InvestMacro FX

“So many myths about extraordinary profits turned out to be real stories.” – says Dariusz Swierk, Ph.D., the author of groundbreaking book “Conversatins With Forex Masters”. While leading a two-year study on traders and trading systems that they use, Dr. Swierk identified significant number of systems that continuously and systematically generate huge profits, making their owners multimillionaires.

Both individuals and institutional traders have been put into examination. The main goal of the study was to discover the shortest possible way one should go in order to get from the beginner in forex trading to an expert level.

It is extremely important to ask what special features distinguish traders who achieve a stunning success on the market. Especially while over 90% of the novices, simply lose their deposit in the first year of trading. If only they could see how the bests trade and repeat their actions, the results could have been completely different.

Result like the one achieved by self-made multimillionaire who spent about half a year watching the markets and elaborating his own system. Then he just started to trade. Since August 2008 till November (exactly on November 11, when he called Dr Swierk) he turned a capital of $400 into more than $80,000.

Even higher amounts were made by a trader who earned more than $300,000 in a month. He started from $1000 level using very simple system based on breakouts. Broker, whom he played with, changed the rules in order not to permit system’s further use, despite the fact that the system required nothing more but the basic trading skills – the ability to set entry orders at the swing points. Quite a few of similar stories (with accounts insight evidences included) have been identified by the author of the book.

The conclusions say that significant part of the stories about enormous assets made in a short time period are truth.

You can read some further conclusions in a new report issued by ForexInstitute:

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• What types of systems bring traders best profits?
• 95% of systems being sold on the market bring only losses.
• Scalping systems are not the only ones with enormous profitability potential.
• An example of little-known long – term system with great earnings potential.
• Characteristics of systems providing you with the fastest capital accumulation.

You will get the report for free now on www.ForexInstitute.eu. Number of copies is limited.

By CountingPips.com

The US dollar has continued to be on the defensive today against most of the major currencies in the forex markets following the unexpected decline in the ADP employment report. The dollar has lost ground on the day versus the euro, Japanese yen, Swiss franc, Australian dollar, New Zealand dollar and the Canadian dollar while trading a bit higher against the British pound sterling in the afternoon of the US trading session. On the week, the American currency has lost ground against all the major currencies mentioned above.

The US stock markets, meanwhile, have been mixed at close of trading with the Dow Jones industrial average higher by 22.93 points while the NASDAQ and S&P 500 have decreased by 19.17 points and 0.78 points, respectively.

In commodities, Oil has edged up very slightly by $0.36 to the $83.18 level while gold has increased by $8.10 to trade at the $1,347.00 level to mark a new record high.

Today’s ADP private employment report showed that companies lost a total of 39,000 workers in the month of September. This data follows a revised increase of 10,000 workers added in August after the original report had shown a decline of 10,000 workers. Market forecasters and economists were expecting the jobs report to come in on the positive side with a gain of 23,000 jobs for the month. The decline in September jobs breaks a string of seven straight months of job increases dating back to February.

The service sector saw an increase of 6,000 workers in September while the goods-producing sector registered a decrease of 45,000 workers. Manufacturing jobs fell by 17,000 workers for the month while the construction sector declined by 28,000 workers. The financial sector also shed 13,000 workers in September.

Large businesses lost 11,000 workers in June while medium-size businesses fell by 14,000 workers. Small businesses or companies with less than 50 workers also saw employment payrolls fall by 14,000 for the month.

The market-moving US nonfarm government payroll report is scheduled to be released on Friday at 12:30 GMT. Last month, the government report showed 67,000 workers were added to payrolls and the unemployment rate was at 9.7 percent. Early forecasts are looking for the payrolls report to increase by 77,000 workers and the unemployment rate to increase back up to 9.7 percent.

Stock Prices Are Still Cheap!

By Jared Levy, Editor, Smart Investing Daily

Are stock prices still cheap? It all depends on how you look at it of course and what your time horizon is for the stock’s price history.

Part of what makes the markets function properly is the multitude of belief systems, strategies, analysis and risk tolerance that we all use.

