above the 1.4040 level. The trailing stop will then move in accordance, of course, adding further to your profits.

By Adam Hewison – The crude oil market came under pressure on Monday and I’m disappointed that I did not have this video out to you earlier. I created the video on Sunday along with the other three videos on the S&P 500, gold, and the euro that did make it to the blog.

Nonetheless, I think you will find this video  useful as it outlines our position in this market. The video is short and to the point, nonetheless I think you’ll have a lot of good takeaway information.

As always our videos are free to watch and there are no registration requirements. I would really like to hear back from you with regards to your thoughts on this video.

Watch the Video Now….

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

By Fast Brokers – Gold is staging a rally during the Asia trading session as investors await key EU economic data and the Fed’s monetary policy decision later today.  Gold was a beacon of stability during yesterday’s risk-averse movement in the FX markets.  The precious metal continued its consolidation above $1100/oz and is currently moving in line with its negative Dollar correlation despite last week’s deviation.  However, although gold’s pop is encouraging, it still needs to surpass our 1st and 2nd tier downtrend lines along with 3/12 highs before establishing a more sustainable recovery.  After all, the precious metal did dip below $1110/oz and some key uptrend lines last week during its pullback.  Should EU data print strong and the Fed stick to its loose monetary policy for the foreseeable future gold could find enough strength to overcome its topside technical barriers.  On the other hand, should data disappoint and the Fed tighten its language then gold could come under selling pressure again.  On the other hand, gold hasn’t exactly been behaving according to its past correlation patterns as of late, so analyzing gold according to its usual correlative forces could be a mistake.  Either way, gold and FX markets could experience heightened activity over the next 24 hours as investors digest the wealth of news and data.

Technically speaking, gold faces multiple downtrend lines along with 3/12and 3/10 highs.  As for the downside, gold still has multiple uptrend lines serving as technical cushions along with intraday, 3/15, and 3/12 lows.  Furthermore, the psychological $1100/oz area could continue to have an influence on gold over the near-term.

Present Price: $1113.30/oz

Resistances: $1113.77, $1115.19, $1116.32/oz, $1117.66/oz, $1118.87/oz, $1120.77/ oz

Supports: $1112.30/oz, $1111.13/oz, $1110.06/oz, $1109.09/oz, $1108.17/oz, $1106.94/oz

Psychological: $1100/oz, $1150/oz, March highs and Lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY is retesting its highly psychological 90 level as the Dollar pulls back across the board ahead of the FOMC.  Investors will be paying close attention to the Fed’s statement to see whether the central bank alters its dovish language.  Should there be any alteration, this could spur a Dollar rally and benefit the USD/JPY.  However, if the Fed keeps its loose policy statement intact, the risk trade could bounce in anticipation of more cheap money in the U.S.  The U.S. will also release building permits data today, meaning that either way the FX markets could be in for an active trading session.  The BoJ will also make its monetary policy decision during tomorrow’s Asia trading session.  It will be interesting to see whether the BoJ heeds to the DPJ’s calls for additionally liquidity injections to counter deflationary pressures.  If so, the USD/JPY could pop again as the BoJ takes a looser monetary policy stance than the Fed.  However, if the BoJ keeps its policy as is the USD/JPY may be buoyed around its highly psychological 90 area.  That being said, there are many events on the calendar which could have a considerable impact on the USD/JPY over the next 24 hours.

Technically speaking, the USD/JPY faces multiple downtrend lines along with 3.8, 3/10, and 3/12 highs.  Meanwhile, the highly psychological 90 area could continue to have an influence over the USD/JPY’s movements for the near-term.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 3/9 lows.

