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Jyske Bank interim financial report. First quarter of 2011.

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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.

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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

For more Daily Analysis and  Forex Signals visit @  ForexTradingEVO.com

By Russell Glaser

A media frenzy followed the report of the death of Osama bin Laden and traders supported the dollar in overnight trading. Silver prices slid 10% before the commodity recovered after futures margins were increased. UK and many European markets are closed today for banking holidays which will leave the FX markets with low levels of liquidity and exaggerate some of the price moves that accompany illiquid trading conditions.

Spot silver sold off sharply following new margin requirements for futures contracts by the CME Group. The price declined to $42.50 and comes close to the short term trend line off of the January low which comes in this week at $41.20. Silver traders may be able to buy the commodity on a rebound as the fundamentals supporting silver prices (rising demand for the commodity and global inflationary pressures) have not changed. Further support is found at the $38 level.

Today’s Market Events:

EUR – Final Manufacturing PMI – 08:00 GMT
Expectations: 57.7. Previous: 57.7.
An uptick in manufacturing data will support the euro as any increase in euro zone economic activity will add more influence for EU inflation hawks. EUR/USD support come in today at 1.4755 followed by 1.4650. Resistance is found at 1.4880 and the 2009 high of 1.5140.

GBP – BOE Gov King Speaks – 13:00 GMT
Governor Mervyn King is set to speak in Brussels today. Should he provide any hint of future British monetary policy the pound should react accordingly. The EUR/GBP is encroaching on the current rising trend line off of the February 18th low which comes in today at 0.8830. A breach of this level and the pair could fall to the support at 0.8715.

USD – ISM Manufacturing PMI – 14:00 GMT
Expectations: 59.9. Previous: 61.2.
Recent positive US data releases have fed into USD selling. However, with the announcement of the death of Osama bin Laden, US traders may be compelled to buy dollars given the patriotic sentiment that often follows such news events.

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.

Source: ForexYard

With Europe and Great Britain on holiday Monday, currency traders have witnessed a relatively thin trading environment. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets.

Economic News

USD – USD Traders Weighing Momentum at Start of NFP Week

The US dollar has continued to plummet since Friday as dollar bears continued to move out of the greenback in exchange for higher yielding currencies. The Fed’s record low interest rates will persist for the foreseeable future, according to the FOMC report and subsequent statement last week, and the dollar is expected to see little support this week as a result.

The EUR/USD rose to a three-year high, reaching towards 1.4900 in Friday’s session. The AUD/USD witnessed a similar bull run, climbing to a 29-year high of 1.0920. The USD/JPY joined the chorus, despite weak fundamentals in Japan, and fell to 81.52 from 82.17 yesterday.

Today, with most of Europe on holiday for Labor Day, the US economy will be one of the few major global economies releasing data sets on Monday. The most impactful figure being published will be the Institute for Supply Management’s (ISM) Manufacturing PMI, a leading indicator of manufacturing production.

As industry appears to be faltering these past few weeks, this number may get released somewhat below expectations, driving more investors away from the USD. With Non-Farm Payrolls (NFP) this Friday, the week should be exciting for forex traders.

EUR – Euro Begins Week Mildly Bullish Despite Thin Labor Day Trading

The euro has been a top performer against the US dollar following last week’s announcement by the US Federal Open Market Committee (FOMC) that US interest rates would remain at their record lows. The EUR began the middle of last week strongly bullish and has since tapered off mildly, but still maintains its momentum; albeit weakly.

With Europe and Great Britain on holiday Monday, currency traders have witnessed a relatively thin trading environment. Though debt concerns loom in the euro zone, and industrial production falters globally, the higher yielding assets like the GBP and EUR appear positioned to gain despite poor fundamentals. This trend appears to have little opposition as dollar traders shift substantial value into other assets.

As for Monday, the euro looks to be gaining against the greenback as traders are largely absent from the region to shift investments, but global traders are still bullish on Europe as the USD remains in freefall. Switzerland will publish its retail sales data today, along with the euro zone’s final manufacturing PMI. These factors, however, will likely be outweighed by the shift in sentiment towards the buck after last week’s FOMC statement. Look for long positions on the EUR to continue through this week.

JPY – Japan Celebrates Golden Week, Thin Trading Expected

The USD/JPY has been trading lower recently as investors flee the greenback on the coattails of the Fed’s monetary policy statements. After reaching upwards of 82.75 on Tuesday, the pair quickly dropped to a daily low of 81.61 Wednesday, and dipped farther in Thursday’s sessions after the Bank of Japan (BOJ) decided to hold rates steady and maintain present levels in its Asset Purchasing Program.