For the most part, just about every one of us has a slightly different opinion on an investment. Even if two or more of us are bullish, chances are we would pay different prices for that same stock. Hopefully, if the position became profitable, it is also likely that different investors would choose different stock price spots to sell at.

Of course for every buyer there has to be a seller, but as bullish sentiment increases, buyers may be willing to pay more as sellers move their prices up. On the flip side, if bearish sentiment is in control sellers bring the downward pressure and buyers drop their stock prices accordingly. You can trade these “variations” and short–term stock price movements as I do often, but if you are an investor, you need a different measurement for the price of a stock.

More importantly, if I want find where the market is headed longer term, I’m not so concerned with the small transactions that are taking place every second. I want to know where the BIG trends are going to come from…

Will the buyers begin to dominate and push the sellers away or will the bears take control?

Stepping Back to See the Relative Value of the Stock Market

Sometimes it’s good to take a step back and look at the big macro picture to get an idea of relative value. To find out if the stock market is relatively over or underpriced, you need to examine a couple points:

1. Economy – Even though it’s not all crimson and clover out there, the economy is SLOWLY improving according to many data sets.

Second – quarter U.S. GDP grew 1.7% (better than the previous 1.6% estimate). That is not to say that this country doesn’t have struggles ahead, but it seems that we are slowly on the way to recovery.

I do find it a bit amusing that the NBER issued a statement that the recession ended June 2009, then went on to say, “Any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.” You have to just adore economists… I’m just hoping the unemployment rate drops, so more Americans can start experiencing the “end of the recession.”

Regardless, the stock market has moved higher (leading as it usually does) out of the recession, looking forward in time.

2. Valuation – There are many ways to gauge the “value” of the stock market. Sara outlined some great tactics here. The most simple and common method is to examine the market’s total P/E (price/earnings) ratio.

I like to look at the S&P 500 (SPX), because it gives a much broader and diverse picture of 500 of the U.S.’s top companies compared to only 30 in the Dow Jones. Also note that many Nasdaq and Dow stocks are also contained in the S&P 500.

There are two views we need to take on P/E ratio:

• First is the trailing or actual P/E ratio, looking back over the past year. Currently that number is about 15x.

This means that if you combine all the stock prices and all of the earnings of the index, it is trading at 15 times its past year’s earnings. The good news is that this is a low number; the mean or average P/E over the past 100 years is about 16.40X.

• Second, we need to look at the forward or projected P/E ratio. This comes from analysts who use models to predict what a company will earn. Earnings season kicks off in about two weeks; this is where we will find out how companies have fared in the last quarter. The forward P/E is 13.75x, which basically means that analysts are expecting companies to continue to grow modestly. If they do so, then the actual P/E would go even lower… making stocks even more attractive at these levels.

*The lower the P/E, the better, generally speaking.

3. Sentiment – Sentiment is a tough one to gauge. According to the AAII (American Association of Individual Investors), the weekly sentiment numbers show about 43% bullish, 26% neutral and 31% bearish.

As those numbers are a short–term, somewhat anecdotal measurement, I don’t put too much credence in them, especially with consumer confidence dropping in September. But they do give you an idea of what is on the minds of investors.

Overall sentiment is mixed, but you also must realize that in order to get the best deals, you sometimes have to go against the grain.

I also am fairly confident that the upcoming earnings season won’t be a dud and that most companies will meet or beat their expectations. Of course there will be exceptions.

Furthermore, look at how the market has reacted to data. Bad reports get a muted sell–off and moderately good news gets rewarded with a huge rally.

Don’t forget that sentiment can change fairly quickly.

4. Technicals – Looking at the longer–term picture, the SPX is above its 200–month moving average as well as its 200–day moving average, which I prefer to use when monitoring my longer–term trades. The 200–day SMA is about 1,115, which to me is a good support point. The big, nasty head and shoulders that everyone was talking about never came to fruition, which was a huge sigh of relief from a technical aspect.

The Bottom Line

In the short term, market volatility may return with earnings season and a minor retracement may occur, but looking out over a three–year period, valuations are still cheap and if the economy continues to at least make minor steps toward recovery (with the help of the Fed), American companies should continue to grow at least at a modest rate, moving the S&P higher. For the long–term investor, the broad market is still a buy.