Present Price: 90.06

Resistances: 90.16, 90.23, 90.29, 90.35, 90.41, 90.50

Supports: 90.01, 89.92, 89.84, 89.74, 89.64, 89.55

Psychological: 90, March highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is consolidating above Monday’s lows after undergoing a hefty selloff in response to more warning shots concerning UK debt levels.  Moody’s issued fresh statements warning the UK, U.S. and several EU countries to get their fiscal houses in order.  The prospect of a hung parliament in the UK is worrying investors that the government will not be able to make the necessary budget cuts to counter rising debt levels.  The EU issued a similar warning to the UK today citing concerns that proposed austerity measures are not enough to alleviate fiscal fears.  Another storm of negative statements dealt a blow to the Pound, highlighted by resilience in the EUR/GBP.  Hence, it’s the same old story for the Pound with psychological attacks weighing down the GBP/USD.  The UK will be quiet again on the data wire, leaving investors focused on today’s FOMC meeting.  Should the Fed maintain its dovish monetary language, this could help buoy the Cable and the risk trade in general.  However, if the Fed tightens its stance this could place downward pressure on the Cable with investors heading to the Dollar.  Therefore, investors should keep an eye on the market’s reaction to today’s Fed statement.  On a positive note, gold is rebounding from $1100/oz.  Gold is normally negatively correlated with the Dollar on a trend basis, so gold’s bounce could imply further stability in the risk trade.  Meanwhile, it will be interesting to see if the Cable can pop back above our 1st tier downtrend line since it runs through 2/23 eyes and has been a bearing concerning the longevity of the Cable’s present upswing from 2010 lows.

Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with 3/15 and 3/11 lows.  The psychological 1.50 area comes into play again and could serve as  a solid cushion.  As for the topside, the Cable faces multiple downtrend lines along with 3/3, 3/8 and 3/12 highs.

Present Price: 1.5056

Resistances: 1.5065, 1.5071, 1.5085, 1.5098, 1.5106, 1.5118

Supports: 1.5037, 1.5029, 1.5020, 1.5012, 1.5004, 1.4998

Psychological: 1.50 and March highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The AUD/USD has bounced from Monday lows after dipping below .91 and touching our key 2nd tier uptrend line.  The Aussie followed the EUR/USD and Cable lower amid a wave of risk-aversion in reaction to statements from Moody’s warning developed countries with increasing debt exposure to get their fiscal houses in line or face the possibility of a credit downgrade in the future.  Uncertainty, particularly in Europe, weighed on the Aussie as investors speculated that more debt issues could dissuade the RBA from tightening its monetary policy again.  However, the Aussie has staged a solid rebound thus far today, finding support in our key 2nd tier uptrend line which runs through 3/9 lows.  The RBA issued its meeting minutes today and the notes showed the RBA is holding its monetary stance for the time being and stands ready to tighten or loosen depending on fundamental conditions.  That being said, the RBA still seems to be leaning towards a hawkish monetary policy so long as employment and consumption continue to improve.  However, last week’s negative employment and housing reports have decreased the expectations of a rate hike at the central bank’s next meeting.  Meanwhile, focus will likely be on the U.S. with building permits data and an FOMC meeting on the way.  Should the FOMC maintain its loose monetary language then they risk trade could receive a boost.  On the other hand, any hawkish language alteration could have a negative impact on the Aussie in anticipation of tighter monetary policy from the Fed.

Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with intraday lows, 3/15 lows, 3/9 lows, and the psychological .90 area.  As for the topside, the Aussie has multiple downtrend lines serving as technical barriers along with the psychological .92 area.  Additionally, previous 2010 highs could serve as a hefty technical barrier should they be tested.

Price: .9146

Resistances: .9160, .9171, .9186, .9194, .9213, .9227

Supports: .9137, .9126, .9114, .9104, .9090, .9073

Psychological: .92, .90,  2010 highs

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Editorial Staff

The following article is adapted from a special report on “Popular Culture and the Stock Market” published by Robert Prechter, founder and CEO of the technical analysis and research firm Elliott Wave International. Although originally published in 1985, “Popular Culture and the Stock Market” is so timeless and relevant that USA Today covered its insights in a recent Nov. 2009 article. For the rest of this revealing 50-page report, download it for free here.

This year’s Academy Awards gave us movies about war (The Hurt Locker), football (The Blind Side), country music (Crazy Heart) and going native (Avatar), but nowhere did we see a horror movie nominated. In fact, it looks like Sweeney Todd, The Demon Barber of Fleet Street was the most recent to be nominated in 2008, for art direction (which it won), costume design and best actor, although the last one to win major awards for Best Picture, Director, Actor and Actress was The Silence of the Lambs in 1991.

Whether horror films win Academy Awards or not, they tell an interesting story about mass psychology. Research here at Elliott Wave International shows that horror films proliferate during bear markets, whereas upbeat, sweet-natured Disney movies show up during bull markets. Since the Dow has been in a bear-market rally for a year, now is not the time for horror films to dominate the movie theaters. But their time will come again.