While the yen suffers from its own economic concerns, shifts in consumer sentiment have helped lift yen values against a number of its rivals. The pair also looks to be continuing this movement for the foreseeable future given the massive shift away from the US dollar. With Japan celebrating Golden Week since last Friday, liquidity throughout the region will be somewhat depressed. The JPY could gain from this absence as the rest of global traders shift towards Europe.

Oil – Oil Prices Supported by Declining USD

Oil prices ended Friday slightly higher on the day as traders largely moved away from the US dollar, lifting commodity values. As investors bailed out of their long positions with the USD, oil prices found support, pushing the commodity back towards $113 a barrel with an opening price of $112.86 today.

As for today, crude oil traders may want to consider that commodities, which are linked to the value of the US dollar, are likely going to continue receiving a boost in the immediate future due to recent monetary policy statements out of the US. Hawkish statements about economic growth may suffice to hold prices stable between $112 and $115, but many speculators are beginning to anticipate another bull run in commodity prices.

Technical News

EUR/USD

The pair has come off from last week’s high at 1.4880 to form a bullish flag pattern. A breach above the consolidation pattern would target 1.5070, just below the 2009 high of 1.5140. Support comes in today at 1.4755 followed by 1.4650 and a retracement target on the hourly chart at 1.4430.

GBP/USD

After completing a textbook retracement lower to the previous trend line off of the 2007 high, the pair reached a 17-month high and looks to continue to rise. Both monthly and weekly stochastics are rising, indicating further potential gains in the pair. Initial resistance comes in at last week’s high of 1.6745, followed by 1.6880, with a target at the 2009 high at 1.7040. Support comes in at 1.6625, followed by 1.6600 and 1.6430.

USD/JPY

The sharp downtrend continues for the USD/JPY as the pair touched a low this morning at 81.00. This is encroaching on the 80 yen line in the sand, potentially drawing the ire of the Ministry of Finance and a possible new round of intervention in the FX markets. Support is located at the post-intervention low at 80.70, followed by the pre-intervention low at 76.40. Resistance is found at 82.80.

USD/CHF

The pair closed the month near a new all-time low and the Swiss franc has been one of the strongest performing currencies this past month. A 14-year trend line comes in at 0.8510 and may prove to be supportive. A breach below this level would take out a significant number of stops. A bounce higher at this level could take the pair higher near 0.8900.

The Wild Card

Silver

Silver prices collapsed this morning as traders took profits after the commodity reached a new high near $50. The price decline to $42.50 comes close to the short term trend line off of the January low which comes in this week at $41.20. Forex traders may be able to buy the commodity on a rebound. Support is found at the $38 level.

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 Cedric Welsch

People who are just getting started in trading Forex should make use of the many websites that offer Forex trading advice. As the currency trade is a very risky investment it would be unwise to get involved in this market without some prior knowledge. Thankfully there are a few ways that beginner traders can minimize the risks they encounter when they start to trade currency.

Like everything else in life, trading requires practice and hard work. Many people believe that they can get rich from Forex in a short amount of time. This is not the case. Beginner traders will need to practice in order to learn the systems and rules of Forex. There are a number of websites that allow traders to practice for free. All a beginner needs to do is search the term “Forex demo account” and they will be supplied with a list of websites that provide this service. These demo accounts will allow beginners to practice using fake money. These accounts let the trader to practice using real market conditions without losing any money. Once a trader feels that they are doing well enough on the demo account to start trading for real, they can sign up with a broker.

As traders learn the demo system they will start to understand the processes behind Forex trading. Many traders will begin to develop their own trading systems while others will look for popular trading systems online. People who trade Forex need to be completely comfortable with their system before they start trading real money. As every system will lose money from time to time, traders need to be comfortable with losing money every now and then.

Lastly it is important that potential traders take their time. Amateur traders have been known to complete a few trades on a demo system and then go on to using real money. This is a method that will lose the trader money in the long run. The experienced trader will have completed hundreds of trades in the demo system before their start to put their own hard earned dollars on the line. It is important that a trader takes the time to test their system thoroughly before giving up the demo software. Every system will have its flaws and it is important that the trader knows what to do when he or she is losing money on the Forex market.

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