*You can invest in the S&P 500 by purchasing shares in the SPY ETF.

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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 Bob Moore – The S&P 500 eMini is popular among the four eMini Futures to trade. Traders grow to appreciate the S&P 500 eMini because its trading action offers a ‘middle ground’ when compared to its stalwart brethren, Dow-30, the nascent leader, Nasdaq-100, and the hypertensive brother, Russell 2000.

Trading the S&P 500 eMini (ES) requires an understanding of Market dynamics and a sense of where the Price is heading. Keenly monitoring price action to the ES’s daily Value Area gives the trader insight into Intra-day Price Direction.

Value Area is defined as the instrument’s Price Range where 70% of yesterday’s volume was traded. The Value Area is important because it defines the current ‘Comfort Zone’ where traders are comfortable trading under a neutral bias.

By taking price movement into consideration with the Value Area, it can signal Intra-day Price Direction. The Value Area for the ES is particularly accurate in signaling Price Direction because the ES is the eMini trading instrument of ‘middle ground’.

Signals in Intra-day Price Direction are very helpful to traders in deciding quickly which trades to take during the day. A discussion of the Value Area signals follows.

80% Rule Signal. The 80% Rule is simple to understand, and quite reliable in determining market direction. When the market is above or below the Value Area, and then pierces into the Value Area for two consecutive half-hour periods, the market has an 80% chance of at least filling the Value Area.

The trader has an opportunity to place a trade once the signal is triggered and ride the price through the Value Area before deciding to exit the trade.

Above Value Area Signal. When the market opens and stays above the value area, this signals a very strong bull trend. Institutional buying is going on in the market pushing the market higher. A trader may be able to buy into the market on dips, sometimes as the Value Area Top is being tested, before it resumes its rally.

Below Value Area Signal. When the market opens and stays below the Value Area, this signals a very strong bear trend. Institutional selling is going on in the market pushing the market lower. You may be able to sell into the market rallies, such as in a testing of the Value Area Bottom, but you don’t want to trade long when the institutions are selling.

Support/Resistance Signals. The bottom and top of the Value Area are excellent support and resistance levels. For instance, if you were long above the Value Area, you would put a sell stop just below the top of the Value Area because if the market pierces into the Value Area, a strong bear trend is signaled. If you want to buy and the market is below the Value Area, you would put your buy order just above the Value Area bottom, because if the market pierces into the Value Area, a strong bull trend is signaled.

In addition, observing the other eMini’s as the ES approaches its Value Area top or bottom can be very helpful in guiding a trader’s decision. For example, when the ES is within its Value Area but hovering just below its Value Area top, if the Nasdaq’s eMini is demonstrating strength, then there is a stronger likelihood the ES will penetrate its Value Area top signaling a bullish bias and a Buy. If the Nasdaq is demonstrating weakness, then there is a stronger likelihood the ES will decline from its Value Area top signaling a bearish bias and a Sell.

In conclusion, considering S&P 500 eMini’s movement with relation to its Value Area is an excellent method of deciphering market direction. The more a trader monitors the eMini’s Price Action to its Value Area, the better ‘in-tune’ the trader will be to its dynamics.

About the Author

Bob Moore is with Taylor Trading Plus, an international data-exchange trading service using George Taylor’s Book Method, Value Area trading, Elliot Wave analysis, and Short-Term Trend analysis to identify trading entries/exits in select instruments of Futures, ForEx, Commodities, Metals and Oil, ETF’s, and Stocks. To request chart examples using Value Area to trade S&P 500 eMini, please go to ‘Contact’ tab at: http://www.taylortradingplus.com.

By Adam Hewison – A little while ago I made a video that projected some amazing levels
for gold. Given the strong upward trend in gold and the price action on
Tuesday the 5th of October, it is worthwhile looking at this video again:

This short video, will certainly give you some interesting price targets
for gold that are based on sound trading principles. I hope you enjoy the video,
and as always we would love to have your feedback on our blog.