In the meantime, to catch up on why all kinds of pop culture — including fashion, art, movies and music — can help to explain the markets, take a few minutes to read a piece called Popular Culture and the Stock Market, which Bob Prechter wrote in 1985. Here’s an excerpt about horror movies as a sample.

* * * * *

From Popular Culture and the Stock Market by Bob Prechter

While musicals, adventures, and comedies weave into the pattern, one particularly clear example of correlation with the stock market is provided by horror movies. Horror movies descended upon the American scene in 1930-1933, the years the Dow Jones Industrials collapsed. Five classic horror films were all produced in less than three short years. Frankenstein and Dracula premiered in 1931, in the middle of the great bear market. Dr. Jekyll and Mr. Hyde played in 1932, the bear market bottom year and the only year that a horror film actor was ever granted an Oscar. The Mummy and King Kong hit the screen in 1933, on the double bottom. These are the classic horror films of all time, along with the new breed in the 1970s, and they all sold big. The message appeared to be that people had an inhuman, horrible side to them. Just to prove the vision correct, Hitler was placed in power in 1933 (an expression of the darkest public mood in decades) and fulfilled it. For thirteen years, lasting only slightly past the stock market bottom of 1942, films continued to feature Frankenstein monsters, vampires, werewolves and undead mummies. Ironically, Hollywood tried to introduce a new monster in 1935 during a bull market, but Werewolf of London was a flop. When film makers tried again in 1941, in the depths of a bear market, The Wolf Man was a smash hit.

Shortly after the bull market in stocks resumed in 1942, films abandoned dark, foreboding horror in the most sure-fire way: by laughing at it. When Abbott and Costello met Frankenstein, horror had no power. That decade treated moviegoers to patriotic war films and love themes. The 1950s gave us sci-fi adventures in a celebration of man’s abilities; all the while, the bull market in stocks raged on. The early 1960s introduced exciting James Bond adventures and happy musicals. The milder horror styles of the bull market years and the limited extent of their popularity stand in stark contrast to those of the bear market years.

Then a change hit. Just about the time the stock market was peaking, film makers became introspective, doubting and cynical. How far the change in cinematic mood had carried didn’t become fully clear until 1969-1970, when Night of the Living Dead and The Texas Chainsaw Massacre debuted. Just look at the chart of the Dow [not shown], and you’ll see the crash in mood that inspired those movies. The trend was set for the 1970s, as slice-and-dice horror hit the screen. There also appeared a rash of re-makes of the old Dracula and Frankenstein stories, but as a dominant theme, Frankenstein couldn’t cut it; we weren’t afraid of him any more.

Hollywood had to horrify us to satisfy us, and it did. The bloody slasher-on-the-loose movies were shocking versions of the ’30s’ monster shows, while the equally gory zombie films had a modern twist. In the 1930s, Dracula was a fitting allegory for the perceived fear of the day, that the aristocrat was sucking the blood of the common people. In the 1970s, horror was perpetrated by a group eating people alive, not an individual monster. An army of dead-but-moving flesh-eating zombies devouring every living person in sight was a fitting allegory for the new horror of the day, voracious government and the welfare state, and the pressures that most people felt as a result. The nature of late ’70s’ warfare ultimately reflected the mass-devouring visions, with the destruction of internal populations in Cambodia and China.

Learn what’s really behind trends in the stock market, music, fashion, movies and more… Read Robert Prechter’s Full 50-page Report, “Popular Culture and the Stock Market,” FREE

By Yan Petters – The GBP/AUD pair is dropping quite constantly for almost two years now. Normally, traders are advised to stay away from this pair as it is considered to be too volatile, and is even named by several analysts as an exotic pair. However, traders should not miss out on such unique opportunity.

• The chart below is the GBP/AUD 1-Week chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The MACD provide a bearish cross once again, indicating that the freefall has more room to go.
• The RSI has failed to reach the 60 line, and has once again dropped into the ‘Over-Sold’ zone. This suggests that the momentum is still bearish.
• Nevertheless, the Slow Stochastic shows a bullish cross, which means that the bearish momentum might halt a bit. Yet as the last 2 years shows us, bullish crosses of the Slow Stochastic have predicted halts in the bearish trend and not bullish reversal.
• It seems that as long that the Pound continues to fall on all fronts, the largest drop will take place against the AUD.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.