All the best,
Adam Hewison
President of INO.com and co-founder of MarketClub

To see more of Adam’s Videos click here or sign up for Adam’s Free 10-part Professional Trading Course.

By Natalie R. – The Bank of Japan surprised the financial markets Tuesday by announcing a 35 trillion yen ($418 billion) monetary easing program as well as stating it would cut its key overnight call rate to a range of 0.0%-0.1% for the foreseeable future. It also launched a 5 trillion yen program to buy private and public sector assets.

The new monetary easing measures were taken in order to spur economic growth and to combat the unrelenting deflationary pressures. While markets were expecting some form of intervention to combat the ever rising yen, the extent of the monetary easing program caught investors by surprise.

Bank of Japan Gov. Masaaki Shirakawa stated that the decision to undertake additional monetary easing measures was based on a worse-than-expected outlook for the Japanese economy. The Japanese recovery was hurt greatly by the strong yen as the country’s economy is export driven and a strong domestic currency diminished the gains from this sector.

Unfortunately for the Bank of Japan, while it might have been the first central bank to act, as recoveries in industrial nations falter, it can be expected that several central banks will soon follow suite. The USD/JPY pair remained virtually unchanged following the surprise announcement as expectations mount the Federal Reserve will be the next to act, pumping money into the U.S. economy, negating Japan’s yen-weakening program.

The Federal Reserve has signaled last month they may announce the purchase of more Treasuries as soon as their next policy meeting on Nov. 2-3 in an effort to boost growth and reduce the unemployment rate which is hovering near 10% for the past year. Federal Reserve Bank of Chicago Governer, Charles Evans, reiterated this notion today by calling on the Fed to do more to charge up the economy, including a new program of U.S. Treasury bond purchases and possibly setting a higher inflation target.

While other Central Banks may not be looking into further quantitative easing measure, they are suspending their interest rate increases. The most notable recent example is the Reserve Bank of Australia which Monday, unexpectedly left its benchmark rate unchanged at 4.5% despite a widely expected increase to 4.75%.

It seems that the BOJ’s next move will depend on the Federal Reserve as well as other Central Banks among the G20 nations. With growth stagnating in the developed nations we may be at the beginning of what some analysts have nicknamed as a “monetary easing war.”

Forex Market Analysis provided by ForexYard.

© 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.

By Adam Hewison – I have just finished a short video on the S&P 500 that I believe is
worth watching. In this video I detail out a particular chart formation
that has proven to be very reliable in the past. If I’m right, we could
see a further move and run in the S&P500 to the upside.

All the best,
Adam Hewison
President of INO.com and co-founder of MarketClub

To see more of Adam’s Videos click here or sign up for Adam’s Free 10-part Professional Trading Course.

By Dan Eduard – Platinum has seen substantial gains in the last few weeks, as the declining US dollar has increased demand for alternative investments like precious metals. With significant fundamental news on the horizon, technical indicators are now showing that the commodity may finally be in overbought territory, meaning a downward correction is likely to take place.

We will be examining the daily chart for platinum, provided by Forexyard. The technical indicators we are using are the Stochastic Slow, Relative Strength Index and Williams Percent Range.

1. The Stochastic Slow shows a bearish cross has formed above the upper resistance line. This is typically seen as an indication that downward pressure exists, and that a correction may take place.

2. This theory is supported by the Relative Strength Index, which is currently right around 75. Anything above 70 is usually taken as a sign that the instrument is overbought, and that downward pressure is likely to take place.

3. Finally, the Williams Percent Range is currently well above the -20 level, which is widely considered to be the border between being overbought and neutral territory. Traders can take this as a clear sign that platinum prices will drop in the near future.

Forex Market Analysis provided by ForexYard.

© 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.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar found a foothold during the Asia session but was unable to recover ground lost during yesterday’s selloff. Asian equities followed their US counterparts higher, with the Nikkei-225 up +1.5% at the time of writing. The S&P500 had earlier closed up 2.1%. Gold made a new record high of $1350/oz, as investors continue to fret over the possibility of a synchronised return to quantitative easing by the world’s largest economies. EURUSD traded 1.3823-1.3859, USDJPY 83.07-83.30. A positive data release was not enough to deter thoughts of more Fed action overnight and instead kept risk-seeking intact. The non-manufacturing ISM increased more than expected to 53.2 in September and our analysts’ all-economy ISM index, which combines the manufacturing and non-manufacturing indexes, also rose in September to 53.4, a level that is historically consistent with real GDP growth of around 2.5%. The level is also consistent with the upside risks that our economists have been emphasizing to their forecast for Q3 real GDP growth (1.5% est). A Wall Street Journal interview with Chicago Fed President Evans, a 2011 FOMC voter, stoked investor expectations of more Fed action as he said the Fed needs to do much more to aid the economy. There are no major releases due from the US today. Expectations will now likely build as the Q3 earnings season gets underway tomorrow, and the payrolls report on Friday comes into view.
EUR

Services PMI improved to 54.1 and the latest data, in general, suggest that domestic demand is improving. However, both the “incoming business” and “employment” component fell, suggesting the outlook remains uncertain. Final Q2 GDP is expected to be confirmed at 1.0% q/q but with an uncertain outlook, ECB officials will need to exercise more caution as momentum potentially slows.
ECB President Trichet said that China’s declaration of its confidence with respect to Eurozone debt is appreciated. However, he also said Chinese authorities do not share Europe’s view on the need for a faster yuan appreciation. Elsewhere, Eurogroup Chairman Juncker said the yuan remains undervalued and that more FX flexibility is in the interest of China. Currency imbalances will remain a major topic in the weeks to come.
JPY

After yesterday’s policy surprise from the BoJ there were no market-moving developments during the Asia session. USDJPY remains close to its 15-year lows after initially rising on the back of yesterday’s policy decision. The yen’s intraday recovery probably has less to do with a sense that the BoJ did not ease enough, and more to do with growing expectations that the Fed will follow suit.
GBP

At 52.8 (cons. 51.0, prev. 51.3) Services PMI for September was above expectations. As such business activity has improved. However, according to our economists the outlook remains uncertain, especially as the “new orders” component fell to the lowest level in a year. As such the BoE will likely keep a cautious stance on monetary policy.

CAD

BoC Senior Deputy Governor Macklem said that the current policy rate at 1% ensures that financial conditions remain expansionary, a setting he described as appropriate. However, he indirectly raised the possibility of further accommodation, noting that the BoC’s move away from its emergency policy stance provides some flexibility if the Fed eases further. He also said the BoC becomes concerned about the CAD if it turns volatile, but would only intervene in exceptional circumstances.

TECHNICAL OUTLOOK

EURUSD targets 1.3896.
EURUSD BULLISH Momentum is positive; the pair targets 1.3896 with scope for 1.4194 next. Near-term support holds at 1.3637 ahead of 1.3381.
USDJPY BEARISH Look for a break below 82.88 for extension of bearish trend towards 79.75. Resistance remains at 83.99 ahead of 85.40.
GBPUSD BULLISH Move above 1.5999 and 1.6069 would expose 1.6276. Support at 1.5670 ahead of 1.5503.
USDCHF BEARISH Clearance of 0.9709 exposes 0.9590 and 0.9500 next. Resistance at 0.9918 breakout low.
AUDUSD BULLISH Upside potential held at 0.9751, clearance of the level would expose 0.9850. Initial support defined at 0.9542, yesterday’s low.
USDCAD BEARISH Focus is on downside; initial support lies at 1.0108 ahead of 0.9931. Resistance comes in at 1.0380.
EURCHF BULLISH Violation of 1.3467 would pave the way for a move towards 1.3651 ahead of 1.3924 key resistance. Support at 1.3265 ahead of 1.3165.
EURGBP BULLISH Next resistance above 0.8738 lies at 0.8808. Support holds at 0.8563 ahead of 0.8510.
EURJPY BULLISH Expect gains to extend towards 116.68 and 119.33 next. Near-term support comes in at 112.98 ahead of 115.53.

Forex 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.